Category Archives: Scam Warnings

The Iraqi Dinar Scam

New Iraqi Dinar

Hello everybody.

I’m sure you’re all pretty familiar with the situation in Iraq. Well, with the emergence of the New Iraqi Dollar a whole slew of “Iraqi Dinar investment” sites have popped up. They all promise massive profits if you buy this new and highly speculative Iraqi currency. I too was tempted a while back to buy a few New Iraqi Dinars, but after the initial greed wore off and rationality came back to me I decided that it was too risky for me to go ahead with the purchase. I’m glad I made that decision as most likely I would’ve ended up with nothing more than worthless paper.

Personally I think what these sites are offering is a scam. When you stop to think about it, why should one expect the Iraqi central bank to want a strong Iraqi Dinar? It’s not to their advantage to do so. It is always in the best interest of a developing country to have a weak currency.  I don’t think any of the sites offering Iraqi Dinars for sale mention this and other associated risks. Then again why would they care to mention it if it might prevent you from getting suckered into a bad investment? My point is that you should really do your homework on this issue before you make a decision. To help you out I’ll share with you two videos a friend of mine sent me.

The videos are produced by a currency expert called John Jagerson (about which my friend says that the guy “REALLY knows his stuff when it comes to currency trading”.) In these two videos John gives a presentation on why you might want to avoid this type of investment. He also explains why the guys selling you the dinar are maybe not telling you everything you should know about the deal before exchanging cash with you.

Without further ado here are the two video links:

Part 1:

http://www.learningmarkets.com/index.php/200904141921/Forex/Forex-Getting-Started/the-iraqi-dinar-scam-part-one.html

Part 2:

http://www.learningmarkets.com/index.php/200904151937/Forex/Forex-Getting-Started/the-iraqi-dinar-scam-part-two.html

Kudos to John for taking the time to inform the public on the dangers of this speculative currency investment.

That about does it for this post. Thanks for your attention and I wish you all safe and profitable investing!

Cheers,

Alan

http://alansmoneyblog.com

Ponzi Schemes and HYIPS – Free Money Traps

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By Pharaoh

Source: http://www.forexpeacearmy.com/forex-forum/forex-basics-boot-camp/3959-ponzi-schemes-hyips-free-money-traps.html

With the collapse of Bernard Madoff’s 50 billion dollar investment fund, Ponzi schemes are very much in the news. Recently, the FPA investigated CRE Capitol Corporation and the TradeLite HYIP, both of which turned out to be Ponzi schemes. I’ve covered some of this before in my article about managed forex, but since so many people have lost so much money to both classic Ponzi schemes and HYIPS, I thought this style of scam deserved a more in-depth analysis.

Be aware that not every managed forex fraud is a Ponzi scheme. Both Atwood & James and LegendTrader just found different ways to steal money directly from investors without following the typical plan of a Ponzi scheme.

So, what exactly is a Ponzi scheme?

A Ponzi scheme is an investment that provides returns to investors from deposits, not from investing. In a typical Ponzi scheme, investors are promised a fixed rate of return (usually fairly high) allegedly from some form of high return investment. The original scheme was devised by Charles Ponzi and was based on a legal method (at that time) of using international postal reply coupons. The problem was that there weren’t enough of those coupons in existence to cover all the investment money that poured in. Modern Ponzi schemes claim to make returns based on a number of different investment plans, with forex becoming more and more prominent.

When the first person invests, the company makes very sure the investor gets paid his returns in a timely fashion and encourages him/her to tell friends and family about the investment. For example, if Investor 1 invests $10,000 dollars with PonziFx Investments (fake company name – example only) and is promised a 10% monthly return from their “expertly” run investments. If the scammers keep their overhead costs down, they can pay $1000 per month to Investor 1 for almost 10 months without doing any work at all.

This would seem like a foolish way to scam people, but the scammers have a plan. Whether by advertising or just by encouraging Investor 1 to tell friends and family, they get more investors. Everyone is now making a huge return on their investments. Investor 1 is so pleased, that he might take out a 2nd mortgage and max out his credit cards. Now he places a total of $200,000 with the company. He can now quit his day job and collect $20,000 a month. Of course, he’s a nice guy and tells everyone he knows so they can all share in his success. Some are skeptical, but it’s hard to keep doing the 9-5 thing when 3 of your relatives and 5 of your neighbors have all quit their jobs and are making huge amounts of money with no effort.

