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Investment fraud, some gems exposed by the SEC...

Anything related to investing, including crypto

MJ DeMarco

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Been monitoring the SEC website for some "news" in light of an investment talked about around here that might be falling apart.

Found these little gems... some investment scams exposed just in this month alone.


The SEC’s complaint alleges that from at least July 2016, Espinal and Cash Flow Partners deceived investors into believing that they were investing in a pooled fund that would purchase and renovate houses, and then flip the houses for profit. Espinal and Cash Flow Partners allegedly guaranteed investors rates of return between 1.25% and 4% per month. The complaint alleges that, in reality, Cash Flow Partners’ purported real estate “fund” owned only two residential properties, neither of which were ever sold. Instead, Espinal allegedly used money from new investors to pay monthly “returns” to other investors, to bankroll his personal living expenses, and to sustain his separate fraudulent bank loan scheme.

“As alleged in our complaint, Espinal exploited his shared ethnic background to entice members of the Hispanic community to invest more than $5 million with Cash Flow Partners,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “Protecting retail investors is a Commission priority, and we encourage investors to use the resources available on the Commission’s website to help identify risks and red flags, such as promises of guaranteed returns.


The SEC's complaint alleges that Springer and SFA received millions of dollars in undisclosed compensation and other benefits for recommending certain investment products while claiming that they did not have any conflicts of interest. According to the complaint, many clients learned of Springer through his radio show, "Smart Money with Keith Springer," and Springer misled prospective clients into believing he was selected to host the show because of his industry expertise. In reality, SFA paid to broadcast the show. The SEC's complaint further alleges that Springer went to great lengths to hide prior charges by the SEC and his disciplinary history with the New York Stock Exchange, hiring internet search suppression consultants and instructing employees not to provide the information to prospective clients.

For more...


The best way to know something is a scam before it happens is to know the numbers. When they don't work, the investment won't either. Many times these scams succeed because folks like to ignore the numbers and just assume they work. Finance can be complicated like that and these people prey on that fact.
 
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James Klymus

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Yeah it's pretty shocking to me that people won't do even a tiny bit of due diligence.

It reminds me of Theranos, where they didn't have the technology they claimed to. The companies valuation was in the billions, and no one bothered to visit the building and see the technology.

It goes to show that anybody can be taken advantage of, from the guy working at a restaurant, to the multi-billion dollar entrepreneur
 

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It reminds me of Theranos, where they didn't have the technology they claimed to. The companies valuation was in the billions, and no one bothered to visit the building and see the technology.
Investors did ask to see the tech but they were told they could not see it. That's one reason Kevin O Leary didn't invest (apparently).
 

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Yeah it's pretty shocking to me that people won't do even a tiny bit of due diligence.

It reminds me of Theranos, where they didn't have the technology they claimed to. The companies valuation was in the billions, and no one bothered to visit the building and see the technology.

It goes to show that anybody can be taken advantage of, from the guy working at a restaurant, to the multi-billion dollar entrepreneur

You'd laugh at how stupid people were in 2015 when cryptocurrency was trending. There were a lot of ponzi sites that would "double your bitcoins in 24 hours" with the principle that a bulk of people deposited some amount, then more people would deposit more coins and those would be sent back to the previous investors. These sites would close within days.

Then there were escrows who were usually friends with one party, they used to scam people who trusted fair trade and then spam their accounts with negative rep and keep going.
Then there were shady gambling websites where once you deposit money, you'd never get it back. There were similar currency exchange websites.

Ah those days.

P.S: One of the most recent scams I've noticed now is kinda hilarious. There would be these bots spamming posts in pastebin and similar websites where the user id and password of a user of a crypto wallet would be leaked. If you login to that website with those credentials, you'd find 50k$ worth bitcoins. But when you try to withdraw, the website would tell that an unknown IP has accessed this account so they are temporarily locking it. To unlock the withdraw feature, you need to deposit 5-10$ to prove you're the user. It's obvious whoever deposited that amount is an idiot and he won't get it back.
 
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PapaGang

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Been monitoring the SEC website for some "news" in light of an investment talked about around here that might be falling apart.

Found these little gems... some investment scams exposed just in this month alone.







For more...


The best way to know something is a scam before it happens is to know the numbers. When they don't work, the investment won't either. Many times these scams succeed because folks like to ignore the numbers and just assume they work. Finance can be complicated like that and these people prey on that fact.

Has anyone ever wondered, why bother? It seems like it takes so much effort to keep the deception going. That's a lot of work. Why not just do something legit?

I guess the allure of fast, easy money is powerful.
 

Suzanne Bazemore

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The best way to know something is a scam before it happens is to know the numbers. When they don't work, the investment won't either.
A few years ago I was reading a transcript of the testimony in the Bernie Madoff trial that I had found online. His scheme had roped in so many people, including top banks and accounting firms, but what I found fascinating were the ones he didn't get. One guy who was with a big investment firm said that the math just didn't seem to add up to him, and if he couldn't get his head around the math, then he would pass on the investment, so he passed on Madoff.
 
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MJ DeMarco

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Has anyone ever wondered, why bother? It seems like it takes so much effort to keep the deception going. That's a lot of work. Why not just do something legit?

Very true, I always thought that some of the notirous big scammers would be successful if they just focused their energy correctly. The problem is, these folks don't want to WORK for a real, legit productocracy ... so the scam becomes their instant productocracy. Scammers know that productocracies prints money.
 
