Anatomy of a “Ponzi” Scheme

Anatomy of a “Ponzi” Scheme:

Contributed by: Lucas Trevant-Global Advocates

http://www.globaladvocates.ch

It seems most people are familiar with the phrase “Ponzi Scheme” especially after 2008 when Bernard Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, were charged by the SEC with securities fraud for a multi-billion dollar Ponzi scheme perpetuated on his firm’s clients for many years.

In Madoff’s case he appeared to be a successful securities investor.  He had been a prominent member of the securities industry throughout his career.  He served as vice-chairman of the NASD, he was a member of its board of governors, and chairman of the New York region.  He was also a member of the NASDAQ Stock Market’s board of governors and it executive committee and served as chairman of its trading commission.   Over a period of 48 years he established a significant reputation in securities trading and his clients trusted him.

What is a Ponzi scheme?     

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.  Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.  In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.

Why do Ponzi schemes collapse?

        With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue.  Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.

How did Ponzi schemes get their name?

        The schemes are named after Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.  At a time when the annual interest rate for bank accounts was five percent, Ponzi promised investors that he could provide a 50% return in just 90 days.  Ponzi initially brought and traded a small number of international mail coupons in support of his scheme, but quickly switched to using incoming to pay off earlier investors.

What are some Ponzi scheme “red flags”?

Many Ponzi schemes share common characteristics.  Look for these warning signs:

  • High investment returns with or no risk.  Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk.  Be highly suspicious of any “guaranteed” investment opportunity.
  • Overly consistent returns.  Investments tend to go up and down over time, especially those seeking high returns. Be suspect of an investment that continues to generate regular positive returns regardless of overall market conditions.
  • Unregistered investments.  Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators.  Registration is important because it provides investors with access to key information about the company’s management, products, services and finances.
  • Unlicensed sellers.  Federal and state securities laws require investment professionals and their firms to be licensed or registered.  Most Ponzi schemes involve unlicensed individuals or unregistered firms.
  • Secretive and/or complex strategies.  Avoiding investments you do not understand or for which you cannot get complete information is a good rule of thumb.
  • Issues with paperwork.  Ignore excuses regarding why you can’t review information about an investment in writing, and always read an investment’s prospectus or disclosure statement carefully before you invest. Also, account statement errors may be a sign that funds are not being invested as promised.
  • Difficulty receiving payments.  Be suspicious if you don’t receive a payment or have difficulty cashing out your investment.  Keep in mind that Ponzi scheme promoters sometimes encourage participants to “roll over” promised payments by offering even higher investment returns.

What steps can I take to avoid Ponzi schemes and other investment frauds?

        Whether you’re a first-time investor or have been investing for many years, there are some basic questions you should always as before you commit your hard-earned money to an investment. The SEC sees too many investors who might have avoided trouble and losses if they had asked question from the start and verified the answers with information from independent sources.

When you consider your next investment opportunity, start with these five questions:

  • Is the seller licensed?
  • Is the investment registered?
  • How do the risks compare with potential rewards?
  • Do I understand the investment?
  • Where can I turn for help?

For more information, we suggest you read;  

http://www.sec.gov/investor/pubs/fivequestions.htm

If you have been a victim of fraudulent scheme, anywhere in the world then it’s time to real justice and recover your losses.

 FREE case analysis contact [email protected]    http://www.globaladvocates.ch


BEWARE OF WORLD BANK CONSULTANT; JOE STEWART

World Bank Consultant; Joe Stewart,
Gordon Building Supply (owner);
Bryan MacKenzie, Omnia Worldwide UK (owner);
Bill Todd, M-I SWACO Consultant.
 
These parties in collusion Solicited $330,000 Performance Bond for Diesel Oil Investment.
The Bond was mysteriously lost after 8 months of repeated attempts $330,000 be returned after DIESEL contract deadline had past. 
 
Stewart, Mackenzie, and Todd also signed contract to repay $82,500 each if Bond was lost, stolen, or forfeited for any reason. 
 
Repeated attempts to collect this LEGAL OBLIGATION have been unsuccessful. DO NOT AGREE TO ANY BUSINESS DEALS WITH ANY OF THE ABOVE LISTED INDIVIDUALS OR THEIR ASSOCIATES! INDUSTRIES INVOLVED  INCLUDE REAL ESTATE, RESORT PROPERTIES, FINANCE AND ACCOUNTING, OIL, OIL TANK CLEANING, BUILDING MATERIALS, AND CONSULTING.
For additional information contact: www.equalizergroup.org

Keith Eugene Mitchell

Keith Eugene Mitchel

Keith Eugene Mitchel

ALERT: Keith Eugene Mitchell and Alleged Co-Conspirator “Dr.”/“Pastor” Stephen J. Cooney

DBA: “The Option Group” Operating out of Coeur d’Alene, Idaho.
Without remorse they will lose your money!
In this case they scammed their victims for over $500,000.00.