Incentives to recruit new people can be monetary (cash bonuses and/or higher interest for the investor who recruits others) or more personal. I don’t know about you, but I’d love to be able to tell my family and friends, “Put your life savings with this company and all your financial worries will be solved forever.” if there really was a company that could always return 5% a month or more per month every month, under all market conditions with no drawdown ever. Wow! I’d be the great fiscal hero to everyone who would listen. This is part of how people get drawn in. People want to believe that they’ve found the perfect solution to all their money problems. Sometimes, they are cautious and just put in a little money to test it out. Once they get a few payments, it’s easy to justify borrowing money at a low interest rate to invest it at a high rate of return.

A well run Ponzi can become huge (current world record – $50 billion), but at some point, it has to end. Either the supply of new investors runs out or the authorities step in – assuming the scammers haven’t already decided just to grab the money and leave town beforehand.

Ponzi Warning Signs

1. Many large promises are made about the skill of the traders or the special trading or investing method (could be forex, could be anything), but details are scarce. Trading statements (if any) are unlikely to give information on what brokerage was used to place the trades. Attempts to get details will be gently deflected. Any serious attempt to get details is likely to result in the scammer threatening to not let the potential investor take part in the investment plan.

2. A web search for the people in charge of the company reveals little or nothing about them, despite claims of having long and successful careers managing other people’s money. Worse yet, the search may show some civil and criminal legal difficulties, but these will be explained away as “misunderstandings” by people who didn’t understand the business. Most of the positive info available is by word of mouth from friends or relatives who have invested.

3. The company will often try to claim that it has a long and solid history, often on Wall Street. There might be a virtual office in New York. There may or may not even be a very nice local office. Asking for information about registrations with the CFTC, NFA, BBB, local, or state authorities will be turned aside, either with excuses about how this isn’t necessary, or with threats to keep anyone who would not take the investment seriously won’t be allowed to invest.

4. An investor who wants to take some time to consider the investment will often be pressured to place money as soon as possible. Of course a legitimate investment manager will want your business soon in order to collect commissions, but excessive pressure to invest now can mean that the scammer is getting short on cash to pay off prior investors or else is getting ready to run off and wants as much money as possible before disappearing.

A serious investor needs to apply logic. Any legitimate company will be very happy to provide information about which regulators, government agencies, and business groups they belong to. Anyone who asks for your money and says that you aren’t entitled to get a full disclosure about the company and how the investments will be handled is either a criminal or a crazy person who thinks that normal rules of investing don’t apply. Anyone who threatens not to accept your investment money if you require basic information about the company is a criminal. The company my IRA is with sends me way too much info about my investments and they are happy to answer any question I have by email or phone. Investment companies should want to give you info, not hide it. Any serious managed investment company that claims to have a long, solid track record will be easy to look up online. Lack of bad information is not the same as the presence of good information. Just because your Aunt Mildred has been getting 10% per month for 6 months is no reason to throw all of your money in without researching the company first.

One special note about the Madoff case. He got a lot of very big names to invest in his scam. He even managed to slide under the CFTC’s radar many times when they checked his company (yes, he really was registered with the CFTC). The reason he got away with it for so long is that he only offered 10% per year. This made his company seem a lot less suspicious, so many investors as well as investigators didn’t examine his books as closely as they should have. Still, some smarter investors who checked things out closely did avoid getting involved.

One other thing about Ponzi schemes. Those who get in early and who don’t add to their investment can end up with a significant profit. So, do you think it’s ok if you got in early enough to have recovered your initial investment and made a profit? Think again. In the Madoff case, the authorities are working to recover any profits made by early investors to help partially repay the losses of later investors. Just because an investor didn’t know it was a criminal enterprise doesn’t mean that the investor can profit at the expense of others. Also, there’s almost no way to predict when a Ponzi will collapse, so trying to invest with the plan to profit before the scheme fails is dangerous and foolhardy. Knowingly taking part in such a scheme can also attract quite a bit of attention from the authorities and other investors after the scheme falls apart.

Free Money from HYIPS?

HYIP stands for High Yield Investment Plan. I can’t prove that they are all Ponzi scams, but am willing to bet that at least 99% of them are. Some HYIPS have FAQs claiming that they aren’t HYIPS, so let me explain some of the more obvious warning signs that something is a HYIP.

