North Star Funding Solutions Tom Ellis frauds that take up front money and promise the world and produce nothing Internet, Maryland
I went to these so called moeny men with a project that they said all i need to do was put up escrow of 2 million dollars and pay their upfront fee of $15,000 and i would have a bank instrument loan. the fact is they have done nothingf they dont even have a bridge lender to help the clients all they did was drain me with smoth talk and promises. They screwed the poor lady that brought me to them for moeny also . beware they dont even have an office it is in executive space. these are to retards scamming people all over the world.
my research found this about these so called loans.
AMAZING FACT: For some strange reason most victims of fraud walk away from losses of One Million Dollars or more. They do NOTHING to get their money back!
In my experience of over 20 years representing clients in the securities trading, and the instrument leasing and monetizing businesses, many clients come to me who have lost thousands and millions of dollars and decide to not do anything serious to get it back. They walk away from Two-Hundred and Fifty Thousand Dollars! They walk away from One Million Dollars or more! I will say it again: They walk away from $1,000,000 or more! They wire $250,000 or $1,000,000 to a fraudster they do not know, but are unwilling to pay $25,000 to try and get it back. It defies logic.
What does this tell you about the fraudster? It tells you that few victims will go after the fraudsterand probably none. The fraudster has both a license to steal and a stay out of jail card, and the victim issues the card. Amazing! And the corollary of this conclusion is that this is why there are so many fraudsters in this fieldbecause it is easy to get away with it. Is that nice to hear? So if you dont have a conscience, you could make millions being a fraudster with little or no risk.
The damage to the victims is devastating. Let me tell you, these victims are broken...sometimes beyond repair. They often have lost their life savings, lost their marriage and family, lost their businesses, and worst of all, lost their health. The loss from the crimes of these fraudsters in bank leasing transactions is very personal and the cut is way deeper than anyone who has not gone through it can imagine. Yet few victims do much about it. One victim I know paid a London fraudster $3 million, got nothing back except he lost his family, their home, and alcohol abuse makes him unemployable.
SECOND AMAZING FACT: People do not have to be defrauded of their money if they seek experienced counsel prior to giving anyone any money. Sounds pretty basic? You would be surprised how many fraudsters make a big living because people do not seek counsel prior to parting with their money.
As an example to my fellow lawyer, following is the nature of my practice with regard to leasing of bank instruments and their monetization:
a. Recovery of Money Lost in Instrument Leasing Transactions and Fraudulent Trading Programs. I use my own strategic plan (See infra.) to recover funds of clients who have lost money on bank instrument leasing transactions and the attempt to monetize the instruments. I charge a minimum retainer of $25,000 plus 10% of the amount recovered (My profit comes in the 10%; the $25,000 covers expenses and overheads.). You dont have to, but I allow payment terms on the $25,000 retainer. My method of recovery is discussed below in a quick overview and I call it:
THE TAKE NO PRISONERS
AND MAKE THEM PRISONERS APPROACH
I prepare an evidentiary criminal prosecution package which contains all the evidence in proper trial ready legal form against the fraudster. I want this guy either to give my clients funds back or start a long prison termits either or.
I do the following with the evidentiary prosecution package:
(1) Show the prosecution package to the defendant fraudster so he can clearly and visibly see the evidence against him and the long prison term he faces (About 50-60% of the time the case is settled at this stage to the satisfaction of the client), and
(2) If the defendant does not return my clients funds shortly after I present the evidentiary package to him, then I endeavor with great persistence to persuade law enforcement to prosecute these fraudsters and in the process get an order of the court for restitution of my clients funds.
You must be wondering.Why do you have to have a prosecution evidence package? Why cant you just walk into the F.B.I. and file a complaint? That is a good question, and the answer is that since 9-11 it appears that the F.B.I. has been inundated with homeland security matters and unless the clients loss is three or four hundred million dollars or more, it is difficult to get them to move on your case. The professionally prepared prosecution evidence package is there to help solve this problem by substantially reducing the investigation requirements as the evidence of the case is laid out on their desks. And for State and local law enforcement authorities the prosecution evidence package is there to help them understand the complexities of a crime they normally do not see.
I have found through years of observation and practice that civil suits often only enrich attorneys and seldom (i) work as they take many years with huge legal fees and (ii) the clients funds are seldom actually collected. (NOTE: From lack of experience in this specific field, most attorneys who take these CIVIL cases do not know that they are usually pursing a fruitless path.)
BRUTAL TRUTH! If a potential Lessor of an instrument cannot pay $2,000 to save himself from being defrauded in a world of great fraud, then, (a) he does not have the intellectual capability to be in this business or (b) he does not have the capital required for success and by all logic and experience will lose his money. He should immediately withdraw from this endeavor.
A PRECAUTIONARY NOTE ON STRUCTURED FINANCE
In the 90s structured financing techniques were operating in the capital centers of the world to provide creative forms of finance, multi-definitional forms outside the traditional financing paths. These techniques became popular even more popular after the credit squeeze of 2008 and which continues through the present. In the hands of the largest banks and investment banking firm, the structured finance techniques have been either beneficial or horrifically harmful, depending on the particular technique. The important point of this note is that the term Structured Finance has spread from the capital centers to the fraudsters in every corner of the planet and has become a buzz word for all kinds of fraudulent schemes, which often have in their content disguised elements of the leasing and monetization of bank instruments. Consequently, structured financing programs should be carefully analyzed for their fraudulent purposes. Beware, that any financing program can be labeled structured financing, which often is just a new way of describing an old fraud scheme. I see several a weeksome are workablemost are frauds.
BUSINESS LOGIC OF AN INSTRUMENT LEASING TRANSACTION
I 1. A very rich fellow has $100 million dollars. He wants to create a standby letter of credit. He deposits the $100 million dollars in the bank that is going to issue the standby. With this money as collateral the bank will issue the standby (Bank will not issue standby without collateral.). The terms of the standby should allow the beneficiary of the standby to borrow $100 million using the standby as a guarantee of repayment to a lender.
2. A second gentleman wants to lease the standby for $3 million for 60 days and use it as collateral for the $100 million loan; i.e. if the second gentlemen borrows the money using the standby as collateral and he defaults on the repayment of that loan then the lender can draw $100 million on the standby to pay the defaulted loan.
3. So here is the deal: The fellow with the $100 million risks it all in exchange for a payment of $3 million leasing fee. I repeat: The fellow with the $100 million risks it all in exchange for a payment of $3 million leasing fee. He puts up $100 million and he gets back $3 million if the beneficiary defaults on his loan secured by his standby letter of credit.
4. Now, who would make that deal? Answer: No one. Who would risk 100 million dollars for a return of 3 million? If it doesnt make business sense, then there is a problem. You can see by this example that instrument leasing cannot be what it is purported to be; i.e. free money.
5. So what is the real reason someone would invest $100 million to buy a standby letter of credit and allow someone to lease the standby for 3 million dollars a month (3%)? The answer is: The standby letter of credit is set so that there is no possibility that the instrument will ever be called on and the money lost; i.e. there is no risk, and that is why he puts up his money.
6. This process is also used with other instruments such as certificate of deposits, bank guarantees, cash deposits, etc. The story is the same, only the instrument is changed.
WARNING! BE AWARE THAT A STATUTE OF LIMITATIONS IS RUNNING ON YOUR MATTER AND YOU MUST ACT TO PROTECT YOUR CLAIM, OR IT WILL BE LOST FOREVER! THIS IS SERIOUS BUSINESS!!!
On several occasions I have drafted a set of documents to set up instrument leasing programs. This work has been done for either (i) an applicant with the collateral money to create or back an instrument or deposit for leasing or (ii) for a broker that has found a sugar daddy to put up the money. I have set up a number of these instrument leasing programs and none of these clients have been prosecuted for anything...and will not be prosecuted in the future. And they have not lost a dime.
Setting up an instrument leasing program can be (1) very lucrative (These clients paid me $25,000 and have made millions!) and (2) what they did is completely legal. The point of this story is: As a lawyer, in capable hands this is what you are up against; legalized thievery.
INSTRUMENT LEASING IN GENERAL
The leasing of instruments is a worldwide phenomenon that has been ongoing for over thirty (30) years. Usually, it involves a client leasing a certificate of deposit, bank guarantee, standby letter of credit, a cash balance in an account or some bank or brokerage house. The client is asked to pay a leasing fee to lease the instrument. An example of a leasing fee may be a monthly payment of three percent (3%) of the face amount of the instrument, and the term of the lease is anywhere from one month to a year or more. The leased instruments are usually in very large denominations; for example, the most common amount is One Hundred Million dollars ($100,000,000.00), but it can be any amount in dollars or Euros. Thus, the lease payment for a $100 million instrument may be $3 million for a month or two for the alleged use of the instrument (3% for 60 days is very common).
for an expenditure of this amount, one would think that a reasonable businessperson would obtain counsel for such a transaction, but ordinarily and unfortunately they do not until after a substantial payment is made.
PURPOSE FOR LEASING
1. Finance Real Property Development. In this scenario, a developer is seeking financing for the development of a real estate project. The developer is told that if he leases an instrument, that instrument can be used as collateral for a loan. Of course, the next step facing the developer is to obtain a loan using the leased instrument as collateral. (This purpose is discussed more fully below.)
2. Invest in Securities Trading Program. In this situation the investor (client) seeks to obtain collateral for a loan with the proceeds of the loan being invested in a security trading program (sometimes called high yield investment programs or more recently platform trading). Again, once the client has obtained the instrument, he must find someone to loan against the instrument.
3. Financing Other Purchases. Like the need to finance a real estate development, sometimes the client wants to finance some other type purchase; e.g. purchase a corporation, buy a business, etc.
4. Credit Enhancement Purposes. Commonly there is the case where the client either has no credit or his credit is insufficient to borrow funds to purchase a large asset (e.g. a $50 million company). Consequently, he wishes to enhance his credit by leasing an instrument to show on his financial statements for loan purposes. We should just get rid of this idea right now. Here is the problem, if you list the credit enhancement amount on your financial statements, and you know it is only leased by you and that it has to be returned to the Lessor, then you have to list the same amount as a liability. Consequently, the asset and the liability offset each other, and there is NO credit enhancement. Your client pays for NOTHING! If the fraudster tries to advise your client to not tell the lender that the credit enhancement instrument is leased, then this is bank fraud, and if your client attempts to get a loan on these financials, just the attempt (without success) is a felonious bank fraud, and your client and the fraudster will go to prison as co-conspirators for bank fraud. It is also important to note that there is a second reason that a leased instrument CANNOT be legally used as a means of credit enhancement. That reason is the following: the leased instrument has no value because it cannot be drawn on and converted to cash at any time. The instrument is worthless, and a worthless instrument CANNOT legally be used as an asset to enhance ones credit. And most importantly, as a lawyer you should know that there is civil and criminal liability on the part of anyone offering, brokering, or participating in the delivery of a leased instrument for credit enhancement purposes. This includes any escrow company or lawyer who serves as an escrow holder on the leasing fees, as they are co-conspirators (civil and criminal) in committing a fraud. So lawyers! Do not act as escrow holders with your trust accounts. Under Federal sentencing guidelines it is worth about 65 months in Federal prisonnice fee, huh? And by the way, if an applicant is your client and he/she has been asked to put up the collateral for a bank to issue an instrument to be leased to third parties, this is a conspiracy to commit a felony and advise them to rundont walk. Interpol will soon be on their trail.
5. Compensating Balances. A compensating balance is different from a credit enhancement. In a compensating balance the borrower may deposit or have a third party deposit with a bank or lender a significant deposit to encourage the bank to make the borrower a loan. The compensating balance is not collateral, and theoretically to the uninitiated in banking conduct the bank cannot seek this balance to collect a defaulted loan (though the crooked banks often do). BUT you cannot legally use a leased instrument as a compensating balance without disclosing that it is a leased instrument and has no value because it cannot be called on.
[IMPORTANT NOTE: Please do NOT call me with regard to seeking a provider of leased instruments or a source of monetizing these instruments. I am a lawyer and not a broker. Read the rest of this Article and you will understand my position. Further any information of any kind that I have received as to such sources has come through my clients, and such information is the subject of the attorney-client confidential relationship and cannot be disclosed to third parties.]
