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Archive for April 27th, 2011

PONZI SCHEME..if it sounds to good to be true, it probably is..

Posted by andriantoangkadirjo85 on April 27, 2011

Hi,

I was inspired about this PONZI SCHEME thing after I came across an article in Yahoo!Finance ‘ Retired Bus Drivers Lost Everything in Ponzi Scheme ‘.  What is really PONZI SCHEME? According to Wiki : IT IS THE DESCRPITION OF ANY SCAM THAT PAYS EARLY INVESTORS RETURNS FROM THE INVESTMENTS OF LATER INVESTORS. This scheme was bringing in cash at a fantastic rate, but the simplest financial analysis would have shown that the operation was running at a large loss.  As long as money kept flowing in, existing investors could be paid with the new money. In fact, new money was the only way this Ponzi Scheme had to pay off those investors, as this scheme made no effort to generate legitimate profits. This kind of scheme have happened in countries around the world.

So the questions are what makes this scheme possible and why this scheme got so many victims? Some people even mortgaging their homes and investing their life savings.  Despite GREED (offer high return), Ponzi Scheme are CONFIDENCE GAMES. To be truth, anyone can be taken by this Ponzi Scheme ..NO EXCEPTION. Each scheme seems to have their own target, ‘passion group’, as they called it. The people who say they would never get victimized are also in ‘passion group’, ’cause they will use your confidence against you and you would fall for it. Man more so than women. Women are actually harder to victimized because their ego and self-confidence aren’t as likely to get the best of them. And woman like to ask questions and talk about things . Ponzi Schemers hate this. Men assume they know everything. It is so easy to take a man. It is almost like dating if you are Marlyn Monroe. Men are so dazzled by the attention, they won’t even know you are robbing them blind. One more thing : Most of these people were introduced by someone already in the schemes.

How many times does this sort of thing have to happen..Ponzi Scheme..? Don’t we read about them all too often? Wake up people..! Below, I wrote 2 cases Ponzi Scheme.. 1 in my country Indonesia & the other  in Uncle Sam country.

1. DRESSEL INESTMENT LIMITED

Dressel Investment Ltd used its agent in Indonesia, PT. WAHANA BERSAMA GLOBALINDO, to perpetrate the scheme which targeted the potential investor from Indonesia. They operated from 1997 to 2006.

This company, Dressel Investment Limited, launched 2 investment products, SPORTMANS (Strategic Portfolio Management Scheme)& GMP(Global Market Portfolio) , promised their clients high returns of between 24% and 28% per year on such a small investment, min $5,000/unit, for 6 months periods. Thousands of indonesian investor  got victimized by the scheme. This company raised at least $150 million nationwide.

The fund manager (they called it that way) of Dressel Investment Ltd met with Indonesian potential investor first in May, 2001 at Grand Hyatt Hotel, Jakarta, Indonesia. Officially led by Donald Sherer & Joseph Yau, they claimed that Dressel was negotiating with the Cayman Holidays Government for 15 yrs tax-holiday incentive, something believed never happened. Sherer also portrayed himself as a successful investments advisor, so did Joseph Yau. Both of them falsely promising high investment returns through stocks, bonds, gold, real estate and others premium projects. Sherer also insisted these investments were all safe and the money would be handled very2 professionally. He encouraged them to invest their money through Dressel’s products..SPORTMANS & GMP.

The second meeting was held in September 2001. Also by Sherer & Yau. Sherer duped the potential investor by falsely claiming that he was years on foreign financial markets & taught financial management. They distributed Dressel’s brochures to potential investors. The brochures also named Kenneth McCabe & Michelle Sherer as a professional investment advisor, which were not. The brochures also named Dwight Williams as its company lawyer and Tanner LC as its accountant. At last, the brochures also including bank account and routing info of Dressel in Regal Financial Bank, to which the potential investor could transfer their money.

The third meeting was held in June 2004, at Hyatt Regency Hotel, Bandung, Indonesia. Danny Wong, Dwight Williams, Donald Sherer & Michele Sherer attended this meeting. They always falsely claiming high return 24%-28% per year from Dressel to the potential investor & told them that Dressel could make avarage profit 40% per year. This representation was really a scam!! Dressel placed only a minuscule fraction of the investors’ money in legitimate investments!! Instead of taking steps to protect the investors’ principal investments, Dressel misappropriated virtually all of their money to among other things, eg. started & financed their individual own business and lived a lavish lifesytle, included helicopter for themselves.

The fourth meeting was held in July 2004 at Shangrilla Hotel, Surabaya, Indonesia. Danny Wong, Donald Sherer, Michelle Sherer, Dwight Williams attended this meeting. Here, they told that Regal Financial Bank was partly owned by Dressel. Danny Wong also told that Dressel invested their money through out companies around the world, in China, Japan & Europe, which was not. All the money went to individual to started & financed their own individual bussines & to live a lavish lifestyle.

