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Thread: Investing with an Eye on Fraud Prevention

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    Investing with an Eye on Fraud Prevention

    For the most part I wanted to do something on "segregation of duties" in avoiding Ponzi schemes. Even if something doesn't start out to be a scam, people change. In more than one instance bad returns have led to doctored accounts and fresh money paying old clients. Conversely, little if anything I have ever seen promoted on the internet by unlicensed individuals warranted a second look. Would say if you are wondering about an opportunity viewed on Youtube you can stop reading now, but it does take some time to cobble this stuff together so humor me.


    A Ponzi is one the simplest of scams to set up and execute. A promoter creates a story of how they are going to generate returns, collects money, and pays old investors with money from new investors. The buzz feeds on itself since investors are being paid and are encouraged to recruit people they know, usually for a commission. This will last as long as they the perpetrators keep the money in their pocket, and/or find fresh money for the scheme. Once withdrawals exceed available funds the excuses start and the scheme will collapse.

    Sounds trite, but the first step to being conned is sending someone your money. Before writing the check nail down who will be reporting your account balances and who has access to your money. Let's say you hire a money manger to invest for on your behalf. They may have permission to make trades in your account, they should not have access to transfer funds out of your account. An independent third party like a major broker or bank should be producing and mailing the account statements. The investment adviser may be mailed a COPY, but should have no access to the original, and it must be mailed direct from the custodian to you. (Once this chain is broken, the potential for fraud is magnified.)

    A redundancy can be placed on top of the above with email or text alerts that notify you of any account changes or requests for funds.

    If an investment situation involves writing a check to the the promoter, them producing the statements and processing requests for funds watch out.

    http://www.ey.com/Publication/vwLUAssets/EY_Segregation_of_duties/$FILE/EY_Segregation_of_duties.pdf

    *The above link has some useful ideas for business owners to avoid employee theft.
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Above I said for the most part, there are a few links I often refer back to in writing about scams and wanted a useful place to dump them. Additionally there are things I read of interest to me on investing in general. For the purposes of this thread I will post them with an eye on keeping money safe from predators. The caveat being, I am not an investment professional, not an accountant, not an attorney, not a broker, insurance agent, or super hero and am not giving advice. That said, considering some of the garbage I see passed off one could do worse...

    Some links to agencies that provide a wealth of information on avoiding scams and due diligence. There are probably 1000s of scams written about on this website and I doubt any did not show at least some red flags listed below well before they imploded. Many possess all the warnings and people still want to argue that they somehow have found a program that really works. Can't save them all.



    How to Recognized an HYIP/PONZI Scam

    The promise of high daily, weekly or monthly returns.
    An offer from the company to pay “referral fees” to investors for bringing in additional investors.
    The use of social media to spread the word and praise the program.
    The promoter provides very few details about who runs the company and how profits are generated.
    The promoter may require that the investor open an e-currency account to invest. E-currency accounts are not licensed as a money transmitter.

    Informed Investor Advisory: HYIPs - NASAA

    What are some Ponzi scheme "red flags"?

    Many Ponzi schemes share common characteristics. Look for these warning signs:

    High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any "guaranteed" investment opportunity.

    Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.

    Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company's management, products, services, and finances.

    Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.


    Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb.

    Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised.

    Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to "roll over" investments and sometimes promise returns offering even higher returns on the amount rolled over.

    If you are aware of an investment opportunity that might be a Ponzi scheme, contact the SEC by phone at (800) 732-0330 or submit a tip online at sec.gov/complaint/tipscomplaint.shtml.

    SEC.gov | "Ponzi" Schemes

    SEC.gov | Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs

    SEC.gov | Pyramid Schemes

    https://www.sec.gov/investor/pubs/te...toconsider.htm

    SEC.gov | Five Questions to Ask Before You Invest

    https://www.sec.gov/contact/addresses.htm

    On checking investment professionals, review both state and federal databases as they aren't always synced up.

    SEC.gov | Protect Your Money: Check Out Brokers and Investment Advisers

    BrokerCheck Search Help | FINRA.org
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Lines are often blurred between what is a Ponzi and a Pyramid Scheme, some of this is likely intentional on the part of promoters. A security offered to US citizens must be registered with the SEC even if the company offering it is located elsewhere. Watch out for things like clicking ads or auction bids to make it appear like something is not an investment. It helps to run an offer though the filters for both a Security and Pyramid Scheme. If it walks duckish and quacks duckish close enough for me to consider it a security, hence it should be registered. Your money though.

    Often people will ask "if it's illegal, why hasn't it been shut down?" There are 1000s of these scams running at any one time, some by people that that have done nothing else for years. The law is what it is, some schemes get closed down, others won't just like any other criminal enterprise. Even if arrests are made, investors are seldom made whole. Those that turned a profit may be subjected to clawbacks and have to deal with taxes they paid on phantom gains.

    As with many things in life, knowledge is power. Better to be on the ground wishing you were in the air, than in the air wishing you were on the ground.