HOW INSTRUMENT LEASING WORKS
1. The Applicant. Instrument leasing programs begin with an investor who has cash or bank credit. This investor is called the Applicant. (This applicant-investor is not to be confused with your client-investor) The Applicant applies to a bank for the issuance of an instrument. For a certificate of deposit, bank guarantee, or standby letter of credit he has to deposit the face amount of the instrument in the issuing bank. Usually the issuing bank is paying interest on the amount deposited in existing accounts, and the bank takes a deposit or savings account of the Applicant as collateral for issuing the instrument. It is not uncommon for the deposited funds used as collateral to be off-shore tax evasion funds that the Applicant is seeking to use in such a scheme (a form of money laundering).
2. Inducement to the Applicant. The Applicant is induced to provide the funding to back the instruments for two good reasons: profit and security. With regard to profit, the Applicant is paid a percentage of the leasing fee, which is added to the interest that he is already receiving on the funds. For instance, by entering such a transaction he can increase his yield from 3 or 4% annual interest from the bank to maybe half of 3% per month (calculated at 3% per month less half for broker fees.) that he receives as leasing fees.
Here is the most important point of this White Paper; to wit: the safety factor for the Applicant. The Applicant is willing and eager to provide the funding for the instrument because he knows that the instrument will never be called on (cashed) for any reason. These instruments are supposed to be used as a guarantee for a loan; however, the nature of the transaction assures the Applicant that this guarantee will never be called upon as collateral to pay the loan on its default. [What the Applicant is not told by the fraudsters or an attorney is that the Applicant is entering into a civil and criminal conspiracy to commit fraud.]
Why will the instrument never be called upon? There are various techniques and at least one is used in every transaction, and often more than one is used. These techniques are discussed in the next paragraph.
REASONS THAT THE INSTRUMENT WILL NEVER BE CALLED UPON AT DEFAULT
1. Face of the Instrument. Sometimes the face of the instrument is written to preclude the Client-Investor from presenting the instrument for payment. For instance, a standby letter of credit requires the named beneficiary to present the required performance for payment.
a. Client Not Named as Beneficiary. In this situation, because the Client has little or no knowledge of bank issued negotiable instruments, he allows someone else to be named as beneficiary. Thus, in order to collect on default and present the instrument for payment he must rely on the beneficiary, someone other than himself. That other beneficiary is in the back pocket of the Applicant and will never make such a presentment. Further, no bank will lend against the instrument without the signature of the beneficiary pledging the instrument, and the other beneficiary will not do so to protect the Applicant.
b. Co-Beneficiary is Named on Instrument. However, either the Client-Investor is not the named beneficiary or is a co-beneficiary and presentment requires both co-beneficiaries to go to the window for collection, and, of course, the co-beneficiary is in the back pocket of the Applicant and will never go. Another situation is the Escrow Scam. This is where the Client-Investor is named as the beneficiary, but the terms of the transaction require that the instrument be placed in an escrow and the escrow holder is required to present it on default on behalf of the Client-Investor. Again, the escrow holder is in the back pocket of the Applicant and will never follow the Client-Investors instructions to present the instrument for payment. Also, the issuing bank will not take presentment from the escrow holder, as the face of the instrument calls for only the beneficiary to do so.
2. Conditions cannot be Met Within Restricted Time Period. Once in a while you may find that an instrument is legitimately issued, but the lease term is, for instance, sixty days. Now, the purpose of the investor-client in leasing the instrument is to generate cash to invest in a trading program, called high yield investment programs or trading platforms. The idea of the investor-client is to lease the instrument, borrow the money against the instrument, invest in a trading program, and from the profits pay back the leasing fee that he has obtained from third parties or borrowed from a bank. Here is the problem: The Lessor of the instrument relies ever successfully on the fact that 99.5% of these trading programs are bogus and the lessee will never find a real trading program within the 60 day term. And the Lessor is safe even if the lessee of his instrument were to find that needle in a haystack called a real trading program, because there is no way that the lessee can qualify AND invest in a real private securities trading program within the 60 day term. It is to short of a term. And to add to the problems facing the lessee, the party providing the trading program is often also the Lessor of the instrument or his associates, and you know what they plan to do. And finally on this subject, it is interesting to note that often the Lessor will give the Lessee free extension, because Lessor is very sure that the Lessee will never find a legitimate trading program.
3. Requires Third Party Performance. Either the face of the instrument or the terms of the documents require that a third party perform some condition in order for the instrument to be usable as collateral. The important point in this situation is that the third party will never perform that condition. An example of this situation is where a cash balance is purportedly held in the account of a third party brokerage house or offshore bank, and it is represented that that cash balance can be used as collateral for investors loan. The condition that the third party must perform is the release of that fund as collateral for the loan; i.e. the account is placed in such a form that a lender will be comfortable that it can collect on the account in the event of default on the loan. As the third party is in a conspiracy with the promoter, and it will never place the cash balance account (or instrument) in jeopardy as called for by the terms of the documentation? So the investor-client pays the fees, and is unable to fund his deal with the cash balance (or instrument) as collateral. Sometimes the third party is the holder of the cash balance or sometimes it may be a third party escrow holder with instructions to act on the cash balance account according to the terms of the documentation between the promoter and the investor-client, the terms irrevocably favor the promoter.
4. Third Party as Beneficiary with Assignment. Similar to Paragraph a. above, sometimes the investor-client is talked into allowing a third party to be the beneficiary with an assignment of the beneficiary interest to the investor-client. Here is what the investor-client does not know: The assignment of a negotiable instrument has to be approved by the issuer, and usually the issuer will not approve such an action. The investor-client on the default of the loan and the need for presentment to the issuing bank for collection cannot make the presentment to get the money, because only the beneficiary on the face of the instrument may do this, and in this case that beneficiary is in a conspiracy with the Applicant and the default will not be allowed. Further, if the client-investor take the instrument to a lender and wants to pledge it as collateral for a loan, the lender will not accept it as collateral because the borrower is not the beneficiary of the instrument. Another road block in favor of the Applicant.
5. Fraudulent Escrow. In this situation the fraudster has the investor-client place an initial fee (e.g. $600,000) into an independent escrow, often using a real escrow company. However, the terms of the escrow provide that the escrow holder shall release the funds to the fraudster upon notice from the fraudster that he has arranged the leased instrument. Note, that the notice of performance comes from the one who is to perform, and there is no independent verification of performance by the third party escrow holder. Since there is no way that the investor-client can use the instrument (as you never can), then the escrow holder gambit has worked and the fraudster has the initial fee.
6. Instrument is Only Available on Screen. In this fraud the fraudster gets his fee, or the initial fee, and has the instrument place on, for example, DTC (Depository Trust Corporation) and can only be seen by DTC members with a certain level of access (which is almost no victim as they have no idea how to belong to DTC). In this situation there is always a clause in the agreement that the instrument cannot be withdrawn or transferred or even attempted to be withdrawn or transferred under the threat of immediate cancellation, which means that it cannot be used as collateral. If someone is going to make a loan using the instrument as collateral, then that lender has to have some control via a transfer (e.g. an assignment) of some sort to collateralize the loan. So even if you can get a DTC member with a (certain level of access) to confirm the instrument on the screen, for your initial fee (e.g. $300,000) all you can do is LOOK AT ITnothing more!
7. Victim is Required to Perform an Impossible Act. This fraud is almost always perpetrated after the victim has paid an initial fee; e.g. $200,000 as a down payment of a leasing fee of $2 million. Please note that the scam is to get the initial fee (in this case the $200,000) and there is no intention of going after the balance on the $2 million because the VICTIM WILL DEFAULT. Yes! This is set up so the victim will create the default, and the fraudsters can keep the $200,000. The victim will default, because after he pays the $200,000 the fraudster will provide the victim with a task that is impossible to perform, and this impossible to perform task is hidden in the language of the contract between the victim and the fraudsterbut it is really hidden and only can be found by an experienced counsel. For instance, the fraudster may require the victim to have a bank issue a counter guarantee before a leased instrument will be delivered to the victim. A counter guarantee is a guarantee by a bank that the bank will guarantee that the instrument will be returned unencumbered to the issuing bank at the end of a defined term. No bank will do this. But when the victim fails to get a bank to do this, the fraudster declares the victim is in default and keeps his money. And the fraudster gets away with it because it is in a grey area of the law, and only a sophisticated and experienced lawyer or law enforcement investigator will know how to take this out of the grey area and into a prosecutable action.
8. Misleading Name of Broker. You can be sure that an instrument cannot be called upon if it is brokered by someone who is intending to mislead you by a confusing name of their broker business. For example, International Monetary Funds (note the added s) means to imply that it is really the International Monetary Fund (called IMF) which is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Most importantly, for this purpose, the IMF ONLY deals with governments and not with private enterprise.
ALL TALES MISREPRESENTATIONS In General about Tall Tales. Almost every fraudster in almost every fraudulent scheme will have what I call Tall Tales representations designed to establish the fraudster as an important, trustworthy, and reliable figure in the business at hand. And believe me these are the tallest of tall tales, but they are all huge lies. Here are a few examples:
a. My family was the founder of EFG Bank in Switzerland.
b. I have direct contacts through two generals in the Pentagon that provide me with fund raising projects from Homeland Security; for example, the bullet train is one of those projects.
c. I have direct access to the Chairman of the Federal Reserve Bank who provides me with clearances for trading in United States banks.
d. I have one of the few certificates issued by the International Monetary Fund for trading directly with it.
e. I work directly with the international accounts division of Bank of America on all my trading programs.
f. I am one of seven people allowed to trade with European banks.
g. I can take any large asset and use it in a trading program.
l these tall tales are just lies designed to entrap your confidence in these phony moguls of international finance. Many of them are misrepresentations that the fraudster knows cannot be checked; for example, if he says he has the ear of the Chairman of the Fed, who can check this out? No one. So look for these types not capable of being checked tall tales when you encounter prospective fraudsters.
THE INITIAL FEE FRAUD
The Initial Fee Scam. Many times in these leasing of instrument transactions there is an initial fee that is payable prior to the payment of the leasing fee; for instance, in order to just get the transaction underway a fee much smaller than the leasing fee is required. That fee may be anywhere from $10,000 to $100,000 or more. What is important to note is that the payment of this fee is the sole fee that that the promoters ever seek to collect; i.e. the whole leasing of instrument scam is set up to defraud the investor out of this fee. Nothing more. After the payment of this fee either the promoter starts making excuses as to why the instrument for leasing is not available thereby delaying the investor-client in moving forward in the transaction or the investor-client starts asking more questions before putting up the large leasing fee. In any event, the initial fee is paid and the investor has lost it. From the promoters viewpoint it is better to collect a lot of initial smaller fees than wait for the big score with the payment of the larger leasing fee.
THE PROJECT FINANCING SCAM
One of the most common instrument frauds, though it may or may not involve leasing of instruments, is the case where the fraudster offers project financing in exchange for the investor-client paying an upfront fee for the instrument that will fund the project. This instrument is usually a bank guarantee (which are used outside the U.S.) or standby letters of credit (which are used in the United States and elsewhere). The institution issues the instrument usually in huge amounts to fund big development projects; however, the instrument is only viable and useable provided that the beneficiary delivers either to the issuing bank sufficient cash to back up the instrument (guarantee that if the instrument is called on there will be cash to pay the default amount) or deliver into an escrow with the issuing bank (usually) sufficient funds to build the project (along with a completion bond to guarantee completion of the project) so that the issuing bank knows that the instrument will never be called on for a default payment. The practical effect, in either case, is that the investor-client cannot get a loan against the instrument unless he independently raises the required balance amount of the project cost (which is also the face amount of the instrument). So now the investor-client has paid for a useless instrument and still has to raise the same money he needed at the beginning to fund his project. This instrument is called by the fraudsters a non-cash back instrument, and that says it all.
THE AUTHENTICATION RUSE
Usually the first thing the investor wants to do after seeing a copy of an instrument is make sure that it is authentic. Here is a list of what may happen:
1. Low Quality Issuing Bank. Almost all the documentation that the promoter and the investor sign does not require that that instrument being leased be from a quality bank or institution. There is simply no requirement in most of the documentation. There may be a requirement of the Top 25 Banks, but who knows what this means. This important issue is invariable overlooked by the investor, and consequently in some of these leasing transactions the promoter provides an instrument that is issued by an offshore bank that has little or no assets behind it. Thus, the instrument has no value as collateral and no bank or other lender will provide a loan against it. So when the instrument is authenticated, it is authentic, but of no value whatsoever for any use other than wallpaper.
