And Justice For All? Getting Away With Investment Fraud

The following is a personal story involving  events which took place years earlier.

It is example of Danger #8 of the Ten Dangers of Investing.

These events partly gave rise to the development of a platform focused on providing financial honestly.  Thus, Money Uncensored was born.

Looking back, here’s what happened.

I wrote an article on behalf of the investors of a reputable lending company. These investors were looking for answers as to why their monthly interest payments had suddenly stopped after 13 years of no issues.

In the article, I politely asked some direct questions including the reason for the interest payment stoppage and a bunch of other questions important to confirming the sanctity of the lending company’s business model.

I also contacted the lending company for feedback on the article. This investment was absolutely rock solid and I was just asking some basic questions.  It should have been impossible to collapse…unless there was something going on we didn’t know of.

After being politely threatened with a Cease and Desist, the article went viral to all the right people.  Almost immediately, investors notified a securities commission and a national paper about the article. They both tracked me down to get more information. Lawyers contacted me. 

An uber-famous reporter engaged me in several conversations to learn more. He was involved in the initial media reporting just before moving on to infamously break one of the biggest international stories of the 21st century.

Looking back,  I realize now that I wrote an article which greatly assisted in exposing massive investor misinformation.

An investigation led to discovering a major circumvention of the investment business model and an illegal $200 Million+ laundering scheme.

Allegedly, this is how they got away with it.

The scheme surrounded the claims that the reputable lending company was using investor money for  “Factoring Loans” to vetted companies.

In return, the investors received between 7% and 12% annually in monthly installments.  Each factoring loan had creditor insurance in case any loans were not repaid.  The factoring company was also supposed to have about $2 in collateral for every $1 they lent out.  Like I said, this was a rock solid investment…unless there was something going on we didn’t know of.

During the last years of the investment, hardly any factoring was done and hardly any real assets were pledged against the loans.  This rendered the creditor insurance useless.  In reality the majority of the funds were “loaned”  to companies the leader of the lending company controlled.

INTERNAL FRAUD ALERTS claims.
The leader utilized several shell companies.  He loaned the money to himself and then consequently bankrupted the borrowing company leaving him with an enormous amount of stolen money, which he allegedly laundered and hid. In order to continue perpetuating this scheme the investors received monthly payments  until three years ago when apparently the new investor money coming in was no longer enough to keep the scheme going.

Three years later, two provincial securities commissions banned the company, its subsidiaries  and its primary owner from selling securities.  There were bankruptcy proceedings in process for these defunct companies.  Investors have received 3%  of their investment funds back.  And that’s pretty much it.

Everyone on the securities, auditor, media and ownership side seems to have “moved on” with investors still being confused victims.

So basically one or a group of people committed large scale fraud and simply walked away with $200 Million+ and didn’t properly explain in simple English to the investors where the rest of the money was laundered to.   So where has all the money gone?  Who else helped perpetuate the situation and why haven’t they been named?

There comes a point when the answer to these question may be “I don’t want to know”.  

Nothing about the finality of this case made sense.  Everyone seemed to deliberately avoid answering real questions.  The securities exchanges didn't answer questions. The auditors didn't answer questions.  Their legal paper work shows there is an avoidance of properly acquiring certain answers. And of course the main players of this scheme certainly avoided answering questions.

Like I said, there comes a point when the answers to these questions may be “I don’t want to know”.  Why?  Because you never really know how high this goes up...if you get my drift.

Sadly, this is not the only case I know of like this.   Money talks and it can buy you a lot of time and legal obstacles for the legal world to cut through.

This investment was once highly coveted by the dealers that had exclusive rights to sell it. The CEO of one of those dealers did everything to stop me from selling it after I left his firm.  He took steps to destroy my career in order to never work in this business again, as described by people who heard him say so.  Obviously that didn't work out well for him.

If there is a lesson to learn from all of this, I don't really know what it is. I just know that I wish people were more honest, less cutthroat, did more due diligence and had more integrity.

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The above article is a personal story involving a series of unfortunate events which took place years earlier.  It is one of several stories which gave rise to the creation of the original Money Uncensored series of lectures, strategies and articles.