    Howey Test to Determine if an Investment is a Security

    The 1946 U.S. Supreme Court case of SEC v. W.J. Howey Co. provides the precedence to determine what a security is. According to the Howey test, an instrument is only a security if it involves an investment of money or other tangible or definable consideration used in a common enterprise with a reasonable expectation of profits to be derived primarily from the entrepreneurial or managerial efforts of others. The form of the security (whether it is a formal certificate or nominal interests in the physical assets employed by the enterprise) is irrelevant.

    http://www.legalandcompliance.com/se...is-a-security/

    https://supreme.justia.com/cases/fed.../293/case.html

    Koscot case has been referred to in every suspect pyramid scheme.

    (1) Payment of money to the company;
    (2) The participant receives the right to sell a product (or service);
    (3) The participant receives compensation for recruiting others into the program;
    (4) The compensation is unrelated to the sale of products (or services) to the ultimate user.



    A (MLM) Skeptic: MLM Dictionary: Koscot Test
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    I like AAII as an organization for investors. Personally I don't pick individual stocks or follow their model portfolios, but they have some great articles and useful tools.

    2) Question where your money will be held.

    Regardless of who is making the investment management decisions (an investment advisory firm, your advisor on his own, or if you must sign off on each financial decision), a financial institution will have custody of your money. Make sure you know which company it is, and how you can contact the company. This firm, typically a broker/dealer, bank or trust company (known as the “custodian firm”) is required to provide you with at least quarterly financial statements, and most will provide them monthly. Make sure that these statements will be coming to you directly from your custodian firm—not from your advisor.

    Red flag: Ask if the account will be held in your name. If you do not have access to an account (as in a private investment) or daily ability to make withdrawals (as in a hedge fund), press harder for even more information about the custody of your assets and the reliability of the custodian. AAII: The American Association of Individual Investors

    ================================================== =========

    Find out who will be handling the closing of this investment? Are you giving them a check made out to their company? Maybe your attorney should handle all paperwork and work on your behalf to help verify whom you're dealing with.

    Ponzi Schemes 101: How You Can Avoid Being a Victim - DailyFinance
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    I can't come up with too may scenarios where some checks and balances can't be built into an investment program to minimize the risk of fraud.

    A few like crowdfunding or investing with the guy at the gym where someone might take a flyer on a great sounding story. My overall feeling is deals like that should only be done with money that could literally be set on fire and laughed at while it burned. Yesterday I read about a guy that went "all in" on a program with $50 and was waiting for payday to get some more. Not the type of person I think should be taking risks like this. If someone had $100,000 and tossed $5000 to their brother in law and didn't expect to see it again that's a little different. Or maybe its worth investing $5K not to see your brother in law again, life is about making the hard choices.


    To avoid ruin diversification across asset classes, time frames, brokers, investment styles etc. makes sense to keep the wolves where they belong. Diversification Definition | Investopedia

    Speaking for myself, there have been times when things were going great I thought I was a genius, times when they were going to hell as I was puking on my shoes over how stupid I was. These are the times I have made some of the dumbest decisions of my life. A well rounded plan smooths out the highs and lows and helps keep the siren song of the snake oil peddlers and your own demons to a minimum. When the stock market crashes, the real estate gurus will surface, both of those markets in the dumps, here come the options and FX hucksters, none of that working say hello to the hard asset peddlers.



    Two threads below I really enjoyed with plenty of links to investment stuff.


    This guy has an ad on Bloomberg radio right now that makes it sound like he is a former Wall Street Insider http://www.realscam.com/f12/steve-si...nstitute-3092/ I don't know when he would have found the time since he has been on the seminar stage for years.

    This guy was a complete train wreck for many people's finances. http://www.realscam.com/f8/elevation...-dillard-3445/

    ================================================== ===========

    All in stories of success make the news, so do lottery winners. Grifters know this and make it sound like it's the norm in an attempt to get people to take more risk than they should. Conversely, no matter how risk free the investment sounds or how great adviser has been diversification offers piece of mind. All of these guys and many other con artists were very well respected in the community. Twenty year careers, involved in charity, charismatic, able to earn decent livings without cheating, but...


    https://en.wikipedia.org/wiki/Alberto_Vilar
    https://en.wikipedia.org/wiki/Allen_Stanford
    https://en.wikipedia.org/wiki/Bernard_Madoff
    https://en.wikipedia.org/wiki/Scott_W._Rothstein
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Buzzwords such as passive or residual income. Trite quotes like "trading your time for dollars" and "don't work for money, make money work for you" can be indications of a scam. The reality of building a team of people in "business x" and spending the rest of your days cashing checks while they work, highly unlikely. So unlikely that your first question should be why is the person telling me this still here? What happened to their last 10 sit on the beach ventures that they still have to work? They like helping people do they?

    The two links below put in perspective some demographics and habits of the typical millionaire. Certainly there are exceptions, although any "investment" or "business" story that deviates too far from this is suspect in my opinion.

    Only 20% of millionaires are retirees. Around 80% still go to work

    29 Valuable Facts about Millionaires and Billionaires

    Our household's total annual realized (taxable) income is $131,000

    https://www.nytimes.com/books/first/...llionaire.html

    Too many fraudsters give the illusion of wealth and massive returns by spending every dollar that comes in, Trevor Cook comes to mind.