2. Nonexistent Bank or Inactive Charter. Sometimes the instruments are issued on familiar sounding banks, but the banks either do not exist, their charters are inactive (usually because of bank mergers), or there are other misleading elements presented by the fraudster. For example, if a certificate of deposit is issued by Chase Manhattan Bank (Grand Cayman or BWI), check to see if the Chase Manhattan Bank charter is still active in Grand Cayman after all the mergers Chase Manhattan has gone through over the past few years. Many of these old familiar bank names have inactive charters, and therefore do not have the legal capacity to issue instruments. Also, dont let a familiar name operating as a trust (e.g. Chase Manhattan Trust Ltd.) be inferred as an issuer of instruments, as trust do not issue these type instruments. But this can be confusing, because there are some banks that have trust in their name which DO issue such instruments, and this has to be checked. A company called Vital Funds out of San Diego headed by a Dr. Mitchell Holland leased a certificate of deposit issued by Chase Manhattan Bank BWI, a bank that does not exist. The people behind this phony instrument have been arrested in Spain, and in my opinion Holland is next (I am working on the case)
3. Parked in a Clearinghouse. In the situations where the instrument is issued and the promoter wants to create a greater aura of authenticity, he will park it in a clearing house such as Depository Trust Corporation (DTC) or Euroclear where it can be confirmed on a screen. I say park, because there is a clear distinction between parking an instrument and placing it for clearing. These houses clear securities; i.e. they complete the trades between buyers and sellers only of securities. However, a bank guarantee, standby letter of credit or a certificate of deposit are not securities and are not subject to clearing at these houses. But a member of the clearing house group can place a non-security like a bank guarantee, standby letter of credit, or certificate of deposit on the screen so that it can be observed by other members. Here is the important point: placing these instruments on the screen with one of these clearing houses or similar institution (i.e. parking) does NOT authenticate them as being validly issued. So do not let your client be taken in by the relationship of the instrument to a clearing house; it is nonsense. Using the vernacular of another saying, you can park a ham sandwich on a clearing house, but you cant authenticate it.
4. Escrow by Law Firm. The fact that a law firm is holding the instrument in escrow is sometimes used to create an aura of legitimacy and enhance the appearance of authenticity of the instrument. Let me tell you from my experience, some of the most prestigious New York law firms have held fraudulent instruments, and usually did not know the instruments were invalid. Most lawyers have no idea how to authenticate an instrument, and that possibility is substantially enhanced when the lawyer is a one a one man office in a one horse town in Mississippi or similar abode. Further to my observations over the last 30 years, relying on lawyers is the largest cause of clients losing money to these fraud schemes than any other cause. So, lawyers be careful and give competent advice. And what else you should know is that these losses to fraudsters are usually considered business transactions and not covered by malpractice insurance (but I try and go after the insurance anyway). So if you are going after a lawyer, you have to go after him and his firmnot his insurance carrier. [On a case I am working on, there is a lady lawyer in Miami who well may be on her way to free room and board for several years.]
5. Bait and Switch of Instrument. I have seen the situation where a sample of the instrument initially shown is from a major bank (e.g. Citibank). But the documents signed by the parties do not define what bank has to be used as issuer of the instrument to be leased, though using the sample infers that the issuer will be a major bank (Citibank in this example). Without a clear definition of the issuing bank, the promoter substitutes in a bait and switch maneuver a lower classified or worthless bank or other institution (e.g. brokerage house). Usually on review of the documents, the fraudster is found to be correct. It is not covered.
6. Misleading Instruments. In example #4 above where Citibank is purported to be used, the promoter changes the spelling of the bank to Citybank and this is usually not picked up by the investor. This was done on one of my cases and the lawyer involved was disbarred and served time and his client is still in prison (Let me say, it was very hard work getting him there.). Another thing they will do is to use the name of a major bank (e.g. Bank of America), but add to it a branch that does not exist; for example, the name of the issuing bank may be Bank of America of North Island). Authenticating this is usually done very easily by a Google search for such a bank, but unfortunately, most investors never check. Their greed along with blind trust and awful judgment just sees Bank of America.
7. The Translucent Cash Balance Account. In this situation the investor-client pays for the leased use of a cash balance in an account either in a bank or brokerage firm. Usually the bank or brokerage firm is offshore. The promoters pay a bank or brokerage house to represent that they have a large cash balance account that the investor-client can lease for use as collateral for a loan. Now sometimes the money is actually in the account or sometimes it is not. It makes no difference, because the same account is simultaneously used over and over again for a multitude of investor who lease the same funds for collateral purposes while the Lessor knows that the structure is such that none of these investor will ever be able to have a lender verify the existence of funds that can be used as collateral and consequently no lender will ever loan against the account. The reasons that the funds cannot be verified for collateral purposes are set out under the section on REASONS THAT THE INSTRUMENT WILL NEVER BE CALLED UPON DEFAULT.
8. The SWIFT Transfer Transaction. Sometimes the instruments are purported to be transferred by SWIFT message code transmission. This gambit is used to create an aura of authenticity. The main thing to understand that any form of a guarantee transmitted by SWIFT message can be such as to make it impossible to call on that guarantee; thus the SWIFT transmitted guarantee is useless when this is done. First, it is important to note that often these SWIFT message codes do not operate as represented by the fraudsters. For instance, the representation that the instrument will be transmitted to the beneficiary by SWIFT code MT799 is a red flag. Swift code MT799 is not a binding transfer; i.e. it is tantamount to a non-binding letter either advising that the sending bank may do something or requesting the receiving bank to do something. Neither bank has to do it under MT799. The MT 799 is a swift message used between banks to communicate in electronic written form which is usually referred to as a pre-advice. For example, Red Bank may send a MT799 message to Blue Bank stating that, We confirm $1 million on deposit and are prepared to block this amount via MT760 in favor of account 0001 at your bank. Please confirm readiness and receipt. Often the MT799 will be sent prior to the MT760 being issued. [Typically the MT 760 is issued and the investor-client pays the initial fee or sometimes the leasing fee; he thinks that the MT799 is binding and can operate as collateral. Remember that it is nothing more than a nice letter sent electronically.] However the fraudsters will misrepresent that the MT799 is a collateral instrument. Also, it cannot be used in a platform trading transaction.
The MT760 message can operate as a guarantee. If an MT760 is actually sent, it is subject to all the reasons that the guarantee cannot be called on as stated above. I say IF it is actually sent, because after collecting the funds via a MT799 transaction there often is no intent to send a MT760. No matter how nice this appears, the terms of the guarantee can be such as to guarantee nothing because this MT760 guarantee is susceptible to the same non-performance reasons of other transactions described above. I have spent many an hour with the wire departments of major banks trying to get the language of a SWIFT message correct. Sometimes getting the right wording is not easy, but you can eventually get the wording down to create a real guarantee for lawful purposes or a fraudulent instrument for no good.
UTHENTICATING AN INSTRUMENT
Sometimes the fraudsters will give the investor-client a copy of the instrument that they will be leasing. The initial inclination, of course, is to authenticate it. Authentication issues to check
a. The quality and existence of the issuing institution. You want to determine the financial strength of the issuing bank. In this process you must also check to see if the bank really exists as a bank (or brokerage house), and believe it or not you have to see if the bank is really located where it is represented to be situated. One time a client of mine had an instrument from Bank One of Columbus Ohio. It had a street address, and as standard procedure I hired a private investigator to drive by the address and see if there was a bank there. There was not. It was a vacant lot. I was negotiating a bank guarantee with a bank in Beirut for an Egyptian development project. On the last day of negotiations when the instrument was to be issued, I got up that morning and walked from the Phoenicia Hotel down to the bank, and overnight some terrorist had blown up the bank. The bank was gone. There was no fraud involved, but the story illustrates that a bank can be here today and gone tomorrow. (I had to fly that morning back to Cairo and tell the Egyptians the bad news, The bank was blown up and I have to start over with their office in Zurich Never had to say anything like before or since.)
b. Confirm that the signatures on the document represent people who work at the bank. Usually the instrument is signed by two purported bank officers. Check to see if these people actually work for the bank and ask them if they sign these types of documents. One time I had a meeting at Barclays Bank in London, and my client and I were to meet the officers of the bank in the banks lobby. We arrived and were met by two fellows who each appeared to be dressed like a banker. We were invited to follow them to an empty desk on the lobby floor where we sat down and signed some documents transferring a large fee to them for services. Right after I reviewed the documents and my client signed them, a young man from the bank walked up to all four of us and asked, May I be of assistance? I slowly took the signed documents off the desk and put them in my brief case, and asked the young man if he knows my two bankers. He said, I do not, but Barclays is a big bank. At that point the two bankers ran out the front door.
c. Check Telephone Number. If the documents state a phone number (e.g. on letterhead accompanying the instrument), check and see if it is a cell number. Or if there is no telephone number visible on a document, ask the promoters for a telephone number for the bank. Banks do not use cell numbers.
d. Do not take an instrument to issuing bank for authentication or borrowing. Sometimes either you or your client decides to take the instrument to the issuing bank (or a branch) to see if the people who work there can authenticate the instrument. DONT DO IT! Whomever you talk to, unless you know them VERY well as an existing customer, will not know the answer, and security will eventually be called. BANK SECURITY OFFICERS ARE CRAZY! DONT TRUST THEM TO USE THEIR HEADS! The chances are almost 100% that one of these people will call security, and when security comes they hold you and have you arrested. That is, Security calls the cops and you are put in jail, often with a high bail. I had a client who called me from the San Francisco jail. Previous to her incarceration, she had come to my office and showed me a bill of exchange for a large multi-million dollar amount issued by a Turkish bank. I confirmed that it was authentic. Unknown to me she took it to Bank of America in the financial district of San Francisco intending to borrow against it. It was referred to security; the security officers never heard of a bill of exchange (Is that a surprise?) and called the police. Nine months passed before a friend of hers got her bailed out. The way to do this is for the attorney to CALL the bank and tell them that you think that one of their instruments is circulating and that it is fraudulent. Tell them that you hope that they can confirm this and get it out of circulation before it can harm a victim or the reputation of the bank. Then fax a copy over to themdo not go to them at the bank!
HYIP AND LEASING INSTRUMENTS
One of the primary purposes for an investor to lease an instrument is to raise funds to invest in a high yield investment program (HYIP) or a trading program. Here is what happens where this is the purpose:
a. You Cannot Use Leased Instrument to Directly Invest in HYIP. Not only can you not directly use an instrument for a trading program because you have to have cash, you cannot use a lease instrument indirectly in such programs. The investor-client tells the fraudster Lessor of the instrument that he wants to lease the instrument in order to raise capital by borrowing against the instrument for investment purposes in a high yield investment program. The fraudster knows that one cannot get a loan against the instrument and consequently with no loan, there can be no investment in a HYIP, because when you buy and sell securities you have to pay for them in cash before you can sell them for a profit. No cash, no HYIP! The fraudster does not tell the investor-client that leasing will not work with a HYIP program investment. In fact, he will often say he knows of such a program in which the victim can invest the funds generated by the leasing of his instrument. Sometimes the investor-client has been lead to believe that the instrument itself can be used as the investment in a HYIP, but, again, you cannot buy and sell securities without paying cash, and you cannot get cash from a fraudulently leased instrument. NOTE: Forget about so-called blocked funds transactionsall frauds.
b. More on HYIPs. If you want to know more about high yield investment programs, then see my book, Lawyers Guide: Advising Clients on High Yield Investment Programs. It is 120 pages of truth about such programs, including how to tell the real from the fraud. The book may be purchased at www.hyip-book.com. For further information on these programs, see my free article The Misunderstood World of Private Securities Trading at www.townlaw-hyip.com.
WHY IS YOU CLIENT HAVING DIFFICULTY FUNDING AGAINST THE LEASED INSTRUMENT (CALLED BY BROKERS MONETIZING)?
If your question is, Why doesnt a lender want to loan money against collateral that cannot with certainty be called on in the event of default? the answer is so obvious to be unworthy of comment. Would you? If you need clarity, see The Scavengers of Leasing Deals immediately below.
The scavengers (or worms) of these leasing deals are the people who represent that they can fund (monetize) the leased instruments; i.e. they can find someone to lend against the unlendable instrument. They are also known as brokers. They will always charge an upfront fee (Sometimes a million dollars) for their services, because they have to get their money upfront as they wont get paid on the completion of promised performance, as they KNOW that they will never be able to fund or monetize the leased instruments. They know that funding is not possible, or should know, as they are knowledgeable in how the leased transaction scam works (i.e. or doesnt work for the investor-client). Sometimes, the scavenger is in a conspiracy with the promoter of the lease transaction, as the promoter is the one who refers the investor-client to the scavenger. Also, it makes it easier for the promoter to sell the leased instrument to an investor-client when he can introduce a third party co-conspirator who says he can fund (monetize ) the leased instrument; he is then selling a complete package of instrument and funding. Who can resist that? And for this referral, the promoter shares the front-end fee paid by the investor-client with the monetizing guy. Also, the broker who introduces the promoter to the investor-client will often introduce the scavenger as well. You have to bring all of them to justice!