HYIP Warning Signs

1. The website will often go on and on about the company having a large team of experts in a wide variety of fields, but when you check the services offered, it’s usually just a set of 2-5 “Plans” paying interest in a daily/weekly/monthly basis for anywhere from a few days to 12 months. Sometimes the interest rate is fixed, sometimes it’s listed as a maximum or minimum. It’s always far more interest than can be had from any legitimate investment. The alleged investment can be just about anything, but forex is very commonly listed. Some of them have names like Real Online Forex, but are just real online scams.

2. A very steep increase in daily/weekly/monthly return as the amount of investment increases. I’d expect to make a little more interest with a legitimate account manager if I place $100,000 instead of $1000, but not somewhere between 2 and 10 times as much. Many also pay investors a percentage to bring in other investors.

3. They usually only accept deposits via one or more e-currencies (Liberty Reserve, e-Gold, StrictPay, etc.), not check, credit card, wire transfer, or anything else easily traceable. Those few that do offer wire transfer almost never have the money sent to a bank in a country with strict regulations. I’m completely in favor of offering a variety of methods to fund and get paid back on investments, but when all of the funding methods are virtually untraceable, this is not a good sign.

4. Minimum investment amounts are typically very low – almost always under $100 and sometimes as little as $1. This is done to lure people in and pay them some huge percentage of profit in order to convince them to invest larger amounts and tell their friends about it. Some people have lost hundreds of thousands when a HYIP disappears.

5. There is usually little or no contact info on the website. Contact is typically only by a web form or an email address. This might be fine for a low-cost or free service, but not for some place that claims to be investing significant amounts of your money.

Try to think about this logically. Some of these HYIPS promise over 5% interest per week. Take a moment to do the math. Even uncompounded, that’s over $250% per year (5%, 52 times). Compounded weekly, that would be over 1000% per year. If this was all there was to investing, why isn’t anyone talking about how great it is in the financial news? These things are very easy to find on the web, so they aren’t secrets. Do you really think there’s a service that gives away virtually unlimited free money with little or no risk? If these really work, why didn’t Bernie Madoff just place a small percentage of the money he had into them and fix the problem he has paying off his investors?

Some people play what I call HYIP games. There are HYIP rating sites that tell if HYIPs are paying out to investors or not. Some of these sites are honest, but many are owned by the HYIP companies and are completely fake. Those who play HYIP games look for sites that are fairly new and are currently paying out while trying to lure more people in. They invest modest amounts and try to recover their initial investments as quickly as possible. They leave some money in and try to get as much as they can from the HYIP before it collapses and takes all the remaining money. Sometimes they lose everything, but they can make enough on the profitable ones to have at least a chance of coming out ahead. Personally, I consider this to be unethical. Every dollar placed with a Ponzi scheme makes it possible for that scheme to continue a little longer and steal more money from more people. Those people looking for that “golden moment” to put money in, grab some cash, and get out with a significant profit are only assisting the criminals and taking money from others who still are falling for these scams.

Take action and save yourself from these scams

In conclusion, keep your eyes open, ask a LOT of questions before placing even 1 dollar with a company that you suspect might be running a Ponzi scheme. Don’t let a desire for high returns cloud your judgment. Don’t place any money with anything even resembling a HYIP, and be very cautious before turning your money over to a person or company that claims to be able to produce stable high returns.

I’ve said this before and I’ll repeat it here. Do some serious research before placing money with an account manager. There are people out there who will spend more time checking out the features of a new TV or stereo system than looking into an account manager or investment funds manger before handing over their life savings. If it takes you a whole month to check out a company, the worst thing that happens is that you’ve lost one month of lucrative returns. If the company turns out to be a scam, you’ve given up nothing and saved all of your money. If you don’t have the time or skill to investigate, spend some money and pay someone to do it for you. You may end up spending a couple thousand dollars, but could save your entire life savings, your home, and more.

It’s your money. Invest it wisely. Learn to trade for yourself or else do the research needed to find a suitable investment plan. Most of these scams are easy to avoid if you know what to look for.