    Cook admits to scam - StarTribune.com

    Lastly, never assume just because others in the community are involved a deal like Cooks has been vetted. Word of mouth sells too many scams too easily.

    "New figures reveal high-earning professionals are most likely put cash into schemes which are 'too good to be true"
    http://www.telegraph.co.uk/finance/p...ent-scams.html
    Last edited by ribshaw; 07-29-2015 at 07:52 PM.
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    If someone believes there exists a cabal of top notch FX traders that will return them 1% per day...

    http://www.realscam.com/f8/http-secu...-account-3036/
    http://www.realscam.com/f37/another-...vestment-3556/

    My bias always has and likely always will be to the stock and bond markets. Again this is not to serve as investment advice, but to demonstrate some safeguards to avoid being scammed.

    Over very long stretches the market as a whole has done as well if not better than any other asset class. Yes there are individual exceptions, and no I have no idea if it will continue. I anticipate massive bear markets and periods of underperformance. We are six years into a mega bull market in the US, so no I am not saying go all in. Nor am I talking about picking individual hot stocks and active trading, simply tucking a little money away every so often in large baskets of 1000s of stocks and/or bonds.

    8 lessons from 80 years of market history - MarketWatch

    Why bring up the market at all, compound interest. Simply stashing money each month and getting on with your life away from the gurus and/or charlatans of the money world works. Oh and it's passive too, hucksters love passive but always seem to steer people away from it. Funny that.

    The extraordinary power of compound interest

    Maybe not on this scale, but much sounder than hopping from one hot deal to the next.

    Here's how a janitor amassed an $8M fortune

    A little something for the hard asset people.

    $7 Million in Gold Discovered in Dead Man's Home - ABC News

    ============================================

    Index Funds good enough for Warren Buffet's estate and his friend Lebron James, good enough for me. Indexing is an effective method to have a core portfolio kept way from the grubby hands of thieves. Something our friend from a few posts earlier could do with his $50 each month, instead of being in one company, he could own a fractional interest in 5000. I expect in that 5000 there will be some Enrons and Worldcoms, some home runs, and a few duds. What I don't expect to happen is one day waking up and finding out 5000 of 5000 where running a Ponzi scheme and all my money has vanished. I don't expect the brokerage where the investment is held to suddenly disappear with no explanation or remedy.

    From a fraud avoidance standpoint the less hands on your money the better IMO.

    Warren Buffett

    Warren Buffett to heirs: Put my estate in index funds - MarketWatch

    Fool.com: 60-Second Guide to Index Investing

    ============================================

    Putting this in practice.

    Trusts many times are set up for people that are young, can't or don't have experience handling their affairs. This leaves them more exposed to potential fraud than someone watching things lie a hawk. The examples below highlight fraud in trusts, but could just as easily be any investment account.

    The biggest problem with scams is once the money is gone, very likely it's gone for good. If you're 20 it may sting but you have time to recover losses, eighty or infirm not so much. With the index approach you can't avoid a system of checks and balances, however it should all but shut down mismanagement.


    As the trustee, Pate was legally obligated to manage the money within the terms of the trust. But with no one else watching over the trust’s assets as the years passed, the fund was empty by the time her grandson graduated from high school.

    When You Can

    The lawsuit alleged that the bank mismanaged her family trusts, and as a result cost her tens of millions of dollars.

    Wells Fargo Must Pay Missouri Woman $77M | MadameNoire
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    I'm not going to go so far as to call excessive investment fees a scam, maybe legalized theft would be more appropriate. People certainly deserve to be paid, and a knowledgeable trusted adviser may be worth paying a little extra. That said, there is a ton of expensive underperforming garbage peddled to the public.

    http://johncbogle.com/wordpress/wp-c...n-Feb-2014.pdf

    Achieving Greater Long-Term Wealth Through Index Funds

    Overpaying for Financial Advice - Barron's

    ================================================== ===========

    Forgot I had this bookmarked for an earlier post.

    12 Steps To Avoid Ponzi Schemes & Investment Frauds

    http://www.marquetinternational.com/...ment_fraud.pdf


    ================================================== ===========

    This is the last link I had bookmarked for this thread.

    I watched both of my parents suffer with Dementia and the toll it took their ability to function. Similar situations with friend's parents, and two cases that come to mind where money was sent to questionable people. A lot can happen as people age, and as indicated above once money is gone it's probably gone.

    There are a lot of pros and cons on annuities and I have no intention on weighing them here. What I did like about this little snip was setting up a monthly check where the principal can't be accessed.


    But it's for this exact reason that several actuary friends of mine bought annuities for their mothers after their fathers passed away. It was a good way to make sure their mothers wouldn't become destitute by running out of money if they lived a long life or by becoming a victim of financial fraud. Help elderly parents fight financial fraud - CBS News
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    An interesting albeit limited protection for investors of covered firms is SIPC protection.

    Your Rights Under SIPC Protection | FINRA.org

    SIPC - What SIPC Protects

    ================================================== ====

    A separate beast entirely is futures trading which is not covered under SIPC. Scandals and bankruptcies have occurred from time to time, both PFG and MF Global were highly regarded until the day they weren't.