AL(Secret of Real Instrument Leasing Deals)
The secret of making instrument leasing deals work? Get the Applicant Involved! I have been involved in transactions where leased instruments have been used for project funding. Go back to the idea that the applicant who deposits the cash to back a bank guarantee or standby letter of credit (or other collateral instrument) is not going to risk that deposit in return for a payment of one tenth of said amount. For example, if the applicant deposits $100 million in an account to back a $100 million standby letter of credit, the applicant is not going to risk the default on any loan secured by that standby letter of credit in exchange for a lease fee payment of $3 million. Only a lunatic would do such a thing. Therefore in order to actually use the instrument as true collateral to fund a loan that can be spent on a project you have to have the approval of the applicant for such use and exposure. The applicant has to decide to risk the call on his money in the event of default on a loan collateralized by his standby backed by his money. So you have to present the project to the applicant (e.g. real estate development) and get his approval to use his cash backed standby as collateral for a loan to develop the project. The applicant, at this point, becomes an investor in the project and he will want some controls on the expenditure of the money as well as an equity position in the project. This is very complex legal work, and if you are representing the applicant you have to protect him from all possible risks other than the risk he signs up for. For example, if the beneficiary has a tax problem and owes the IRS back tax payments, they may collect the tax liability from these funds to the detriment of the applicant. Consequently, you may have to set up a new special purpose corporation (SPC) that is free of any liens or claims to handle the transaction and avoid these extraneous risks. It isnt easy, and when I have done them it has taken a lot of legal works, including extensive negotiations with the various counsels involved. Be prepared to spend upward of $100,000 in legal fees and related travel, and it may some time to put together. But the profits may be outrageously high.
Tip: It may work when buying something (e.g. gold, hotel, securities, etc.) and the Applicant is providing bridge financing by causing a leased instrument to be issued for leasing to the Lease Instrument Purchaser. Using the purchase and sale of gold as an example, the Applicant allows a loan to be collateralized against the leased instrument the Applicant provides for the purpose of purchasing gold, and the Applicant receives temporary rights to the ownership of the gold which is then serving as collateral until resold, which reduces the risk to the Applicant, because the on the resale of the gold to a locked-in exit buyer the loan is repaid (and the collateral instrument released back to Applicant). The Applicant earns his leasing fee and a reasonable share of the profits from the resale of the gold, and the Lease Instrument Purchaser receives his major share of profits from the resale of the gold.
Here is a warning on what appears to be a legitimate proposal where the Applicant wants to see a business plan to approve the project. The desire to see a business plan may be window dressing to establish the credibility of the transaction, but beware the showing a business plan requirement should be a red flag to a possible fraudulent situation. Sometimes the fraudsters will put on a big show about wanting to see and approve the business plan; it is all part of the scam. The key to the deal is whether or not there is access for the time required to an instrument that can be used as collateral for a loan. In these cases, ask for a pro forma copy of the instrument, and attach it to any agreement. as an incorporated exhibit. Then take the pro forma to lenders and ask them, If I deliver this instrument to your control as collateral for a loan in the sum of $_______________, will you make a loan to me? If the answer is in the affirmative, then get an irrevocable commitment and pay for that instead of the upfront fee for a bad instrument that cannot be used. Warning! Do not take the pro forma instrument to a lender until your client and you are comfortable that it is a replica of a valid instrument. Remember, you or your client may be thrown in jail if you have a fraudulent instrument on such an inquiry (supra). This is a treacherous business, and you need experienced legal help. No training on the job types!
REMEDY AGAINST PROMOTERS AND SCAVENGERS (
The ordinary reaction of most attorneys is to file a lawsuit and enjoin the movement of the funds. This may be a good first start if you can find the funds. Also, it may work if an escrow has been used where the escrow holder has insurance; then consider going after the escrow holder if you can find that it was part of the fraud or there were funds released without following the escrow instructions. But following up on my initial point, I have found that the criminal courts are better prepared to marshal these defrauded funds than the private lawyer. They can order the return of the funds to an appointed court receiver using the threat of a long or longer prison termsomething I as a private lawyer cannot do. It can be most effective.
NOTE: I know that civil courts have the right to enjoin assets, but make sure that the fraudster has not defrauded others, as the others will seek their remedy in the criminal courts, and the funds collected in the civil matter will be transferred to the criminal court and redistributed among the all the people who lost money (called clawback). In these civil suits only the lawyers make money.
DO NOT THREATEN CRIMINAL PROSECUTION TO COLLECT THE DEBT. IN THE U.S. SUCH THREATS
16 Updates & Rebuttals
mithrindirthewhite
LA,Alabama,
USA
I guess the Feds caught up with Mr. Ellis
#17Consumer Comment
Thu, October 29, 2015
Upon re-reading the entire list of complaints and am happy to report that the Feds have caught up with Tom "fraud" Ellis.
North Star
Silver Spring,Maryland,
Kent
#17REBUTTAL Owner of company
Wed, October 30, 2013
Kent,
I stongly suggest you knock off the posting on this site.Your not even a principal of a project and you never submitted a application. Craid is aware of what your are doing. I see another post on here and my lawyers will be file law suits on you.
Get a life
North Star
Silver Spring,Maryland,
Kent
#17REBUTTAL Owner of company
Tue, October 29, 2013
Kent,
Did you honestly think you could get away with this???. You are not even part of the project. You are not even the principal which by the way are away of this now and will deal with you shortly.
So , we are on you and the attorney's will be in touch with you soon. I talked to the principal of the project and he is very happy and understood the due diligence requirements and time that was required to fund the deal.
You are a real piece of work
North Star
Silver Spring,Maryland,
mithrindirthewhite
#17REBUTTAL Owner of company
Tue, October 29, 2013
mithrindirthewhite ,
After this post, I am done responding to you.
# 1 I don't know who you are. You won't provide me your name and contact number nor will you provide it on this web site. The fact that you are posting on a web site using some coded e-mail address just shows you have ZERO creditability. Not to mention that this web site has bad PR on itself. So continue to hide in the weeds as you are now.
#2 Your posting crap on a web site that anyone can post on knowing that I can not respond to your false B/S or challenge your BS remarks
#3 You never applied with us or Citywide. Which you stated in your response
#4 Most likey you are a pissed off broker who is not licensed, and are upset you quit your job at 7-11 to get into the lending business and then North Star decided not work with you as you have a daisy chain of want to be brokers attached to a project. Or you are a broker who does business out of a StarBucks Store.
#5 Or you had a project that wanted $20 million or so and had no money and wantedt it done for fee
#6 Or your project is a plie of crap
I could go on and on with possibilites of why your upset. But I can't address the problem because you won't provide me your REAL name and contact number. So if you have a real beef with us, then go to the Maryland States Attorney Office, Dept of Licensing, FBI, Secret. Matter of fact, I will provide to you a copy of my license which I had to go through a back ground check to secure. You may be upset again as there are ZERO complaints on us. But go ahead and waste your time like you are on this web site
If I was what you say I am. Then why is there not ONE public complaint, record, etc on North Star ? You know why? Because we can perform and have performed. And real projects are satisified and are funding.
So go ahead a post what you want as you are probably a low life, scum bag broker who is out to make a quick buck or we wouldn't do business with you, OR you have a project that we won't fund, the banks won't fund, no one will JV with you, and you are probably not a real developer, project manager, checkered pass, etc. Get a life would you.
Tom Ellis
North Star
mithrindirthewhite
Alabama,Mithrindir the white
#17REBUTTAL Individual responds
Tue, October 29, 2013
As suspected when I decided to write anonymously that Tom was a pathological liar, he proved me correct. He wrongly accuses and assume he knows mithrindirthewhite and provides details about a transaction mithrindirthewhite is associated. Mr. Ellis, I never applied for a loan, I would not. I know your a con artist. I just happen to know more than you think and will continue to provide gems from those you screw over.
Now then, please explain the great funded projects? where are they? Remember the press release from Mr. Peeler about the funding os a baseball field for 13M US dollars? http://ballparkbiz.wordpress.com/2010/11/29/cruisers-to-close-on-ballpark-loan/
We all know your ^&** those guys. We all called to find out why you could not fund. While you defend your scam, I note that you have zero successful funding events. Let me know how long you want to volley. I have about 30 more emails from you and Mr. Peeler.
Entrepreneurs - these guys don't perform. You need to file reports with authorities if you want justice.
mithrindirthewhite
Alabama,Peeler / Ellis / Scam
#17Consumer Comment
Tue, October 29, 2013
Update:
As previously discussed, Mr. Peeler, Mr. Stuart and Mr. Ellis - sound like many complaints to FBI and other authorities. The intimate details I shared earlier continue to expose the scam. Many emails from Tom Ellis, ironically representing Citywide Lending International, have served to inform "Group A, Group B, etc./ and so on..... as money will come on or before December 1st. Since my last post, the previous time frame was somewher in October. Bottom line: NO FUNDING IN 3 YEARS. Below are som gems:
North Star Finance and our Lender who we are direct now has a direct relationship to a Saudi Investment Group. The Saudi Investment Group is looking for any and all oil deals both overseas and in the United States. North Star has agreed to provide bridge financing to assist with getting into the "Cash Backed Bank Instrument Loan Program" . Please refer towww.northstarfs.com to review guide lines and procedures.
From what we understand the funding process will be alot quicker to fund as the Saudi Group understands how oil projects work. This is a big plus for us. If you are interested. Please e-mail me the following paperwork to be considered.
1. Executive Summary 3to5 pages
2. 3 yr Proforma
3. Complete the lender cover sheet--attached.
If you have any questions, call me.
--
Tom Ellis
Sr. Partner
Office 301-879-1774 / Cell 240-388-7091
SKYPE tom.ellis1966
Web site: www.northstarfs.com
E-mail: tom@northstarfs.com
Maryland License #2189
Update--Final Stretch
Now that the hurricane and holidays are behind us, we can finally get to work without delays. Information that was received last night.
Morgan Stanley Investors--Leaving Jan 9th to Europe to bring back bridge loan doc's to be signed. Will be back Jan 19th.
Fla Trust--Are to receive an update late afternoon today.
Wall Street--Investors are flying this Wed to South America to sign paperwork, then to Europe to sign paperwork, and finally to Hong Kong to sign paperwork and back to the states to close the deal with us. Everything is approved and now is to just sign off by the investors ( money people) in each of those countries they are located in.
UAE Investors--To receive an update today.
Citywide-- Bank Instruments are set up now and reserved by the banks for Citywide. Syndicated Group is on stand by.
Opening up escrow accounts to get ready to deposit fee's and bank instrument fee's
Project due diligence starts once escrows receive monies.
I will send out another update by Wednesday morning to provide an update on UAE Investors and Fla Trust Investors. We have been all approved and sign off by the investors. Now is just flying to South America, Europe, Hong Kong, and UAE to secure "wet signatures" and bring home the loan doc's.
I would suggest that each project to start gathering up paperwork and contact numbers on work that you have already done so far on your projects
( permits, plans, contact number, appraisers, etc) as Citywide Account Executives will be in contact down to the road to start the due diligence process on each project)
--
Tom Ellis
Sr. Partner
Office 301-879-1774 / Cell 240-388-7091
SKYPE tom.ellis1966
Web site: www.northstarfs.com
E-mail: tom@northstarfs.com
Maryland License #2189
there are many more gems like the aboe that span more than 3 years.
North Star / Citywide Lending Group International
California,Conviction on Geiger
#17REBUTTAL Owner of company
Fri, October 25, 2013
Your deal ( Geiger / Baker) took a little longer performing due diligence as Citywide and North Star came across this. So it took a while to get to the bottom of this issue. So who ever reads this. I hope you would understand our position reference the Silver Mountain Mine
United States District Court
Eastern District of Tennessee
UNITED STATES OF AMERICA
v.
DAN GEIGER, A.K.A.