Brought to to you by Alan’s Money Blog
http://alansmoneyblog.com

Feds seize more than $1M from Norfolk pastor in relation to Global Pension Plan scam

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Thanks to okosh for posting this on two forums that I frequent (MoneyGuru Forum & NoBS Network). Here is another news event related to the Global Pension Plan scam saga:

Federal agents seized more than $1.1 million from a self-proclaimed pastor in Norfolk who is under investigation in an international investment fraud scheme, according to court filings unsealed this week.

Benjamin Seigler of Pall Mall Street has not been charged but is the focus of an ongoing inquiry into several of his investment programs, says an affidavit filed in federal court this week by U.S. postal inspectors. More than 4,000 individuals in this country and abroad placed investments with Seigler, but none has seen any returns, the affidavit says.

“Seigler is defrauding individuals by selling fraudulent insurance and securities products,” says the affidavit, filed by postal inspector Eric Brown. “This scheme is ongoing.”

Postal inspectors have been investigating Seigler since November, when managers at the Norview post office, near Seigler’s apartment, noticed he was receiving more than 50 letters a day containing money orders made out to him in amounts ranging from $44 to $1,000, which Seigler cashed at various post offices around the city, the affidavit says.

The mail originated from states across the country as well as from Canada, Puerto Rico and the Virgin Islands. Many of the money orders noted they were payment to the “Global Pension Investment Trust” or some variation.

Further investigation discovered that Seigler had deposited, from October to March, more than $900,000 in cash in a Chartway Federal Credit Union account, Brown said in his affidavit.

The inspectors obtained warrants to listen in on Seigler’s phone calls. During daily conference calls with investors, Seigler said his investments would yield greater returns than traditional bank accounts or stock programs, Brown wrote.

For example, an investment for as little as $42.62 in an insurance contract would yield $3,000, $79,000 or as much as $154,000, Brown’s affidavit says.

The investments were purportedly to be made through an online entity called Global Pension Plan, which has a Web site with no phone number, address or contact information, nor does it identify exactly what insurance program funds are invested with.

“Because we want to succeed in this business, we need to protect the privacy of all our partners. This may sound confusing and shady, but please try to take another perspective,” Global Pension Plan says on its Web site.

Postal inspectors interviewed a number of people, mainly in Arizona and Louisiana, who invested with Seigler but have not received any returns. Those investors were not identified in the court filings.

Postal inspectors did not return calls for comment. Officials in the U.S. attorney’s office declined to comment on the ongoing investigation.

Messages left for Seigler at his home were not returned.

Over the past several months, about 15 people who invested with Seigler signed an online petition stating that Seigler “has caused great consternation among some in the group” by not investing in the Global Pension Fund. The petition signatures are collected at ipetitions.com, an independent Web site.

The petition asks that officials at Global Pension Fund “take appropriate action” to divorce Seigler from the program.

Postal inspectors say they believe Seigler used some of the investors’ money to pay for his own investments, but largely had stocked the money in his Chartway account, according to the court records.

Last month, the inspectors took more than $1 million from Seigler’s credit union account plus another $150,000 in cash from his home as well as 27 boxes of documents, two computers and a handgun, according to a federal search warrant unsealed this week.

Agents also seized three brand-new vehicles Seigler purchased recently: two

Chevy Malibus and a Chevy Trailblazer. When he purchased the vehicles, Seigler identified himself as a pastor with a church called “Talking by Faith Global Deliverance Anointed,” according to Brown’s affidavit.

Public records show that Seigler held a Virginia home improvement contractor’s license from 2000 to 2004 and that he lived in Virginia Beach at the time. In 1996, Seigler and his wife filed for bankruptcy in Pennsylvania and emerged with their debts discharged, according to court records.

Source: http://hamptonroads.com/node/460156

Here are two forum threads related to the Global Pension Plan scam:

http://www.moneyguruforum.com/general-scams/17254-global-pension-plan-scam.html

http://nobsnetwork.net/no-bullshit-investment/2820-feds-seize-1m-pastor-gpp-next.html

AlterGold Is a Scam

It has only been a little while since I wrote my review of AlterGold, and already I’ve come across two articles on the net that put serious doubt as to the legitimacy of this e-currency provider. These two articles come from the e-commerce journal website. Here they are:

Part 1 is over here.

Part 2 is over here.

Draw your own conclusions. Personally, even before I wrote my original review I’ve had strong doubts about AlterGold’s legitimacy. These two articles only bolster my belief and thus I choose to stay away from it.