    It now appears that regulators missed the red flags for years.

    http://dealbook.nytimes.com/2012/07/...or-years/?_r=0

    PFGBest's Wasendorf Arrested - The Audit Confirmation That Caught Him - Forbes

    A former pastor at a Florida church and a partner tried to use the 2012 bankruptcy of brokerage Peregrine Financial Group to hide their theft of $2 million from investors in a commodity trading scam, according to a lawsuit filed by U.S. regulators.

    Former pastor, partner used PFGBest failure to hide scam: CFTC lawsuit | Reuters




    It has come to NFA's attention that fraudulent emails, purporting to be sent by a person affiliated with the PFG Trustee, have been sent to certain customers and creditors of PFG. Please be advised that these emails are a scam and do not originate from the Trustee's office. The Trustee advises any customer or creditor who receives this email message to ignore and delete it. https://www.nfa.futures.org/nfa-inve...ation/PFG.HTML

    Peregrine Financial Group, Inc.: Home

    How MF Global

    Customers Get Checks From Volume Investors - NYTimes.com

    Protecting Futures Customers from Brokerage Firm Failures | farmdocdaily.illinois.edu
    Last edited by ribshaw; 07-30-2015 at 11:58 AM.
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Programs promoted on Money Maker Group, Talk Gold, Youtube, Facebook, or the internet in general end in !!!

    Promised massive and/or overly consistent returns are a sign of a Ponzi scam.


    ================================================== ==========

    Investment returns have to pass the smell test to be taken seriously. In any past year a money manager might put up triple digit returns, the virtually impossible feat is knowing who that person will be in the coming year. As they say past returns do not predict future performance. Leverage and risk also matter, if a trader is using 10X leverage their returns should be multiples of the unleveraged manager. https://en.wikipedia.org/wiki/Victor_Niederhoffer is the case study in great past performance and leverage.

    Some averages from last year, one might hypothesize most of the funds that closed didn't do so because of massive profits.

    Hedge funds, on average, have returned just 2 percent in 2014, their worst performance since 2011, according to data compiled by Bloomberg.
    In the first half of the year, 461 funds closed, Chicago-based Hedge Fund Research Inc. said. If that pace continues, it will be the worst year for closures since 2009, when there were 1,023 liquidations.


    Hedge Funds See Worst Year for Closures Since 2009 - Bloomberg Business


    ================================================== ==========

    Some P&L data on FX accounts:


    Percentage of profitable and unprofitable accounts as reported to the NFA - Q2 2015

    46.5% Profit
    53.5% Loss

    https://www.interactivebrokers.com/e...php?f=759&ns=T


    ================================================== ==========

    Which also leads to the other sleight of hand to goose returns.

    In finance, survivorship bias, also known as "survivor bias", refers to the tendency for mutual funds or hedge funds that have produced poor performance or low asset accumulations to be either liquidated or merged out of existence.
    The result is an overestimation of past returns, as these poor returning funds/national markets are dropped from the data base.


    Survivorship bias - Bogleheads

    ================================================== ==========



    Secure Investment was previously linked in this thread, this is how it ended:

    Forex Investors May Face $1 Billion Loss as Trade Site Vanishes - Bloomberg Business

    People never learn, someone pulled off an identical scam:

    Geneva Whodunit Has Chinese Up in Arms Over*$1.2 Billion Lost in Alleged*Scam - Bloomberg Business
    Last edited by ribshaw; 07-31-2015 at 03:21 PM.
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    FX and Binary options brokers must be licensed, the offshore sites are at a minimum breaking the law, worst case running a bucket shop.

    The public can obtain information about any firm or individual registered with the CFTC, including any actions taken against a registrant, through the National Futures Association (NFA) Background Affiliation Status Information Center (BASIC), available on the NFA website at: BASIC Search

    Foreign Currency Trading - CFTC

    "It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt."

    Binary Options Legal US
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Trading Systems, Bots, and Woo Peddlers

    I designed a trading system whereby a green light/buy signal flashes if the girlfriend's cat uses its litter box. A red light/sell signal flashes if the cat uses my sock drawer. My plan to sell meh system to would be millionaires for $995 a head and give up bloggin. No matter how silly enough sales volume should lead to a few success stories singing my praises. Sadly many folks peddling woo for years can't hold a candle to my kitty system or find as many raving fans. Angell, Fishback, and many other purveyors of trading acumen have been fined along the way. Paying a fine a here and there just a cost of doing business.

    As a general market education some of the stuff out there is decent if it can be had for pennies on the dollar. Seminar hits town, $3000 that night at the hotel, $50 later that night for last years version on EBAY. Other than the mark ups, the claims of 90% wins and negligible losses are very misleading. Not only do I wonder why snake oil salesmen are selling their systems if so easy and profitable, curious why the person that purchased it would be parting with such a golden goose?


    Enforcement Actions - CFTC

    Larry Williams Million Dollar Challenge | Page 3 | Elite Trader

    Ripoff Report | chris verhaegh Search of Complaints & Reviews

    Chuck Hughes services | Elite Trader

    Options - Don Fishback ODDS | Elite Trader

    George Angell Fined | Elite Trader

    Another Trading Platform Scam Ends With Prison
    Last edited by ribshaw; 07-31-2015 at 07:00 PM.
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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    Re: Investing with an Eye on Fraud Prevention

    Shocking...

