A Scam That Keeps On Rolling

submitted by Willow Arune (1998)

"Have I got a deal for you. You see, the banks have been making money for years - massive profits - authorized by treaties after the World War Two. They issue debentures and letters of credit and trade them amongst themselves. This is controlled by the IMF; "traders" have to get a number from the Federal Reserve in the United States. They trade bank debentures issued by the top 100 banks. Sometimes (or in the alternative) short term letters of credit. The volume is very high, and the trading takes place in tranches (derived from the French for 'slice'). Trades occur in cycles, and every trade makes a profit. In a few days, you can make a fortune..."

Or lose it, your house, farm and retirement plans. In fact the option to gain is not present. Just say, you will lose it...

This scam seems to be growing in popularity in western Canada. Going by the names "trade program", "roll program" or "bank debenture program", great returns are promised. From as low as 10% per month to 200% per year. And, of course, with all this money you should get an offshore I.B.C. ("International Business Corporation") which will save you all those taxes and keep the government from sticking its' nose into your business. You can get a secured offshore credit card because later on you will have all the security you want, able to use standard ATMs to gain access to all that money. With no record, anywhere. Buy whatever you want, live in luxury - just take a little risk and believe...

I have followed those involved in these programs for over eight years. They live on a promise. Sometimes the promise is not enough - they have lost family farms, houses, everything. They are in debt up to their eyebrows. From small towns to large cities, people fall under the spell of this scam. So much so some have refused to talk to investigators or press charges - that would, even after years of promises, stop the dream of returns.

It is tempting. You are approached or urged to call a person who tells you all about the programs, normally in a fashion that is impossible to verify. After all, this is very sensitive and secret material. But the profits are astounding! You may get some documentation, normally shoddily prepared, that bears no relationship to what was discussed. Take it to a lawyer and he will just shake his head. But the deal sounds so good.

Off you go to the bank to convert you dollars to American and forward this on. All of this happens in American dollars. You know it will work, even thought you are hard pressed to understand it. You are one of the select - able to join a pool of investors and advance money to the trader, through your broker. And the trader sits with the bankers every day in exotic locations, busily at work. 

With all this action, vast amounts of funds are needed - that is why you are pooled with others (there are special deals, with direct meetings with the bank, if you invest over a certain amount, normally several million dollars). So your investment is placed in a big pot and you get paid pro rata with the others.

Now, you have put in a large amount on faith. In a matter of weeks or months, all that money will start to roll in your direction. 

Naturally your mind starts to plan. You look at houses, visit car lots, pause at the diamond counters and plan for your new and wealthy future. You visit businesses that you may buy and real estate developments that you might fund. At this stage, all is full speed ahead. The broker is calling you with good news on a regular basis and always has an encouraging word. The conversation is full of large deals. Hydro-electricity. Cross channel tunnels. Big petrochemical developments. It is fantastic and you are part of it. You start to read the international section of the business news with a knowing nod - it is just as your broker told you. (Of course, he may read the same paper...). There are hints of even bigger returns. Would you like to own a hotel in Jamaica - a few of the group are getting together and they were wondering... 

The first delay is that not everyone sends in their money. You have a chance to put in more! Some poor fools did not invest and your trader needs a minimum of $X. Now he is in trouble with his banker friends as he was committed to the deal. So, unless we all get together and raise more, nothing will happen and you will just get your money back. No problem, but no profits either. Everybody puts shoulder to the wheel and more money comes forward. Now the trading can start, the tranches are ready...

A fun thing happened on the way to the bank. The money seems to have disappeared.

The excuses are fantastic. It takes a real believer - and everyone is at this stage - to continue. There are problems with getting together with the bankers - after all, no international bank works on Friday, and Monday nothing gets done. That is a delay. The funds are ready but were wired to the wrong bank, or were held because some of the paperwork was not completed, or has to clear customs. The trader got delayed by the carnival in Rio. I have seen this stretch out from weeks, to months, to years. Somehow, all keep the faith through thick and thin. There are faxes and letters explaining, in some way, all the delays. Mostly it is the nasty governments and banks that put all these obstacles in the way. The paperwork has to be done, again and again. Never right. Funds get wired (never on Monday you Friday) to so many wrong places, or get sent but called back due to missing paperwork. Well, if it was easy, everybody would do it.

A pattern seems to develop. Monday - all looks good. Tuesday, a small problem but one that can be set right easily. On Wednesday, the problem is getting bigger, but should be solved by Friday. Thursday, it is really too late and nothing happens Friday, so it will happen next week. And on, and on, and on...

The people who invest in this scam tend to be suspicious of government and big banks. That is one tool used by the vendors. It is all very secret, or THEY will find out what is going on and put a stop to it, and your profits. A non-disclosure agreement is signed by you to restrain you from telling others about this fantastic deal. (But if you have a friend with some money, then...). Of course, there is no prospectus, no licensing, no full disclosure. And, try as you will, nothing can be checked. After all, this is all secret.

The paperwork that goes with this type of deal is sparse. Often it is primitive. But these are people of honour and integrity. Strange, isn't it, that all these movers and shakers work out of their homes, without secretaries and assistants, receptionists or any staff. Well, that is because they run a tight ship and don't want too many people in on the secret. And they have to fight government at every turn along with the wicked banks. "Loose lips sink ships".

It would be nice if the brokers of these multi-million dollar deals "walked the walk" in addition to talking the talk. But most I have know live in small rental premises, work out of home and drive rather ancient vehicles. Certainly no overt display of wealth. Many are tied in with multi-level marketing schemes in some way, if you scratch hard. Just to put the government and banks off the trail... 

Sure...

In most cases the brokers seem to really believe. They are converts. Most appear to be sincerely convinced that they are part of a wonderful program. Now, it has not made money YET - but that just takes faith. It will. At one point, I attributed this belief to an undiagnosed mental disorder and this many not be far off the mark. They are very believable, very convincing. They truly do believe or so it appears. And by being believers, they add others to the list of involved parties or new brokers to the list - people who need to believe, for whatever reason.

There is even a book available on the Net. A gathering of articles from all over the world, from reliable journals, but NONE OF IT TIES TOGETHER. Read it all - it all makes perfect sense. But none of the threads link, and certainly the deal as told to you comes nowhere close unless you really stretch you mind and believe. And if you are in this deep, you do. You have no choice.

One international firm suggests calling the FBI if approached on one of these transactions. Yes, and the RCMP for us in Canada. The Alberta Securities Commission is currently investigating one of these, for over $22 Million lost. That is only the tip of the iceberg. In the western United States and Canada, the home of the anti-government and anti-banking circles, much more has been lost. 

"Arbitrage" is a recognized way of making money, and is closest to this type of transaction. That is the allure, for we all remember the massive profits of the arbitrage of the 1980s. This is our way of getting a piece of it. 

I have known many who invested in this type of program. Without exception, all have lost whatever monies were placed in the scheme. If you want to join their numbers, go right ahead. But at least sinking the money in a boat gives you some fun...