Feel free to share your opinions and comments on a forum thread I’ve started at the following location:

http://www.moneyguruforum.com/other-e-currencies/13362-altergold.html

Take care everyone,

Alan

Global Pension Plan Scam – Update

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It’s been a while since I blogged about why I believe the Global Pension Plan scheme is a total scam. Since then not much has happened. People have yet to receive that big pile of cash they’ve been promised, and frankly I’m not surprised. A comment on my original GPP post spurred me on to scour the net to see if there is any fresh incriminating info regarding GPP. Sadly I did not find anything new really, but I did come across something that I’ve overlooked before. Here is what I found:

http://www.uusisuomi.fi/kotimaa/3133…-suunnitteilla

Translation from Finnish, courtesy of Rokka.

Criminal investigation of GLobal pension plan-pyramid scheme has revealed new scam plans. National bureau of investigations Turku unit has found indications, that there’s already new, similar schemes to collect money from the gullible, tells Turun Sanomat.

Plans for new scams have been revealed in house searches, that police have conducted while investigating GPP in Helsinki, Forssa, Turku, Oulu and Tampere.

People should think where they put their money, can a few tens of euros investment bring you loads of money in a moment, says senior constable Esko Vesanen from NBI of Turku.

GPP network, which was marketing pension insurances, managed to collect from investors at least a pot of hundreds of thousands of euros. Exact figure is not yet discovered. Money went to foreign accounts, and tracing it has been a difficult work. Police haven’t been able yet to discover who was/were running GPP-pyramid scheme. Finnish NBI has been investigating GPP since spring.

Article Published 05.08.2008

http://www.yle.fi/news/left/id98016.html

Police investigating suspects in an alleged pyramid scheme have uncovered evidence suggesting the same people may have been planning similar operations.

The newspaper Turun Sanomat reports that during home raids, Turku police found indications that the suspects may have been trying to set up similar schemes to gather money from people via the Internet.Police have come across plans for Internet fraud in Helsinki, Forssa, Turku, Oulu, and Tampere while investigating the activities of the founders of Global Pension Plan. The “Plan” promised quick returns on investments, but has been accused of being a pyramid scheme.

“People should think about where they put their money,” warns Turku police force’s detective Esko Vesanen. “Can ten or so euros really bring a huge profit in just a moment?”

Police have been investigating one pyramid scheme after another since March.

Finland’s financial authority position on GPP:
http://www.vakuutusvalvonta.fi/s/f/e…0INSURANCE.pdf

Proof that the is no relationship between GPP and the Children of Ecuador Foundation as originally claimed by GPP:

http://breadforkids.org/notice.htm

These lowlife scums (GPP) are willing to stoop so low as to claim to be doing charitable work in order to steal your money. This just really ticks me off!

Interesting forum threads regarding GPP:

http://www.worldlawdirect.com/forum/

http://www.talkgold.com/forum/showthread.php?t=63508&page=1

http://www.moneymakergroup.com/Global-Pension-Plan-t198799.html

http://www.moneyguruforum.com/general-scams/17254-global-pension-plan-scam.html

I’m going to post any new info over here most likely rather than starting a new post.

If you find anything useful or anything that further sheds light on this whole GPP subject, please let me know.

Cheers,

Alan

Numox is a scam

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Hello everyone. Not to long ago – in fact yesterday – I wrote a review of a new e-currency system called Numox (found over here). Well, I must formally apologize as I overlooked something in my first review. Had I not forgotten to do a check on the name which appears on the domain name record, I would’ve came across the following article in the e-commerce journal.

Thanks goes out to Mark Herpel from DGC Magazine for pointing me to this article.

If you read it carefully you will understand why I now recommend that you stay away from Numox. An e-currency system is ran by a former HYIP admin (Peter Takac) ! Forget it! Don’t bother trusting anyone who is or has been involved in running an HYIP!

For the uninitiated in the whole “online investment” scene, a HYIP stands for “High Yield Investment Program.”  A HYIP is nothing more than a ponzi scheme so avoid them at all costs or you WILL lose your money.

As always I want to get your opinions and feedback, and you’re all welcome to share it with the world at the following forum location:

http://www.moneyguruforum.com/other-e-currencies/14703-numox.html