    In fact, no forex trading was ever conducted through the Black Diamond trading platform, and the Black Diamond trading platform never existed.

    Forex Ponzi Scheme lands $76 million fine in non-existent Black Diamond currency trading platform case | LeapRate


    The Western Cape High Court granted an order to seize the assets of Platinum Forex - a pyramid scheme - whose sole owner is pastor Collin Davids.
    Court papers filed by the Asset Forfeiture Unit allege that Platinum Forex contravenes various financial service laws as it is not registered as a financial service provider, yet provides these services.

    CT pastor's assets worth R138m frozen

    Worth a read, although the cheap bastards that don't spring for a meal need a good vetting as well.

    Senior Investor Alert: Free Meal Seminars - NASAA
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  27. #14
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    Re: Investing with an Eye on Fraud Prevention

    Scammers love to get their hands on home equity and/or title to people's property.

    https://www.fbi.gov/about-us/investi...mortgage-fraud

    Common schemes

    Foreclosure rescue schemes
    Loan modification schemes
    Illegal property flipping
    Builder bailout/condo conversion
    Equity skimming
    Silent second
    Home equity conversion mortgage (HECM)
    Commercial real estate loans
    Air loans
    https://www.fbi.gov/about-us/investi...fraud-overview

    Reverse Mortgage Scams

    Home equity conversion mortgage (HECM): A HECM is a reverse mortgage loan product insured by the Federal Housing Administration to borrowers who are 62 years or older, own their own property (or have a small mortgage balance), occupy the property as their primary residence, and participate in HECM counseling. It provides homeowners access to equity in their homes, usually in a lump sum payment. Perpetrators taking advantage of the HECM program recruit seniors through local churches, investment seminars, and television, radio, billboard, and mailer advertisements. The scammers then obtain a HECM in the name of the recruited homeowner to convert equity in the homes into cash. The scammers keep the cash and pay a fee to the senior citizen or take the full amount unbeknownst to the senior citizen. No loan payment or repayment is required until the borrower no longer uses the house as a primary residence. In the scheme, the appraisals on the home are vastly inflated and the lender does not detect the fraud until the homeowner dies and the true value of the property is discovered.

    The FBI and the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) urge consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages, also known as home equity conversion mortgages (HECM), have increased more than 1,300 percent between 1999 and 2008, creating significant opportunities for fraud perpetrators.

    Reverse mortgage scams are engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.

    In many of the reported scams, victim seniors are offered free homes, investment opportunities, and foreclosure or refinance assistance. They are also used as straw buyers in property flipping scams. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard, and mailer advertisements.

    A legitimate HECM loan product is insured by the Federal Housing Authority. It enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment. Eligible borrowers must be 62 years or older who occupy their property as their primary residence and who own their property or have a small mortgage balance. See the FBI/HUD Intelligence Bulletin for specific details on HECMs as well as other foreclosure rescue and investment schemes.

    Tips for Avoiding Reverse Mortgage Scams:

    Do not respond to unsolicited advertisements.
    Be suspicious of anyone claiming that you can own a home with no down payment.
    Do not sign anything that you do not fully understand.
    Do not accept payment from individuals for a home you did not purchase.
    Seek out your own reverse mortgage counselor.

    If you are a victim of this type of fraud and want to file a complaint, please submit information through our electronic tip line or through your local FBI office. You may also file a complaint with HUD-OIG at www.hud.gov/complaints/fraud_waste.cfm or by calling HUD’s hotline at 1-800-347-3735. https://www.fbi.gov/scams-safety/fraud/seniors

    Investment Schemes

    As they plan for retirement, senior citizens may fall victim to investment schemes. These may include advance fee schemes, prime bank note schemes, pyramid schemes, and Nigerian letter fraud schemes. Please visit the Common Fraud Schemes webpage for more information about these crimes and tips for protecting yourself from them. https://www.fbi.gov/scams-safety/fraud/fraud
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  29. #15
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    Re: Investing with an Eye on Fraud Prevention

    Plenty of real estate Ponzi schemes floating around over the years often involving alleged hard money loans or flipping. On the last link it looks like the investors may have caught a rare break.


    Disbarred and disgraced attorney Troy A. Titus was sentenced Thursday to 30 years in federal prison for defrauding clients and friends out of more than $8 million, money a judge said the victims will never see again.
    Titus' complex real estate and investment schemes worked for years before the housing bubble burst, causing him to scramble to pay off investors and his own bills.
    Disbarred attorney sentenced to 30 years for fraud | HamptonRoads.com | PilotOnline.com


    The San Clemente co-owner of a now-defunct Southland real estate firm was convicted today of a Ponzi scheme that involved flipping distressed apartment buildings during the Great Recession’s housing collapse, costing hundreds of investors up to $169 million. Michael J. Stewart, 68, who had been free on bail, was taken into custody after jurors found him guilty of 11 counts of mail fraud.
    San Clemente Realtor Guilty in Massive Ponzi Scheme | San Clemente, CA Patch

    In a Ponzi-meets-“The Producers” fraud, two brothers-in-law tricked investors out of $96 million, diverting much of the money, which investors thought was going into managed funds, to prop up the then-faltering Panoramic View.
    http://www.nytimes.com/2015/08/06/ny...ims-money.html
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  31. #16
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    Re: Investing with an Eye on Fraud Prevention

    Asset protection and minimizing taxes certainly merit some attention. However, as with the above scams there is a lot of illegal and/or useless garbage being peddled as gospel.