DANIEL S. GEIGER, A.K.A. DS GEIGER
JUDGMENT IN A CRIMINAL CASE
(For Offenses Committed On or After November 1, 1987)
Case Number: 1:02-CR-187-003
W. Gerald Tidwell, Jr.
Defendant’s Attorney
THE DEFENDANT:
[ ] pleaded guilty to count(s):
[ ] pleaded nolo contendere to count(s) which was accepted by the court.
[T] was found guilty on count(s) Three through Nine and Eleven through Seventeen of the Second Superseding Indictment after
a plea of not guilty.
ACCORDINGLY, the court has adjudicated that the defendant is guilty of the following offense(s):
Date Offense Count
Title & Section Nature of Offense Concluded Number(s)
See next page.
The defendant is sentenced as provided in pages 2 through 8 of this judgment and the Statement of Reasons. The sentence is
imposed in accordance with the Sentencing Reform Act of 1984 and 18 U.S.C. § 3553.
[ ] The defendant has been found not guilty on count(s) .
[ ] Count(s) [] is [] are dismissed on the motion of the United States.
IT IS ORDERED that the defendant shall notify the United States Attorney for this district within 30 days of any change of
name, residence, or mailing address until all fines, restitution, costs, and special assessments imposed by this judgment are fully paid.
If ordered to pay restitution, the defendant shall notify the court and the United States attorney of any material change in the
defendant’s economic circumstances.
2/4/2005
Date of Imposition of Judgment
/s/
Signature of Judicial Officer
CURTIS L. COLLIER, United States District Judge
Name & Title of Judicial Officer
Date
Case 1:02-cr-00187 Document 323 Filed 02/23/05 Page 1 of 8 PageID #:
EDTN Judgment in a Criminal Case (Rev. 3/04)
Sheet 1 — Reverse
Judgment - Page 2 of 8
DEFENDANT: DAN GEIGER, a.k.a. DANIEL S. GEIGER, a.k.a. DS GEIGER
CASE NUMBER: 1:02-CR-187-003
ADDITIONAL COUNTS OF CONVICTION
Date Offense Count
Title & Section Nature of Offense Concluded Number(s)
18 U.S.C. § 1343 Wire Fraud 10/1/1999 Three
18 U.S.C. § 1343 Wire Fraud 10/4/1999 Four
18 U.S.C. § 1343 Wire Fraud 12/13/1999 Five
18 U.S.C. § 1343 Wire Fraud 1/12/2000 Six
18 U.S.C. § 1954 Graft 10/4/1999 Seven
18 U.S.C. § 1954 Graft 1/14/2000 Eight
18 U.S.C. § 1954 Graft 2/4/2000 Nine
18 U.S.C. § 1956(h) Conspiracy to Commit Money Laundering 8/2000 Eleven
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 1/18/2000 Twelve
Derived From Specified Unlawful Activity
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 2/8/2000 Thirteen
Derived From Specified Unlawful Activity
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 3/10/2000 Fourteen
Derived From Specified Unlawful Activity
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 3/28/2000 Fifteen
Derived From Specified Unlawful Activity
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 4/25/2000 Sixteen
Derived From Specified Unlawful Activity
18 U.S.C. § 1957 Engaging in Monetary Transactions in Property 5/2/2000 Seventeen
Derived From Specified Unlawful Activity
Case
North Star/ Citywide
Silver Spring,Maryland,
Probation Line #5--Geiger
#17REBUTTAL Owner of company
Fri, October 25, 2013
You never disclosed this to Citywide or North Star of your probation restrictions. Play attention to Line #5 to refreash your memory.
Ref: Silver Mountain
DEFENDANT: DANIEL GEIGER
CASE NUMBER: 2:07-cr-99-RLH-GWF
SPECIAL CONDITIONS OF SUPERVISION
1) The defendant shall be confined to home confinement with electronic monitoring, if available, for a period of six (6) months and shall pay 100 % of the costs of electronic monitoring services.
2) Mandatory condition #9 (shall no associate with any persons engaged in criminal activity and shall not associate with any person convicted of a felony, unless granted permission to do so by the probation officer) is modified to permit the defendant to have telephonic contact and/or communication through correspondence with Michael Galardi for a period not to exceed one year. The defendant shall give the supervising Probation Officer advance notice of contact, when possible, and otherwise notify the Probation Officer as soon as possible following any contact/communication.
3) The defendant shall not possess, have under his control, or have access to any firearm, explosive device, or other dangerous weapons, as defined by Federal, state or local law.
4) The defendant shall submit to the search of his person, property, or automobile under his control by the Probation Officer, or any other authorized person under the immediate and personal supervision of the Probation Officer without a search warrant to ensure compliance with all conditions of release.
5) The defendant shall be prohibited from incurring new credit charges, opening additional lines of credit, or negotiating or consummating any financial contracts without the approval of the Probation Officer.
6) The defendant shall provide the probation officer access to any requested financial information, including personal income tax returns, authorization for release of credit information, and any other business financial information in which he has a control or interest.
Note: A written statement of the conditions of release was provided to the Defendant by the Probation Officer in open Court at the time of sentencing.
dgeiger
Las Vegas,Nevada,
True Facts -
#17REBUTTAL Individual responds
Thu, October 24, 2013
Tom Ellis, North Star, to paraphrase William Shakespear's Hamet - "thou doth protest too much, methinks." This is my first and only posting on this matter. Mr. Mithrindirthwhite, we agree with your comments. Silver Mountain Resources has filed a formal complaint against North Star with the appropriate State and Federal agencies. So the true facts will be set forth in whatever forum is deemed appropriate. All clients, past and present, of North Star Finance or Citywide Lending Group are invited to contact us at nsfcitywidecomplaint@gmail.com
North Star / Citywide Lending Group International
Columbia,Maryland,
Why we won't lend money to this project--Our side of the story
#17REBUTTAL Owner of company
Tue, October 22, 2013
Below is the reason why and our response to why we ( Citywide lending Group International
and North Star Finance) would not lend money to this project.
This is our side of the story.
Rather long but interesting.
Mr. Baker’s project did not pass the back groud check that was performed by the lender ( Citywide Lending Group International). The lender discovered that Mr Baker has on his management team a gentlemen by the name of Dan Geiger Geiger did disclose that he had served prison time and the case was closed and that it was resolved. It was discovered that Mr. Geiger is still on probation and we believe that he is now in voiltation of his probation. Mr. Geiger failed to disclose the following to Citywide Lending Group International and North Star Finance. 1) Mr. Geiger stated in a letter he was not a manager for the Silver Mountain Resources LLC project. Mr. Geiger owner of USA Mining was in default of 500 minies. 2) Did not disclose that $6.7 million was taken from a pension fund and was put into USA Mining which was Mr. Geiger’s company. 3) Split $800,000 of pension money between 2 parties 4) $11 million was swindled from the Stardard Coosa Thatcher Yarns Pension Fund 5) Mr. Geiger was sued by the Securties and Exchange Commission 5) Mr Geiger must make restitution @10% of yearly earnings Based on the back ground check that was done on Mr. Geiger and the fact it was disclosed that Dan Geiger was appointed as Project Manager. Citywide Lending Group International denied the loan based on the back ground check that Mr Geiger was in fact part of the Silver Mountain Resources LLC and comitted fraud on his loan application. North Star returned the $75,000 that was required to secure a bridge loan within 72 hrs. Mr. Baker demanded that the $35,000 processing and commitment fee be returned. Mr. Baker did signed an agreement that if the loan is denied for discovery of loan fraud, that the $35,000 was earned. As a result of Mr. Baker’s loan being denied by Citywide Lending Group International, we were unable to provide the bridge loan to secure over all funding because is was discovered that the loan application contained fraud. North Star also would like to disclose that we are a licensed and bonded lender in the State of Maryland. North Star is not a broker. Mr. James is accusing us of being a broker for the bridge loan of $1,200,000 that he fraudulently applied foreven though we provided a copy of our Maryland lenders license.
As a result of Mr. Baker’s loan being denied by Citywide Lending Group International, we were unable to provide the bridge loan to secure over all funding because is was discovered that the loan application contained fraud. North Star also would like to disclose that we are a licensed and bonded lender in the State of Maryland. North Star is not a broker. Mr. James is accusing us of being a broker for the bridge loan of $1,200,000 that he fraudulently applied foreven though we provided a copy of our Maryland lenders license.
Below are the facts and North Star / Citywide’s side of the story and why we would not lend money to this project. NOTE: You can look this up on line and it is a public record.
United States District Court
Eastern District of Tennessee
UNITED STATES OF AMERICA
v.
DAN GEIGER, A.K.A.
DANIEL S. GEIGER, A.K.A. DS GEIGER
JUDGMENT IN A CRIMINAL CASE
(For Offenses Committed On or After November 1, 1987)
Case Number: 1:02-CR-187-003
W. Gerald Tidwell, Jr.
Defendant’s Attorney
THE DEFENDANT:
[ ] pleaded guilty to count(s):
[ ] pleaded nolo contendere to count(s) which was accepted by the court.
[T] was found guilty on count(s) Three through Nine and Eleven through Seventeen of the Second Superseding Indictment after
a plea of not guilty.
ACCORDINGLY, the court has adjudicated that the defendant is guilty of the following offense(s):
Date Offense Count
Title & Section Nature of Offense Concluded Number(s)
See next page.
The defendant is sentenced as provided in pages 2 through 8 of this judgment and the Statement of Reasons. The sentence is
imposed in accordance with the Sentencing Reform Act of 1984 and 18 U.S.C. § 3553.
[ ] The defendant has been found not guilty on count(s) .
[ ] Count(s) [] is [] are dismissed on the motion of the United States.
IT IS ORDERED that the defendant shall notify the United States Attorney for this district within 30 days of any change of
name, residence, or mailing address until all fines, restitution, costs, and special assessments imposed by this judgment are fully paid.
If ordered to pay restitution, the defendant shall notify the court and the United States attorney of any material change in the
defendant’s economic circumstances.
2/4/2005
Date of Imposition of Judgment
/s/
Signature of Judicial Officer
CURTIS L. COLLIER, United States District Judge
Name & Title of Judicial Officer
Date
_______________________________________________________________________________________________
Geiger Gets 9 Years In Prison On SCT Pension Swindle
Friday, February 04, 2005
Federal Judge Curtis Collier on Friday afternoon handed a 9-year prison sentence to Daniel S. Geiger, who was convicted in the case in which over $11 million was swindled from the Standard Coosa Thatcher (SCT) Yarns pension fund.
Judge Collier said he was giving a sentence higher than the normal range "to deter other people who would abuse trust like this."
Prosecutor Gary Humble said Geiger and Kenneth S. Combs had "pillaged" the trust fund. Combs, of Hixson, took his own life after pleading guilty in the case.
Prosecutor Humble said there had been testimony in Geiger's lengthy trial about his getting $669,000 in cash, $71,000 for limousines, $275,000 for chartered planes and $51,000 for hotels from the pension fund proceeds.
He said he was spending thousands of the money on a stripper.
"To do what he did with this pension fund is despicable," the prosecutor said.
He called him a con man whose mode of operation is "lying, cheating and stealing."
He said Geiger earlier had been sued by the Securities and Exchange Commission for a fraud involving Liberian bonds.
The prosecutor said the federal Pension Benefit Guaranty Corporation had stepped in to help the SCT pensioners, but he said not all were made whole, including one who lost $100,000. He said it was the taxpayers who had to pay.
Geiger, who is 53, must begin making restitution at 10 percent of his earnings when he gets out of prison.
Geiger, in an emotional plea, said he may never get out alive. He said he has a terminal connective tissue disease that may take his life within five years.
He asked that he be allowed out for 60 days to gather up money to begin the restitution. He said he had two commitments for $675,000 and would work on coming up with $4.6 million more.
The judge denied the request.
Geiger, who said he had a religious conversion while in jail, said he had acted in the SCT case on the advice of attorneys.
Judge Collier said he would look into his request that he be incarcerated near Las Vegas, Nev., where his former wife, son and daughter live.
Geiger was convicted after a trial that lasted over two weeks and included some 40 witnesses - mainly defense.
He was convicted of three counts of wire fraud, three counts of kickbacks from an employee pension fund, one count of conspiracy to commit money laundering and six counts of money laundering.
According to the probation report, he faced 6.5 to eight years in prison.
During the trial, Geiger had to be rushed to the hospital several times after he collapsed. Attorney Jerry Tidwell said he suffers from high blood pressure and a heart condition.
Combs, the former president of SCT, pleaded guilty in the same case to 31 counts of mail fraud, embezzlement, graft, conspiracy to launder money and money laundering before his suicide.