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PapaGang

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Very true, I always thought that some of the notirous big scammers would be successful if they just focused their energy correctly. The problem is, these folks don't want to WORK for a real, legit productocracy ... so the scam becomes their instant productocracy. Scammers know that productocracies prints money.
True.

Maybe sometime in the future I'll write about a relative of mine that was unwittingly wrapped up in a 340 million dollar ponzi scheme that the FBI busted. It's a crazy story.

 
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Andy Black

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Has anyone ever wondered, why bother? It seems like it takes so much effort to keep the deception going. That's a lot of work. Why not just do something legit?

I guess the allure of fast, easy money is powerful.
I worked for a business that was doing grey-hat stuff and adding little value to the world. They couldn’t go straight even when they tried. The time investment in building products was too much for them compared with shiny arbitrage opportunities. They eventually got shutdown.

I too always wonder about the folks with the smarts to get profitable with strategies that don’t benefit from repeat business and referrals. If they’re smart enough to make €50k/day without collecting a single email address or long term customer, then what would happen if they went legit?

But alas... how you do anything is how you do everything.
 

PapaGang

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I worked for a business that was doing grey-hat stuff and adding little value to the world. They couldn’t go straight even when they tried. The time investment in building products was too much for them compared with shiny arbitrage opportunities. They eventually got shutdown.

I too always wonder about the folks with the smarts to get profitable with strategies that don’t benefit from repeat business and referrals. If they’re smart enough to make €50k/day without collecting a single email address or long term customer, then what would happen if they went legit?

But alas... how you do anything is how you do everything.
Exactly!
If they can be profitable without repeat business, think how great they might be with a legit enterprise and loads of referrals and good reviews.
 
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The SEC's complaint alleges that Springer and SFA received millions of dollars in undisclosed compensation and other benefits for recommending certain investment products while claiming that they did not have any conflicts of interest. According to the complaint, many clients learned of Springer through his radio show, "Smart Money with Keith Springer," and Springer misled prospective clients into believing he was selected to host the show because of his industry expertise. In reality, SFA paid to broadcast the show. The SEC's complaint further alleges that Springer went to great lengths to hide prior charges by the SEC and his disciplinary history with the New York Stock Exchange, hiring internet search suppression consultants and instructing employees not to provide the information to prospective clients.

For more

Keith.png

:rofl:
 

MJ DeMarco

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Jon L

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This is pretty cool.

I did something similar when I was looking into getting my private pilot's license. The FAA has a website that lists all crashes. The vast majority of crashes are cause by pilot error, and most of those happen because the pilot gets into a situation that they don't have enough experience for, but decide to keep going anyway.

Investments are similar - don't invest in something where you don't know how the investment works
 

MJ DeMarco

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WillHurtDontCare

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Yeah it's pretty shocking to me that people won't do even a tiny bit of due diligence.

It reminds me of Theranos, where they didn't have the technology they claimed to. The companies valuation was in the billions, and no one bothered to visit the building and see the technology.

It goes to show that anybody can be taken advantage of, from the guy working at a restaurant, to the multi-billion dollar entrepreneur

Mark Cuban, Jim Mattis, Walgreens. There were some big names who got suckered in over that.

Here's a good book on Bernie Madoff's Ponzi Scheme. A lot of people who invested with him thought that he was running a scam because he had consistent returns each month (that does not happen) but they didn't care because those returns were so good that a lot of intelligent people looked the other way.

It also highlighted the incompetence of the organizations (like the SEC) that should have discovered and stopped his scheme, as well as the agency problem of big investment firms who were happy to give Madoff millions of dollars in exchange for reliable commission checks.

If you give someone your money, vet them ruthlessly and make your own decisions. There are no guarantees that you will get it back.
 

MJ DeMarco

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Tommo

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In related news...


More goodies from the SEC...
Joe Gorga is so smart he even changed the skyline in the background, must of been hard work.
 
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MJ DeMarco

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lludwig

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MJ DeMarco

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I'm thinking about becoming a professional whistleblower... I can spot the scams a mile away.

It pays well.



The SEC website PR page is still one of my favorite reads -- I love it when bro-marketing scammers are caught red-handed.

Income Store! 20% guaranteed for life!! LOL.
 
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Jon L

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I'm thinking about becoming a professional whistleblower... I can spot the scams a mile away.

It pays well.



The SEC website PR page is still one of my favorite reads -- I love it when bro-marketing scammers are caught red-handed.

Income Store! 20% guaranteed for life!! LOL.
Now to find something to blow the whistle on...
 

PapaGang

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I'm thinking about becoming a professional whistleblower... I can spot the scams a mile away.

It pays well.



The SEC website PR page is still one of my favorite reads -- I love it when bro-marketing scammers are caught red-handed.

Income Store! 20% guaranteed for life!! LOL.
You could set up another entrepreneur forum 'honeypot' site that attracts bro scammers.
This way, all the work is done for you.
 

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I’m surprised we haven’t brought up Nikola yet. Yes, I know the SEC investigation is on-going, but is clear major fraudulent activity is going on there.

I expect some of the companies that either had reverse mergers or buyouts via SPACs this year to be exposed as frauds. Nikola being one of the largest.

Now that I am in this world, its amazing how easy it is to defraud people. Honesty always wins in the end though, so you won’t catch me in those SEC press releases ;)

I love reading these press releases and stories though, I’ve always been a bullshit sniffer.
 
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BizyDad

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MJ DeMarco

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