    Beware Of Asset Protection Scams - Forbes

    Asset Protection Scams

    Nevada Corporation Scam

    Nine-year prison term for tax-avoidance scam

    http://www.seattletimes.com/seattle-...ade-cook-wife/

    Tax Protesters Never Win | Nolo.com
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  33. #17
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    Re: Investing with an Eye on Fraud Prevention

    Caught this last night, other than stripping people's home equity to give the illusion of profits, using the name of a real company was a crafty move.


    James Duncan, who called himself “The King of Cash,” simply co-opted his company’s name from a legitimate San Diego firm called Pacific Wealth Management.

    Real estate scams aim to hit you where you live | American Greed

    http://www.hulu.com/watch/750769
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  35. #18
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    Re: Investing with an Eye on Fraud Prevention

    With the market turmoil over the past month shapeshifter Robert Kiyosaki has started filling my inbox with his latest "wisdom" that he is willing to share for a price. A bit more on this in the next post which I am putting together, but before that I wanted to lay a foundation for the type of man Kiyosaki is. There are plenty of links listed below so no need to rehash that with my distaste.

    This is part 1 of a three part series highlighting The Rich Dad organization. One item I want to draw people's attention to is the speaker was exposed by the reporter as having LIED about doing a real estate deal. Imagine that, charging top dollar to learn from lying seminar speakers rather than real investors.



    In one of the threads at BP a member of the community said something to the effect of Kiyosaki's students tend to show up and give rave reviews (sometimes) but never seem to stick around to be part of the community. Me thinks Shills.

    https://www.biggerpockets.com/forums...r-dad-thoughts


    Lastly, yes I have read and listened to a lot of Kiyosaki's dribble, more than I care to admit. Up to and including his "Choose to be Rich" master class which I almost couldn't finish. Before paying seminar prices, consider buying used.

    http://www.ebay.com/sch/i.html?_odkw...osaki&_sacat=0

    http://www.realscam.com/f34/stupid-t...-kiyosaki-643/
    http://www.realscam.com/f9/numis-net...d-rainbow-110/
    http://www.realscam.com/f37/author-r...nkruptcy-1667/
    http://www.realscam.com/f11/robert-k...d-secrets-109/
    Deconstructing Robert Kiyosaki - The Simple Dollar
    Review: Rich Dad, Poor Dad - The Simple Dollar
    John T. Reed's analysis of Robert T. Kiyosaki's book Rich Dad, Poor Dad
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  37. #19
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    Re: Investing with an Eye on Fraud Prevention

    Here's something I bet you didn't know about your favourite author, Jack:

    The only thing necessary for the triumph of evil is for good men to do nothing

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  39. #20
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    Re: Investing with an Eye on Fraud Prevention

    Quote Originally Posted by littleroundman View Post
    [B]Here's something I bet you didn't know about your favourite author, Jack:
    I love the part about the "unnamed" business. Kiyosaki has a penchant for nothing specific other than look at me.

    This video was uploaded April 17, 2011, I don't know when it was filmed but language would indicate during the great recession.



    What we do know is Mr I'm leaning heavily on hyper inflation and the dollar is toxic sold the bottom in the dollar and bought the top in silver. Massive Lose/Lose for those that keep score with real money.

    dollar chart.JPG

    sliver.JPG
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  41. #21
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    Re: Investing with an Eye on Fraud Prevention

    Remember Kiyosaki hates the stock market...

    Robert Kiyosaki has to be one of the dumbest people on the education circuit.JPG

    Except when he wants to sell you overpriced stock market training seminars from a guy who spent his career not running a hedge fund, not manning a family office, not catering to the ultra wealthy, but on the seminar stage.
    It's not so much that I object to overpriced seminars or even more overpriced mentoring, although those things can be pretty damaging to a wallet. Robert's crappy nebulous advice could be far more ruinous than overpriced training, and yeah that grinds me more.

    What really gets me is there is no compelling evidence this guy has any chops to back his claims. I get that he made money selling a ton of books about a Dad that never existed, but for a man that likes to brag as much as he where's the proof of him being a skilled trader? Did he not just say he is not a fan of paper assets?


    ================================================== =================


    At Rich Dad, we are always telling people they need investments they can control.

    Relying on the government or your employer is never safe or secure.

    Neither is relying on the markets.

    Markets have cycles and patterns but they are also victim to the whims of a lot of different forces.

    This week China was the force changing the market.

    The leaders in China needed to do something to bolster their economy. They chose to fire the first volley in a monetary conflict by letting the value of the yuan drop.

    What does this do?

    It makes their products much cheaper for other countries to import. It also makes non-Chinese products much more expensive to the Chinese people.

    This triggers a trade conflict.

    Many are predicting the U.S. will devalue the dollar to help their products sell in an attempt to stave off a huge unemployment surge.