Dressel also launched a web site in Pebruary 2001, which contained so many misinformation & misrepresentation about data being manipulated by Dressel. The data falsely claimed about the qualification of Donald Sherer, Michelle Sherer, Kenneth McCabe, David Thacker & Kelly Thacker as experienced, professional investment advisors for years, which was not !!

In September 2006, Dressel stopped payment to investors because the Ponzi Scheme were disclosed. No money from investors came in anymore. All the existing investors’ money in Dressel Investment Ltd at least $150 million from thousands investors throught out all Indonesia region ( Jakarta, Surabaya, Bandung, Makasar, Medan) were all been screwed !!

Dressel Investment Ltd really a scam!! Rather than making any actual investments, Dressel in fact, operated a Ponzi Scheme, in which new investor money was used to pay interest to existing investors, financed their individual own bussines & live a lavish lifestyle. What really a scumbag!!

2. Mitchell Ponzi Scheme

Retirees duped in Ponzi Scheme..Yup, it is tragic. Here’s the story :

Thomas L Mitchell, 64, through his investment advisory firm Mitchell, Porter & Williams, Inc (MPW) operated two entities, the Adivanala AA Investment Trust (the “AAA Trust”) and AB3, Inc., (“AB3”), which collectively raised at least $14.7 million from 82 MPW clients nationwide, most of whom were retired as  transit operators by the Metropolitan Transportation Authority, according to the U.S. Attorney’s Office.

The Commission’s complaint alleges that MPW’s clients, many of whom are recently retired bus operators, were referred to the firm by former colleagues. According to the complaint, Mitchell met with the clients, and encouraged them to take their retirement pensions as a lump sum payment, rather than a monthly annuity. The complaint alleges that Mitchell advised MPW’s clients to invest their retirement money in a promissory note offered by the AAA Trust and AB3. The complaint further alleges that the promissory note offering carried fixed interest returns ranging between 10-15% per year for 3-6 year terms. The complaint alleges that Mitchell made various claims to investors as to how he could generate such large returns, including investing in stocks, bonds, and real estate.

Mitchell portrayed himself as a successful investment adviser, falsely promising high investment returns through stocks, bonds or real estate.  Mitchell also reportedly insisted his investments were safe, falsely telling at least one victim that her money was insured by the federal government. With these and other bogus claims, Mitchell convinced victims to transfer their retirement funds from their employers’ retirement plans into accounts that he controlled, according to federal officials.

Mitchell’s Ponzi scheme, which operated from 1995 to 2010, “placed only a minuscule fraction of the retiree victims’ money in legitimate investments,” according to the plea agreement. The complaint alleges that between April 2009 and December 2009, the AAA Trust raised approximately $1.4 million from 6 investors. According to the complaint, $1.1 million of these funds were used to pay interest to existing investors, and another $300,000 was diverted to MPW, which Mitchell used to pay his living expenses. The complaint alleges that during this time, the AAA Trust only invested $32,000 worth of investor funds.

“Moreover, instead of taking steps to protect the retiree victims’ principal investments, (Mitchell) misappropriated virtually all of their money to, among other things, live a lavish lifestyle,” which included a luxury apartment, three luxury automobiles, expensive vacations, high-end restaurants and tickets to sporting events and shows, according to the U.S. Attorney’s Office.

The Commission’s complaint, which was filed in federal court in Los Angeles, alleges that, rather than making any actual investments, Mitchell and the other defendants in fact operated a Ponzi scheme, in which new investor money was used to pay interest to existing investors. At last, The Securities and Exchange Commission (“Commission”) obtained an asset freeze and other emergency relief to halt an ongoing Ponzi scheme targeting retired bus drivers living in the Los Angelesarea.

andriantoangkadirjo85 bottom line

There have been scammers out there since the beginning of time. Any sensible person should only make investments with reputable persons and institutions insured by the government (FDIC, SPIC, LPS, etc). Making investments can be a gamble no matter what..but never trust your money to someone without being fully informed. You need to understand what you are investing in and with whom and what the risk are. These criminals get away with it because there are plenty of people who believe what they tell them without a true understanding of what the investments are and how legitimate investments work. Don’t put all your eggs in a stranger’s basket.

– Need new legislation for this kind of crime.

– It doesn’t make any difference whether you lose a little or a lot, how or with whom you invested, the older you get the more likely you are to get sick and “catastrophic illness casino” can screw your money too.. always be prepared & bewared I think is the best way to live in this world.

So, what do you think ? Have you any comments or experiences, please feel free to write your comments below. Thanks



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