Combs had been indicted in November 2002 on criminal counts involving multiple schemes to recklessly invest the assets of the pension plan. Combs received more than $155,400 in kickbacks from the reckless investments. He also converted pension assets for his personal use.
The pension plan lost $11,670,491 as a result of the improper investments.
Geiger was initially charged with 15 counts of wire fraud, bribery, money laundering, conspiracy to conceal and disguise the proceeds of a wire fraud scheme, conspiracy to launder money and money laundering.
SCT manufactured yarn for the textile industry.
The company sponsored two retirement plans covering 771 participants.
The Pension Benefit Guaranty Corporation later took over the retirement plans for hourly and salaried employees and benefits for retirees.
4
A federal judge noted circular history in a sentencing hearing Thursday, drawing references to famed Teamsters leader Jimmy Hoffa while deciding how long a man involved in a local company pension fraud would spend in prison.
U.S. District Judge Curtis Collier, sitting in the same courtroom where Hoffa was convicted here in 1964 for attempted bribery of a grand juror, noted that charges against Hoffa at the time included control of the Teamsters' pension fund that funneled money to mobsters.
The defrauding of that fund led to the creation of federal laws governing private pensions and the backup system that helps pay pensions, somewhat similar to Thursday's case.
Roderick Askew, a 62-year-old United Kingdom citizen, pleaded guilty earlier this year to money laundering for his part in a three-person fraud scheme that bilked money from the Standard Coosa Thatcher Yarn Co. here in the late 1990s.
Collier sentenced him to three years for money laundering but gave him 10 months credit toward the sentence for time served.
Employee-turned-company-President Kenneth Combs and his business partner, Dan Geiger, were also charged in the fraud scheme. Geiger went on trial, was found guilty and has since served his nine-year sentence and is on probation.
Combs pleaded guilty but killed himself before he was sentenced.
Askew left the United States near the time the indictment was issued. He was detained in Spain in 2011 where he fought extradition for 10 months.
Combs took over an estimated $20 million pension fund when he began running the company and lost millions of it in bad investments with Geiger, Collier recounted from the 2004 trial.
Some of the investments included $6.7 million taken from the fund and put into USA Mining, Geiger's Mariposa, Calif.-company that controlled about 500 defunct gold mines.
At that point, Combs took the remaining $10 million and, with Askew's help through a New York bank, transferred the money to 30-year Treasury bonds.
"He just saw it as a means to put money in his pocket," Collier said.
Except $800,000 didn't make it to the bonds and instead was split between Combs, Geiger and Askew.
In court documents Askew noted his $290,000 was a "fair fee" for the transaction.
Though Askew's attorney, Ashley Ownby of Cleveland, Tenn., argued that interest on the Treasury bonds paid back to the pension what was taken, prosecutor Jay Woods said the bond portion was supposed to be temporary and Combs planned to move the money to Thailand, borrow double the amount on the cash to purchase other property and pay back what was taken from the fund.
But that never happened and the pension fund was cut in half.
The Pension Benefit Guaranty Corporation is a federal program that backs failed pensions, but the program has been overburdened by defrauded and bankrupted pensions in recent years, Collier said.
Workers get much less in pension payments than they paid into the fund, he said.
Ownby said his client played a minor role and asked for the lower end of the sentence, which he got. Askew faced nearly four years.
But even the time he was sentenced to may not matter, Collier noted.
Based on a treaty between the United States and Great Britain, Askew can serve his time in his home country, which can release him as soon as he is transferred.
Collier clarified that with Woods.
"So you're telling the court that regardless of what sentence I impose ... Mr. Askew could be in his own country and released?" Collier asked.
"Yes, judge," Woods said.
Contact staff writer Todd South at tsouth@timesfreepress.com or 423-757-6347. Follow him on Twitter @tsouthCTFP.
North Star
Silver Spring,Maryland,
Would you lend on this project part II
#17REBUTTAL Owner of company
Mon, October 21, 2013
I am providing additional information on the person who we know posted these false statements about Citywide and North Star.
I would like for you to be aware that this information was NOT disclosed to North Star or Citywide at the time the loan application was taken.
Now you know why is takes longer than usual to fund certain projects as we have to make 100% sure that the information is true before sending out a denial letter which we did.
Breaking News--From a news article in Tenn. The person below was to be the project manager for the mining pro
Geiger Gets 9 Years In Prison On SCT Pension Swindle
Friday, February 04, 2005
Federal Judge Curtis Collier on Friday afternoon handed a 9-year prison sentence to Daniel S. Geiger, who was convicted in the case in which over $11 million was swindled from the Standard Coosa Thatcher (SCT) Yarns pension fund.
Judge Collier said he was giving a sentence higher than the normal range "to deter other people who would abuse trust like this."
Prosecutor Gary Humble said Geiger and Kenneth S. Combs had "pillaged" the trust fund. Combs, of Hixson, took his own life after pleading guilty in the case.
Prosecutor Humble said there had been testimony in Geiger's lengthy trial about his getting $669,000 in cash, $71,000 for limousines, $275,000 for chartered planes and $51,000 for hotels from the pension fund proceeds.
He said he was spending thousands of the money on a stripper.
"To do what he did with this pension fund is despicable," the prosecutor said.
He called him a con man whose mode of operation is "lying, cheating and stealing."
He said Geiger earlier had been sued by the Securities and Exchange Commission for a fraud involving Liberian bonds.
The prosecutor said the federal Pension Benefit Guaranty Corporation had stepped in to help the SCT pensioners, but he said not all were made whole, including one who lost $100,000. He said it was the taxpayers who had to pay.
Geiger, who is 53, must begin making restitution at 10 percent of his earnings when he gets out of prison.
Geiger, in an emotional plea, said he may never get out alive. He said he has a terminal connective tissue disease that may take his life within five years.
He asked that he be allowed out for 60 days to gather up money to begin the restitution. He said he had two commitments for $675,000 and would work on coming up with $4.6 million more.
The judge denied the request.
Geiger, who said he had a religious conversion while in jail, said he had acted in the SCT case on the advice of attorneys.
Judge Collier said he would look into his request that he be incarcerated near Las Vegas, Nev., where his former wife, son and daughter live.
Geiger was convicted after a trial that lasted over two weeks and included some 40 witnesses - mainly defense.
He was convicted of three counts of wire fraud, three counts of kickbacks from an employee pension fund, one count of conspiracy to commit money laundering and six counts of money laundering.
According to the probation report, he faced 6.5 to eight years in prison.
During the trial, Geiger had to be rushed to the hospital several times after he collapsed. Attorney Jerry Tidwell said he suffers from high blood pressure and a heart condition.
Combs, the former president of SCT, pleaded guilty in the same case to 31 counts of mail fraud, embezzlement, graft, conspiracy to launder money and money laundering before his suicide.
Combs had been indicted in November 2002 on criminal counts involving multiple schemes to recklessly invest the assets of the pension plan. Combs received more than $155,400 in kickbacks from the reckless investments. He also converted pension assets for his personal use.
The pension plan lost $11,670,491 as a result of the improper investments.
Geiger was initially charged with 15 counts of wire fraud, bribery, money laundering, conspiracy to conceal and disguise the proceeds of a wire fraud scheme, conspiracy to launder money and money laundering.
SCT manufactured yarn for the textile industry.
The company sponsored two retirement plans covering 771 participants.
The Pension Benefit Guaranty Corporation later took over the retirement plans for hourly and salaried employees and benefits for retirees.
This is a news article that was pulled from the web and is considered a public record. Again, would you lend money on this project??
I would also request that you are considering working with us and you feel uncomfortable with either North Star or Citywide. That you contact the following agencies listed below. You will NOT find one negative item of information on us. So the then agencies below if you want to know if we are what this clown states we are.
4
Long Beach police department, DA’s office in Long Beach or Los Angeles, California State attorney general’s office, FBI, Secret Service, Department of Corporations, Department of Real Estate, SEC, U.S. Attorney General’s Office mortgage fraud division and the BBB. All of these agencies cover the mortgage industry
North Star
Silver Spring,Maryland,
Would you lend money to this project ???
#17REBUTTAL Owner of company
Mon, October 21, 2013
I read the comments from the above dated October 2, 2013. Would you lend money to this project after investor's due diligence was completed. Now you know why the lender turned the loan down and why it took so long .
Mr. Mithrindirthewhite project did not pass the back groud check that was performed by the lender ( Citywide Lending Group International). The lender discovered that Mithrindirthewhite has on his management team a gentlemen by the name of XXXXXXX. Mithrindirthewhite did disclose that he had served prison time and the case was closed and that it was resolved. It was discovered that Mithrindirthewhite still on probation and we believe that he is now in voiltation of his probation. Mithrindirthewhite failed to disclose the following to Citywide Lending Group International and North Star Finance. Based on the back ground check that was done on Mithrindirthewhite and the fact it was disclosed that Mithrindirthewhite was appointed as Project Manager. Citywide Lending Group International denied the loan based on the back ground check. North Star returned the fee’s that was required to secure a bridge loan within 72 hrs. North Star also would like to disclose that we are a licensed and bonded lender in the State of Maryland. North Star is not a broker.
Now I will address each of these statements which are 1 through 7.
1. The complaints were with Citywide Construction from 6 yrs ago and it was Citywide that filed the complaint against the client. Try reading the entire complaint.
2. I guess Scotia Bank, UBS, Credit Swiss, HSBC, are not Tier 1 Banks which are the ones that issue the Bank Instrument.
3. We charge a processing fee. No one works for free including the Banks and the Investors. If WE fail to fullfill what we promise, we return the money back. What you fail to understand is that the loan requires an underwrite from North Star which we are the bridge lender, Citywide ( lender) as they are coming in with 50% of their money to fund the project, and the Bank issuing the bank instrument underwrites the file. There is a cost to process and underwrite the files. We do provide disclosures which are the digital term sheet, Citywide Term Sheet, escrow doc's, bridge loan agreement, etc. You are also provided a due diligence list to gather information and you are assigned an account rep from Citywide. So that statement is false.
4. Do banks provide proof on funded projects? Do hedge funds provide proof? No they don't. All projects require us to sign a NCND which means do not disclose any information about them.
5. I have no clue why you say I am hot headed and foul mouthed. I tell you how it is. So if that is hot headed. Sorry. Yes, I do get upset when I have to deal with a project that lies, and doesn't disclose everthing as it is wasting my time and cost to do business.
6. You get a "YES" from Citywide as they underwrite the project, the bank underwrites the project, and the investor reviews the project. No to mention that 99% of the projects do not have the money , credit, or assets to secure a loan with a bank. To get your loan approved, Citywide puts up 50% of their money to get the project funded. Then you do get a YES.
7. Go ahead and run both Citywide and North Star throught the Secret Service, FBI, Dept of Licensing, States Attorney, and local law enforcement agencies. If you would like, I can provide the telephone number's.
Your problem with us is that you did not disclose properly to both Citywide and the Banks. You lied and you cost them over $85,000 not to mention us having to report you to the authories . You also fail to understand that banks work at their own pace. And yes they do take there time. The reason why it took longer with you was that you asked for over $25 million, you have zero money, you have less than 1% in liquid assets, your management team has convicted felons on the staff and the list goes on. And you only have less than $40,000 invested into the deal.
I would also like to point out that this is a web site where anyone can post BS on this site. And when someone posts crap like this, they never leave a name, number, etc. Lenders like us have no way of fighting back, If what you accused me of was true, then why in the hell have we been in business for 6 yrs, licensed, bonded, and there is NOT one crimminal complaint on either North Star or Citywide. Go figure.
Tom --North Star
mithrindirthewhite
Alabama,RIP OFF
#17Consumer Comment
Thu, October 03, 2013
Mr. Ellis rebutts are not true and not correct. Current victims have waited nearly three years.
1. They allegedly use Citywide Lending Group International. Robet Peeler, Mr. Peeler has numerous complaints from clients being ripped off all over the web. BEEN VERIFIED provide a uselful report on Mr. Peeler - numerous leins and questionable background. Mortgage industry watch dog websites also confirm Mr. Peelers past.
2. Claim of Tier 1 Glbobal accounts. Recent clients, have been told for 3 years that they would be funded. Emails come from Tom on behalf of Citywide Lending that they have to use European banks and that funding is being held up US Goverment in tranfering of funds. Get this, the recent information is a funding event of December 1st 2013. This has gone on for nearly 3 years, come February of 2014.