    Historically this has created a domino effect forcing countries to devalue their money. It becomes a dash to see who can devalue their money fastest.

    This will cause huge unemployment swings, manufacturing swings, and national chaos.

    The scariest part?
    It will be up to the Fed and the Chinese government to try to repair. That’s like putting your homeowner's claim in the hands of the guy who burnt your house down.

    Oddly enough, this volatile landscape highlights one of the greatest things about stock trading: it is highly liquid and highly agile.


    A savvy investor can use the stock market to capitalize on just about anything going on anywhere in the world.

    Because stocks are so liquid (easy to obtain and sell) and agile (they can move in any direction immediately) an educated investor can get into or out of any deal within seconds. This flexibility will allow the educated investor to make changes as fast as the chaotic markets change.

    One more great thing about stocks.

    Just about anyone can get in the stock market. It is very scalable. You do not need a lot of money to get in. But you do need knowledge.

    With knowledge you can profit greatly from a volatile market. Without knowledge you will be the market’s victim. As Warren Buffett said,

    “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

    Remember, knowledge is what makes a good investor, and only a good investor can profit from the world’s foolishness.


    To making life better,

    Robert Kiyosaki

    ================================================== =================

    You’ve probably heard me say that even the best investment will be bad if the investor is bad. In other words, your investments can only be as good as the investor – you.

    You’ve also heard it said that investing is risky. If you are uneducated then I agree, but if you are financially educated then you know how to mitigate risk.

    If you are to be a good investor, regardless of what you invest in, you need to understand insurance. Investing is far less risky when you have insurance.

    My Rich Dad Advisor on stocks, Andy Tanner, uses options as a form of insurance. In Andy’s new eBook, Rat Race Escape Plan, he says:

    “The most commonly-used strategy for [educated stock investors] is to use the stock market in conjunction with the options market. Stocks become their main investment, while options are like the insurance for that investment. It’s very similar to real estate – you acquire the property as the main investment, and then you get insurance to insulate it. That’s why top stock market investors know how to do the same thing with stocks and options. It’s not difficult at all, but it takes a basic understanding of how it works and how to use it for yourself.


    ================================================== =================

    In the last few weeks we’ve seen the stock market soar to its highest point in history then plummet to its worst week in over four years.

    You know what? I don’t care.

    It’s not because I’m not in the stock market. It’s because my knowledge protects me. I know how to make money regardless of what the market is doing.

    I do not worry about markets, what China’s government is doing or what The Fed is doing. I pay attention and act on my knowledge and experience. Once you learn how to apply the Rich Dad philosophy to the stock market, then you’ll have learned a great vehicle to wealth.

    When I was first starting to invest, I used stocks to help me grow my wealth. Why did I use stocks? Stocks allow anyone to invest. Stocks gave me the ability to scale.

    As Andy Tanner, my Rich Dad Advisor on stocks, says, “There is a common misconception that you need a lot of money before you can begin to invest. Fortunately, investing in stocks allows almost anyone to begin their investing sooner rather than later."

    Stocks are the easiest investment vehicles to get into. The great thing is that you can own exactly the same stocks as prolific investors like Warren Buffett. The difference is that, as a new investor, you’ll probably acquire a smaller number of shares than Buffett. That is scalability.

    A company you want to invest in may be a multi-billion dollar enterprise, but you may be able to get a single share of its stock for just $25. Again, scalability.

    The cost effectiveness of stock allows you to scale up into your investing as you gain the means to go bigger. For the average person, this is a faster way to invest than saving up for decades to acquire a franchise or some other business.

    Andy says, “Almost anyone can quickly place an asset on their financial statement with stocks. In fact, acquiring an asset with stocks can be done faster than any other asset class.”

    If you are looking for a way to invest without setting aside a ton of money first, then I recommend you read Andy’s new eBook.

    Robert Kiyosaki
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  43. #22
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    Re: Investing with an Eye on Fraud Prevention

    My pretend Rich Dad said for this post "don't buy the cow when you can get the milk for free", he said a lot of other things too but none fit for print.

    Investor Resources



    Before giving any charlatan money for "advanced education" which in reality are run of the mill trading tactics get them for free above. Explore all the free training at OIC and hit a Kiyosaki seminar to laugh at how little his advisers know.

    Some other food for thought on this Rich Dad market magic. I'm not saying don't educate yourself, not even saying don't actively trade if that's your thing. Just know the reality and odds which are conspicuously absent from Kiyosaki's narrative.

    Six in Ten Mom-and-Pop Currency Traders Lose Money Each Quarter - MoneyBeat - WSJ
    Scientist Discovered Why Most Traders Lose Money - 24 Surprising Statistics
    Why Active Traders Make Bad Traders - MarketWatch
    Day Traders: Dumber Than Ever
    Leverage as High as 50-1 Lures OTC Forex Traders Who Most - Bloomberg Business
    Active Trading: Speculative Animal Spirits on the Rise

    Well done and often cited studies by Terrence Odeon and BM Barber.
    http://faculty.haas.berkeley.edu/ode...ors%20lose.pdf
    http://faculty.haas.berkeley.edu/ode...oinvestors.pdf
    http://www.econ.yale.edu/~shiller/be...-liu-odean.pdf
    ================================================== ===================================

    Here's a quote from Robert's lying wife Kim Kiyosaki. No rich dad people, never was.