They make empty promises of extraordinary returns with little to no chance of losses.

Be warned, you will lose your money in their illegal schemes.

Here’s the summary of the case:

In about June of 2007, Keith Mitchell and Stephen Cooney held an Investors meeting at a high-end resort in Coeur D Alene, Idaho. The VICTIMS present consisted of several retired Christian Missionaries and senior citizens with limited financial resources.

Some of the investors allege that they were shown documents that demonstrated annual returns of 100%. It was indicated that at the least the investors should see a return of 3 to 5% a month.

Further it was promised that in the worst case scenario the investors would never lose more than 5% in any one month and should the investors desire they could immediately withdraw their investment at anytime with 30-days notice. In short the pitch was that the investment was fool-proof”

Cooney who purported to be a Christian minister, a man of God of unshakable integrity, supported Mitchell’s claims stating that he had over $1,500,000.00 (One Million Five Hundred Thousand Dollars) invested in Mitchell’s program and was experiencing huge returns to the tune of hundreds of thousands of dollars.

The two men worked in concert to entice and induce the various investors into giving them money. In fact it was stated by Mitchell that Cooney received compensation for assisting Mitchell.

As follow-up to the group meeting in Coeur D Alene, Mitchell even traveled to Yakima Washington to meet with some of the same investors in order to perpetuate his scheme. Ultimately the group invested over $500,000.00 (Five Hundred Thousand Dollars) with Mitchell.

A few months later the members of the investment group began to receive “Margin Call” notices on their investments. Mitchell employed the services of a securities broker named “Yarjana”. When the investors came to Mitchell and Yarjana with concerns about the notices, they both directed the investors to ignore or disregard the notices that they were in fact errors.

In February of 2008, the investors discovered that the majority of their principle had been lost by Mitchell and directed them to liquidate what was left of their money. With more than 50% of their money gone, Mitchell confirmed in March that he would liquidate the account and return the money. Further he promised that he personally would “payback the lost principle” himself.

Shortly after this order to liquidate the account, Mitchell and partner in crime, Yarjana went on vacation to Mexico together without following thru with the liquidation. In short the victims lost their money. None of the promises have been brought to fruition.

When confronted with the issue Pastor Cooney’s only comment was, “It must have been God’s will”. Yet the investors discovered that when the investment program began to lose money, Cooney’s accounts were liquidated saving him the fate of the rest of the investors.

Investigation has shown that not only is Keith Mitchell not licensed to sell or market Securities, but that he previously had been under investigation by the State of Idaho for selling securities without a license and was subsequently fined some $25,000.00 and ordered to “Cease and Desist” his activities.

Mitchell and Cooney have within the last two months employed the services to two different attorneys to shield themselves from the outrage of the bilked investors. They have done everything from tell the investors to pound sand to promise to make good on the lost money.

Mitchell has on several occasions stated that he has got some Swiss Deal in the works that will allow him to pay the victims back. But, time and time again refuses to reveal any details of this purported Swiss Deal” Both of the attorneys hired to protect Mitchell and Cooney have dropped from the picture as Mitchell continued to stonewall them as well.

Fraud Alert spoke with an official, who advised that they had been brought into the matter to examine the issue from a criminal perspective and to possibly mediate the situation to resolution. However, to date, the suspects have made no substantive attempt at any type of resolution. Investigators stated that they are close to completing their investigation and will be forwarding their findings to various governmental agencies requesting official intervention.

Bottom line WARNING to the public, BEWARE of Keith Eugene Mitchell and Stephen J. Cooney. These con men will claim to be able make you incredible returns on your investments. Their claims are a SCAM they will lose your money laughing all the way to the bank, leaving you broke.

UPDATE: Cooney who is currently listed as a Director of Candlelight International, Inc. {DBA: Candlelight Christian Church} with the Idaho Secretary of State.  Is now showing his home address to be 8917 W. Cougar Gulch Road in Couer D Alene ID.

SEE ATTACHED PDF BY CLICKING THE LINK BELOW:

CandlelightChurchReg-Cooney

http://www.sos.idaho.gov/xt/?xp=\20151014\XMLPORTS_C189590_1510141216.xml

If you have any additional information that will assist in bringing these criminals to justice please send an email. Also please report your case to your local, state and federal authorities. Help us put stop to these scam artists from damaging anyone else!!.

For additional information please contact: http://www.equalizergroup.org

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