3. Ellis takes money, they never provide any proof of what is being negotiated, i.e. bank instruments. Bottom line, zero disclosure
4. They never provide any proof of anything ever funded.
5. Tom is a foul mouthed, hot tempered type of a guy and clearly has zero backround in finance.
6. How do you get "yes" in funding a project without any due diligence and take fees?
7. There is a solution to all parties ripped off by Ellis/Peeler/Anderson (stuart): 1. never provide money up front 2. Current victims should contact local authorities to file a police report, propogate that report to the FBI immediately. I assure you they will all go to jail.
North Star
Silver Spring,Maryland,
United States of America
North Star Funding Solutions are real
#17REBUTTAL Owner of company
Thu, January 24, 2013
My name is Tom Ellis, Sr. Partner with North Star Funding Solutions. When you read this post from Mr Rosen which is not his true name. I would ask that you read the entire post. North Star only deals with Cash Backed Bank Instrument that are issued from Tier 1 Global Bank in the United States. The bank instrument is backed by cash.
This clown that posted this complaint is writing about a Leased Bank Instrument. I would also like to point out that the spelling and grammar is that of a 2nd grader. So either he didn't attend school and he has one too many drinks while writing this post. I also find it funny that the person doesn't use his real name. North Star is licensed and bonded as a bridge lender in the State of Maryland. You don't secure a license if you rip borrowers off.
North Star
Silver Spring,Maryland,
United States of America
Answer to Run , Run, Run
#17REBUTTAL Owner of company
Mon, October 17, 2011
1)How can our lender steal your money when the money is held in your own escrow account?
2)There is a bridge loan to cover the Bank Instrument fee for a min cost which is a option you have . Matter of fact , we recommend that option to keep the cost down. You clearly did not read the Bank Instrument procedures.
3)Money was not stolen and we are not even working on a project in the State of NY.
4) We never met you as you stated in your in e-mail. And from reading your e-mail, it appears like you are advertising .
Guys like you who write this kind of garbage are either dreamer's wanting to build a million dollar project but haven't invested a penny into the project or don't have a penny in their pocket to invest.
You clearly need to up your dose of med's as it is clear you feel the world is out to get you.
PS---You may want to hit the spell check button next time before you post.
Frank Rosen
United States of Americarun run run
#17Author of original report
Sun, October 09, 2011
I went to these so called moeny men with a project that they said all i need to do was put up escrow of 2 million dollars and pay their upfront fee of $15,000 and i would have a bank instrument loan worth $75,000,000.00 . all tom and his non american friend that cant speak english that is a so called underwriter will screww you. and to be an underwriter that would require working for a bank.
the fact is they have done nothingf they dont even have a bridge lender to help the clients all they did was drain me with smoth talk and promises. They screwed the poor lady that brought me to them for moeny also .
ask these questions and if it cant be provided then run
1. can you provide references names and numbers
2. show me Proof of funds
3. show me a settlement paper with from a real closing
4. put me in touch with a client that closed a deal like this if they cant show you then they are a scam artist
beware they dont even have an office it is in executive space. these are to retards scamming people all over the world. my research found this about these so called loans. AMAZING FACT: For some strange reason most victims of fraud walk away from losses of One Million Dollars or more. They do NOTHING to get their money back!
In my experience of over 20 years representing clients in the securities trading, and the instrument leasing and monetizing businesses, many clients come to me who have lost thousands and millions of dollars and decide to not do anything serious to get it back. They walk away from Two-Hundred and Fifty Thousand Dollars! They walk away from One Million Dollars or more! I will say it again: They walk away from $1,000,000 or more!
They wire $250,000 or $1,000,000 to a fraudster they do not know, but are unwilling to pay $25,000 to try and get it back. It defies logic. What does this tell you about the fraudster? It tells you that few victims will go after the fraudsterand probably none. The fraudster has both a license to steal and a stay out of jail card, and the victim issues the card.
Amazing! And the corollary of this conclusion is that this is why there are so many fraudsters in this fieldbecause it is easy to get away with it. Is that nice to hear? So if you dont have a conscience, you could make millions being a fraudster with little or no risk. The damage to the victims is devastating. Let me tell you, these victims are broken...sometimes beyond repair.
They often have lost their life savings, lost their marriage and family, lost their businesses, and worst of all, lost their health. The loss from the crimes of these fraudsters in bank leasing transactions is very personal and the cut is way deeper than anyone who has not gone through it can imagine. Yet few victims do much about it.
One victim I know paid a London fraudster $3 million, got nothing back except he lost his family, their home, and alcohol abuse makes him unemployable. SECOND AMAZING FACT: People do not have to be defrauded of their money if they seek experienced counsel prior to giving anyone any money. Sounds pretty basic? You would be surprised how many fraudsters make a big living because people do not seek counsel prior to parting with their money.
As an example to my fellow lawyer, following is the nature of my practice with regard to leasing of bank instruments and their monetization: a. Recovery of Money Lost in Instrument Leasing Transactions and Fraudulent Trading Programs. I use my own strategic plan (See infra.) to recover funds of clients who have lost money on bank instrument leasing transactions and the attempt to monetize the instruments.
My method of recovery is discussed below in a quick overview and I call it: THE TAKE NO PRISONERS AND MAKE THEM PRISONERS APPROACH I prepare an evidentiary criminal prosecution package which contains all the evidence in proper trial ready legal form against the fraudster. I want this guy either to give my clients funds back or start a long prison termits either or. I do the following with the evidentiary prosecution package:
(1) Show the prosecution package to the defendant fraudster so he can clearly and visibly see the evidence against him and the long prison term he faces (About 50-60% of the time the case is settled at this stage to the satisfaction of the client), and
(2) If the defendant does not return my clients funds shortly after I present the evidentiary package to him, then I endeavor with great persistence to persuade law enforcement to prosecute these fraudsters and in the process get an order of the court for restitution of my clients funds.
You must be wondering.Why do you have to have a prosecution evidence package? Why cant you just walk into the F.B.I. and file a complaint? That is a good question, and the answer is that since 9-11 it appears that the F.B.I. has been inundated with homeland security matters and unless the clients loss is three or four hundred million dollars or more, it is difficult to get them to move on your case.
The professionally prepared prosecution evidence package is there to help solve this problem by substantially reducing the investigation requirements as the evidence of the case is laid out on their desks. And for State and local law enforcement authorities the prosecution evidence package is there to help them understand the complexities of a crime they normally do not see.
I have found through years of observation and practice that civil suits often only enrich attorneys and seldom (i) work as they take many years with huge legal fees and (ii) the clients funds are seldom actually collected. (NOTE: From lack of experience in this specific field, most attorneys who take these CIVIL cases do not know that they are usually pursing a fruitless path.) BRUTAL TRUTH!
If a potential Lessor of an instrument cannot pay $2,000 to save himself from being defrauded in a world of great fraud, then, (a) he does not have the intellectual capability to be in this business or (b) he does not have the capital required for success and by all logic and experience will lose his money. He should immediately withdraw from this endeavor.
A PRECAUTIONARY NOTE ON STRUCTURED FINANCEIn the 90s structured financing techniques were operating in the capital centers of the world to provide creative forms of finance, multi-definitional forms outside the traditional financing paths.
These techniques became popular even more popular after the credit squeeze of 2008 and which continues through the present. In the hands of the largest banks and investment banking firm, the structured finance techniques have been either beneficial or horrifically harmful, depending on the particular technique.
The important point of this note is that the term Structured Finance has spread from the capital centers to the fraudsters in every corner of the planet and has become a buzz word for all kinds of fraudulent schemes, which often have in their content disguised elements of the leasing and monetization of bank instruments. Consequently, structured financing programs should be carefully analyzed for their fraudulent purposes.
Beware, that any financing program can be labeled structured financing, which often is just a new way of describing an old fraud scheme. I see several a weeksome are workablemost are frauds. BUSINESS LOGIC OF AN INSTRUMENT LEASING TRANSACTION
1. A very rich fellow has $100 million dollars. He wants to create a standby letter of credit. He deposits the $100 million dollars in the bank that is going to issue the standby. With this money as collateral the bank will issue the standby (Bank will not issue standby without collateral.). The terms of the standby should allow the beneficiary of the standby to borrow $100 million using the standby as a guarantee of repayment to a lender.
2. A second gentleman wants to lease the standby for $3 million for 60 days and use it as collateral for the $100 million loan; i.e. if the second gentlemen borrows the money using the standby as collateral and he defaults on the repayment of that loan then the lender can draw $100 million on the standby to pay the defaulted loan.
3. So here is the deal: The fellow with the $100 million risks it all in exchange for a payment of $3 million leasing fee. I repeat: The fellow with the $100 million risks it all in exchange for a payment of $3 million leasing fee. He puts up $100 million and he gets back $3 million if the beneficiary defaults on his loan secured by his standby letter of credit.
4. Now, who would make that deal? Answer: No one. Who would risk 100 million dollars for a return of 3 million? If it doesnt make business sense, then there is a problem. You can see by this example that instrument leasing cannot be what it is purported to be; i.e. free money.
5. So what is the real reason someone would invest $100 million to buy a standby letter of credit and allow someone to lease the standby for 3 million dollars a month (3%)? The answer is: The standby letter of credit is set so that there is no possibility that the instrument will ever be called on and the money lost; i.e. there is no risk, and that is why he puts up his money.
6. This process is also used with other instruments such as certificate of deposits, bank guarantees, cash deposits, etc. The story is the same, only the instrument is changed. WARNING! BE AWARE THAT A STATUTE OF LIMITATIONS IS RUNNING ON YOUR MATTER AND YOU MUST ACT TO PROTECT YOUR CLAIM, OR IT WILL BE LOST FOREVER! THIS IS SERIOUS BUSINESS!!! On several occasions I have drafted a set of documents to set up instrument leasing programs. This work has been done for either (i) an applicant with the collateral money to create or back an instrument or deposit for leasing or (ii) for a broker that has found a sugar daddy to put up the money.
I have set up a number of these instrument leasing programs and none of these clients have been prosecuted for anything...and will not be prosecuted in the future. And they have not lost a dime. Setting up an instrument leasing program can be (1) very lucrative (These clients paid me $25,000 and have made millions!) and (2) what they did is completely legal. The point of this story is: As a lawyer, in capable hands this is what you are up against; legalized thievery. INSTRUMENT LEASING IN GENERAL
The leasing of instruments is a worldwide phenomenon that has been ongoing for over thirty (30) years. Usually, it involves a client leasing a certificate of deposit, bank guarantee, standby letter of credit, a cash balance in an account or some bank or brokerage house. The client is asked to pay a leasing fee to lease the instrument.
An example of a leasing fee may be a monthly payment of three percent (3%) of the face amount of the instrument, and the term of the lease is anywhere from one month to a year or more. The leased instruments are usually in very large denominations; for example, the most common amount is One Hundred Million dollars ($100,000,000.00), but it can be any amount in dollars or Euros. Thus, the lease payment for a $100 million instrument may be $3 million for a month or two for the alleged use of the instrument (3% for 60 days is very common).
for an expenditure of this amount, one would think that a reasonable businessperson would obtain counsel for such a transaction, but ordinarily and unfortunately they do not until after a substantial payment is made. PURPOSE FOR LEASING
1. Finance Real Property Development. In this scenario, a developer is seeking financing for the development of a real estate project. The developer is told that if he leases an instrument, that instrument can be used as collateral for a loan. Of course, the next step facing the developer is to obtain a loan using the leased instrument as collateral. (This purpose is discussed more fully below.)
2. Invest in Securities Trading Program. In this situation the investor (client) seeks to obtain collateral for a loan with the proceeds of the loan being invested in a security trading program (sometimes called high yield investment programs or more recently platform trading). Again, once the client has obtained the instrument, he must find someone to loan against the instrument.
3. Financing Other Purchases. Like the need to finance a real estate development, sometimes the client wants to finance some other type purchase; e.g. purchase a corporation, buy a business, etc.
4. Credit Enhancement Purposes. Commonly there is the case where the client either has no credit or his credit is insufficient to borrow funds to purchase a large asset (e.g. a $50 million company). Consequently, he wishes to enhance his credit by leasing an instrument to show on his financial statements for loan purposes.
We should just get rid of this idea right now. Here is the problem, if you list the credit enhancement amount on your financial statements, and you know it is only leased by you and that it has to be returned to the Lessor, then you have to list the same amount as a liability. Consequently, the asset and the liability offset each other, and there is NO credit enhancement.