    Robert’s rich dad said, “A well-trained technical investor invests on the emotions of the market and invests with insurance from catastrophic loss.”

    The Difference Between Fundamental and Technical Investing

    ================================================== =========

    This we teach you to trade and cashflowing stocks prose is ripped right from the pages of https://en.wikipedia.org/wiki/Wade_Cook, he couldn't trade either. Ironically, if you study the language and trades like "covered calls" most of this is a carbon copy not of a Rich Dad, but a Plagiarizing Poser.



    Investment-Seminar Firm Lost 89% Trading Its Own Money
    Investment-Seminar Firm Lost 89% Trading Its Own Money - latimes

    How to Cash Flow With Stocks
    Written by Robert Kiyosaki | Tuesday, September 15, 2015

    One of the things that makes The Rich Dad Company so different from other financial educators is that we do not tell you what to buy or what to invest in. Instead we teach why an opportunity is good and we show you how many different things there are to invest in.

    How to Cash Flow With Stocks
    "It's virtually impossible to violate rules ... but it's impossible for a violation to go undetected, certainly not for a considerable period of time." Bernie Madoff
    https://www.facebook.com/pages/Scam-...98399986981403

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  45. #23
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    Re: Investing with an Eye on Fraud Prevention

    Quote Originally Posted by ribshaw View Post
    that grinds me more.
    Haven't lost any money to online scams.......results are typical.

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  47. #24
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    Re: Investing with an Eye on Fraud Prevention

    Quote Originally Posted by ribshaw View Post
    My pretend Rich Dad said for this post "don't buy the cow when you can get the milk for free", he said a lot of other things too but none fit for print.

    Investor Resources



    Before giving any charlatan money for "advanced education" which in reality are run of the mill trading tactics get them for free above. Explore all the free training at OIC and hit a Kiyosaki seminar to laugh at how little his advisers know.

    Some other food for thought on this Rich Dad market magic. I'm not saying don't educate yourself, not even saying don't actively trade if that's your thing. Just know the reality and odds which are conspicuously absent from Kiyosaki's narrative.

    Six in Ten Mom-and-Pop Currency Traders Lose Money Each Quarter - MoneyBeat - WSJ
    Scientist Discovered Why Most Traders Lose Money - 24 Surprising Statistics
    Why Active Traders Make Bad Traders - MarketWatch
    Day Traders: Dumber Than Ever
    Leverage as High as 50-1 Lures OTC Forex Traders Who Most - Bloomberg Business
    Active Trading: Speculative Animal Spirits on the Rise

    Well done and often cited studies by Terrence Odeon and BM Barber.
    http://faculty.haas.berkeley.edu/ode...ors%20lose.pdf
    http://faculty.haas.berkeley.edu/ode...oinvestors.pdf
    http://www.econ.yale.edu/~shiller/be...-liu-odean.pdf
    ================================================== ===================================

    Here's a quote from Robert's lying wife Kim Kiyosaki. No rich dad people, never was.

    Robert’s rich dad said, “A well-trained technical investor invests on the emotions of the market and invests with insurance from catastrophic loss.”

    The Difference Between Fundamental and Technical Investing

    ================================================== =========

    This we teach you to trade and cashflowing stocks prose is ripped right from the pages of https://en.wikipedia.org/wiki/Wade_Cook, he couldn't trade either. Ironically, if you study the language and trades like "covered calls" most of this is a carbon copy not of a Rich Dad, but a Plagiarizing Poser.



    Investment-Seminar Firm Lost 89% Trading Its Own Money
    Investment-Seminar Firm Lost 89% Trading Its Own Money - latimes

    How to Cash Flow With Stocks
    Written by Robert Kiyosaki | Tuesday, September 15, 2015

    One of the things that makes The Rich Dad Company so different from other financial educators is that we do not tell you what to buy or what to invest in. Instead we teach why an opportunity is good and we show you how many different things there are to invest in.

    How to Cash Flow With Stocks
    What was the first thing that convinced you kiyosaki was a charlatan.

    And after you answer that, please tell me your opinions on Tony Robbins. Do you view him as a charlatan?

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    Re: Investing with an Eye on Fraud Prevention

    Quote Originally Posted by Fendaril View Post
    What was the first thing that convinced you kiyosaki was a charlatan.
    I know you're asking Jack the question, but I came to the conclusion long before he became an author.

    I first encountered Kiyosaki when he was the owner of the "Money and You" company mentioned in
    post #19 in this thread.

    "Money and You" subsequently withdrew from Australia after being exposed on the Australian version of 60 Minutes.

    When I met him, Kiyosaki was presenting a "Money and You" addon called "Powerful presentations" in which he proudly described himself as a "shark"

    Let's just say very little of the Kiyosaki story is "the truth, the WHOLE truth and nothing but the truth" and it would consume way too much forum space to describe "Money and You" and its' ancillary programs in detail.


    The only thing necessary for the triumph of evil is for good men to do nothing

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