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« A Competition by Kitco | Main | Agnico, Randgold, Yamana Rise as Banks Fall! »
Tuesday
Apr212009

Ponzimonium: Beware Rampant Madoff Style Scams!

Scams 22 apr 09


Ponzimonium is a new word coined by Bart Chilton, commissioner, Commodities Futures Trading Commission as he warns investors that scams are rampant as the markets collapse and redemptions cannot be met. And its not just Bernie Madoff, there are a myriad of schemes in existence that are fleecing people this very minute. Mr Chilton suggest that investors should put their 'due diligence' into turbo-drive and check everything, even the existence of the funds office building. Buyer Beware!

Although we are all aghast at Bernie Madoff he is not the first fraudster and he will not be the last one either. The term Con Man is derived from a false confidence in a scheme or a person that is not what it first appears to be.

Some of these schemes involve elaborate processes where fictional portfolios are displayed and baseless statements are issued to the unsuspecting victims, you could be holding a piece of worthless paper right now.

Some of these operators are not registered with any of the governing bodies and are therefore not known to the regulators as outlined in this interview with Bart Chilton on BNN, just click this link.



Alternatively you could read this article by the Wall Street Journal, an excerpt is shown below:

"The Ponzi scamsters we have caught certainly didn't live low-profile lives," Mr. Chilton said. "They used their stolen money for everything from expensive cars and boats, to clothes and jewelry, homes and ranches."

The commissioner's comments come in the wake of famous cases such as disgraced financier Bernard Madoff's decades-long Ponzi scheme that bilked thousands of investors out of tens of billions of dollars and that of Texas financier R. Allen Stanford, who stands accused of running an $8 billion Ponzi scheme.



In the UK the Guardian has this item:

The commissioner of the US Commodity Futures Trading Commission, Bart Chilton, warned today of "rampant Ponzimonium". He was speaking as the biggest Wall Street fraudster on record, Bernard Madoff, failed to gain release from prison. A federal appeals court ruled that the 70-year-old must remain incarcerated until his formal sentencing in June, when he is expected to be committed to prison for the rest of his life.

Chilton said that regulators are uncovering more Ponzi schemes in the wake of high-profile cases such as the Madoff debacle and charges filed against Allen Stanford.
"Regulators are certainly seeing more of these scams than ever before," said Chilton. "Although some of the crooks are so accomplished that they are hard to detect and remain below the radar for years."





Moving on we have this piece by Morning Star:


Attempting to ride the "alternative investment" wave of the past few years, a plethora of 130/30 mutual funds have emerged, marketed to individuals or institutions unwilling or unable to take the hedge fund plunge. Also known as short-extension funds, these 130/30 mutual funds invest around a standard equity (or bond) benchmark, such as the S&P 500, and take on leveraged positions. For example, using a $100 portfolio of stocks, stocks worth $30 are borrowed and sold short, and borrowed money is used to purchase an additional $30 in stocks, for a total of $130 in long stocks and $30 in short positions. Other versions include 120/20 funds, as most funds try to stay under the SEC's regulatory limit of 150/50, which amounts to 2:1 gross leverage.




We draw your attention to the bit about 'funds try to stay under the SEC's regulatory limit' which raises a number of questions and quit frankly gives us the shudders.

Over recent months we have conducted a question and answer session with SPDR Gold Trust the largest gold holding EFT as to whether they actually had the gold they purport to own on the behalf of their clients. You can back track through our articles and draw your own conclusions.

Please take care and own some gold and silver, have it in your hands, don't brag about it and keep it in a safe place known only to you and your closest confidant.






Have a good one.

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