Your client pays for NOTHING! If the fraudster tries to advise your client to not tell the lender that the credit enhancement instrument is leased, then this is bank fraud, and if your client attempts to get a loan on these financials, just the attempt (without success) is a felonious bank fraud, and your client and the fraudster will go to prison as co-conspirators for bank fraud. It is also important to note that there is a second reason that a leased instrument CANNOT be legally used as a means of credit enhancement.
That reason is the following: the leased instrument has no value because it cannot be drawn on and converted to cash at any time. The instrument is worthless, and a worthless instrument CANNOT legally be used as an asset to enhance ones credit. And most importantly, as a lawyer you should know that there is civil and criminal liability on the part of anyone offering, brokering, or participating in the delivery of a leased instrument for credit enhancement purposes. This includes any escrow company or lawyer who serves as an escrow holder on the leasing fees, as they are co-conspirators (civil and criminal) in committing a fraud.
So lawyers! Do not act as escrow holders with your trust accounts. Under Federal sentencing guidelines it is worth about 65 months in Federal prisonnice fee, huh? And by the way, if an applicant is your client and he/she has been asked to put up the collateral for a bank to issue an instrument to be leased to third parties, this is a conspiracy to commit a felony and advise them to rundont walk. Interpol will soon be on their trail.
5. Compensating Balances. A compensating balance is different from a credit enhancement. In a compensating balance the borrower may deposit or have a third party deposit with a bank or lender a significant deposit to encourage the bank to make the borrower a loan. The compensating balance is not collateral, and theoretically to the uninitiated in banking conduct the bank cannot seek this balance to collect a defaulted loan (though the crooked banks often do).
BUT you cannot legally use a leased instrument as a compensating balance without disclosing that it is a leased instrument and has no value because it cannot be called on. [IMPORTANT NOTE: Please do NOT call me with regard to seeking a provider of leased instruments or a source of monetizing these instruments. .
Read the rest of this Article and you will understand my position. Further any information of any kind that I have received as to such sources has come through my clients, and such information is the subject of the attorney-client confidential relationship and cannot be disclosed to third parties.] HOW INSTRUMENT LEASING WORKS
1. The Applicant. Instrument leasing programs begin with an investor who has cash or bank credit. This investor is called the Applicant. (This applicant-investor is not to be confused with your client-investor) The Applicant applies to a bank for the issuance of an instrument.
For a certificate of deposit, bank guarantee, or standby letter of credit he has to deposit the face amount of the instrument in the issuing bank. Usually the issuing bank is paying interest on the amount deposited in existing accounts, and the bank takes a deposit or savings account of the Applicant as collateral for issuing the instrument. It is not uncommon for the deposited funds used as collateral to be off-shore tax evasion funds that the Applicant is seeking to use in such a scheme (a form of money laundering).
2. Inducement to the Applicant. The Applicant is induced to provide the funding to back the instruments for two good reasons: profit and security. With regard to profit, the Applicant is paid a percentage of the leasing fee, which is added to the interest that he is already receiving on the funds. For instance, by entering such a transaction he can increase his yield from 3 or 4% annual interest from the bank to maybe half of 3% per month (calculated at 3% per month less half for broker fees.) that he receives as leasing fees.
Here is the most important point of this White Paper; to wit: the safety factor for the Applicant. The Applicant is willing and eager to provide the funding for the instrument because he knows that the instrument will never be called on (cashed) for any reason. These instruments are supposed to be used as a guarantee for a loan; however, the nature of the transaction assures the Applicant that this guarantee will never be called upon as collateral to pay the loan on its default. [What the Applicant is not told by the fraudsters or an attorney is that the Applicant is entering into a civil and criminal conspiracy to commit fraud.]
Why will the instrument never be called upon? There are various techniques and at least one is used in every transaction, and often more than one is used. These techniques are discussed in the next paragraph. REASONS THAT THE INSTRUMENT WILL NEVER BE CALLED UPON AT DEFAULT
1. Face of the Instrument. Sometimes the face of the instrument is written to preclude the Client-Investor from presenting the instrument for payment. For instance, a standby letter of credit requires the named beneficiary to present the required performance for payment.
a. Client Not Named as Beneficiary. In this situation, because the Client has little or no knowledge of bank issued negotiable instruments, he allows someone else to be named as beneficiary. Thus, in order to collect on default and present the instrument for payment he must rely on the beneficiary, someone other than himself. That other beneficiary is in the back pocket of the Applicant and will never make such a presentment. Further, no bank will lend against the instrument without the signature of the beneficiary pledging the instrument, and the other beneficiary will not do so to protect the Applicant.
b. Co-Beneficiary is Named on Instrument. However, either the Client-Investor is not the named beneficiary or is a co-beneficiary and presentment requires both co-beneficiaries to go to the window for collection, and, of course, the co-beneficiary is in the back pocket of the Applicant and will never go. Another situation is the Escrow Scam. This is where the Client-Investor is named as the beneficiary, but the terms of the transaction require that the instrument be placed in an escrow and the escrow holder is required to present it on default on behalf of the Client-Investor. Again, the escrow holder is in the back pocket of the Applicant and will never follow the Client-Investors instructions to present the instrument for payment. Also, the issuing bank will not take presentment from the escrow holder, as the face of the instrument calls for only the beneficiary to do so.
2. Conditions cannot be Met Within Restricted Time Period. Once in a while you may find that an instrument is legitimately issued, but the lease term is, for instance, sixty days. Now, the purpose of the investor-client in leasing the instrument is to generate cash to invest in a trading program, called high yield investment programs or trading platforms. The idea of the investor-client is to lease the instrument, borrow the money against the instrument, invest in a trading program, and from the profits pay back the leasing fee that he has obtained from third parties or borrowed from a bank. Here is the problem: The Lessor of the instrument relies ever successfully on the fact that 99.5% of these trading programs are bogus and the lessee will never find a real trading program within the 60 day term.
And the Lessor is safe even if the lessee of his instrument were to find that needle in a haystack called a real trading program, because there is no way that the lessee can qualify AND invest in a real private securities trading program within the 60 day term. It is to short of a term. And to add to the problems facing the lessee, the party providing the trading program is often also the Lessor of the instrument or his associates, and you know what they plan to do. And finally on this subject, it is interesting to note that often the Lessor will give the Lessee free extension, because Lessor is very sure that the Lessee will never find a legitimate trading program.
3. Requires Third Party Performance. Either the face of the instrument or the terms of the documents require that a third party perform some condition in order for the instrument to be usable as collateral. The important point in this situation is that the third party will never perform that condition. An example of this situation is where a cash balance is purportedly held in the account of a third party brokerage house or offshore bank, and it is represented that that cash balance can be used as collateral for investors loan.
The condition that the third party must perform is the release of that fund as collateral for the loan; i.e. the account is placed in such a form that a lender will be comfortable that it can collect on the account in the event of default on the loan. As the third party is in a conspiracy with the promoter, and it will never place the cash balance account (or instrument) in jeopardy as called for by the terms of the documentation? So the investor-client pays the fees, and is unable to fund his deal with the cash balance (or instrument) as collateral. Sometimes the third party is the holder of the cash balance or sometimes it may be a third party escrow holder with instructions to act on the cash balance account according to the terms of the documentation between the promoter and the investor-client, the terms irrevocably favor the promoter.
4. Third Party as Beneficiary with Assignment. Similar to Paragraph a. above, sometimes the investor-client is talked into allowing a third party to be the beneficiary with an assignment of the beneficiary interest to the investor-client. Here is what the investor-client does not know: The assignment of a negotiable instrument has to be approved by the issuer, and usually the issuer will not approve such an action. The investor-client on the default of the loan and the need for presentment to the issuing bank for collection cannot make the presentment to get the money, because only the beneficiary on the face of the instrument may do this, and in this case that beneficiary is in a conspiracy with the Applicant and the default will not be allowed. Further, if the client-investor take the instrument to a lender and wants to pledge it as collateral for a loan, the lender will not accept it as collateral because the borrower is not the beneficiary of the instrument. Another road block in favor of the Applicant.
5. Fraudulent Escrow. In this situation the fraudster has the investor-client place an initial fee (e.g. $600,000) into an independent escrow, often using a real escrow company. However, the terms of the escrow provide that the escrow holder shall release the funds to the fraudster upon notice from the fraudster that he has arranged the leased instrument. Note, that the notice of performance comes from the one who is to perform, and there is no independent verification of performance by the third party escrow holder. Since there is no way that the investor-client can use the instrument (as you never can), then the escrow holder gambit has worked and the fraudster has the initial fee.
6. Instrument is Only Available on Screen. In this fraud the fraudster gets his fee, or the initial fee, and has the instrument place on, for example, DTC (Depository Trust Corporation) and can only be seen by DTC members with a certain level of access (which is almost no victim as they have no idea how to belong to DTC). In this situation there is always a clause in the agreement that the instrument cannot be withdrawn or transferred or even attempted to be withdrawn or transferred under the threat of immediate cancellation, which means that it cannot be used as collateral. If someone is going to make a loan using the instrument as collateral, then that lender has to have some control via a transfer (e.g. an assignment) of some sort to collateralize the loan. So even if you can get a DTC member with a (certain level of access) to confirm the instrument on the screen, for your initial fee (e.g. $300,000) all you can do is LOOK AT ITnothing more!
7. Victim is Required to Perform an Impossible Act. This fraud is almost always perpetrated after the victim has paid an initial fee; e.g. $200,000 as a down payment of a leasing fee of $2 million. Please note that the scam is to get the initial fee (in this case the $200,000) and there is no intention of going after the balance on the $2 million because the VICTIM WILL DEFAULT. Yes! This is set up so the victim will create the default, and the fraudsters can keep the $200,000.
The victim will default, because after he pays the $200,000 the fraudster will provide the victim with a task that is impossible to perform, and this impossible to perform task is hidden in the language of the contract between the victim and the fraudsterbut it is really hidden and only can be found by an experienced counsel. For instance, the fraudster may require the victim to have a bank issue a counter guarantee before a leased instrument will be delivered to the victim.
A counter guarantee is a guarantee by a bank that the bank will guarantee that the instrument will be returned unencumbered to the issuing bank at the end of a defined term. No bank will do this. But when the victim fails to get a bank to do this, the fraudster declares the victim is in default and keeps his money. And the fraudster gets away with it because it is in a grey area of the law, and only a sophisticated and experienced lawyer or law enforcement investigator will know how to take this out of the grey area and into a prosecutable action.
8. Misleading Name of Broker. You can be sure that an instrument cannot be called upon if it is brokered by someone who is intending to mislead you by a confusing name of their broker business. For example, International Monetary Funds (note the added s) means to imply that it is really the International Monetary Fund (called IMF) which is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Most importantly, for this purpose, the IMF ONLY deals with governments and not with private enterprise. ALL TALES MISREPRESENTATIONS In General about Tall Tales
. Almost every fraudster in almost every fraudulent scheme will have what I call Tall Tales representations designed to establish the fraudster as an important, trustworthy, and reliable figure in the business at hand. And believe me these are the tallest of tall tales, but they are all huge lies. Here are a few examples:
a. My family was the founder of EFG Bank in Switzerland.
b. I have direct contacts through two generals in the Pentagon that provide me with fund raising projects from Homeland Security; for example, the bullet train is one of those projects.
c. I have direct access to the Chairman of the Federal Reserve Bank who provides me with clearances for trading in United States banks.
d. I have one of the few certificates issued by the International Monetary Fund for trading directly with it.
e. I work directly with the international accounts division of Bank of America on all my trading programs.
f. I am one of seven people allowed to trade with European banks.
g. I can take any large asset and use it in a trading program. l these tall tales are just lies designed to entrap your confidence in these phony moguls of international finance. Many of them are misrepresentations that the fraudster knows cannot be checked; for example, if he says he has the ear of the Chairman of the Fed, who can check this out? No one.
So look for these types not capable of being checked tall tales when you encounter prospective fraudsters. THE INITIAL FEE FRAUD The Initial Fee Scam. Many times in these leasing of instrument transactions there is an initial fee that is payable prior to the payment of the leasing fee; for instance, in order to just get the transaction underway a fee much smaller than the leasing fee is required.
That fee may be anywhere from $10,000 to $100,000 or more. What is important to note is that the payment of this fee is the sole fee that that the promoters ever seek to collect; i.e. the whole leasing of instrument scam is set up to defraud the investor out of this fee. Nothing more. After the payment of this fee either the promoter starts making excuses as to why the instrument for leasing is not available thereby delaying the investor-client in moving forward in the transaction or the investor-client starts asking more questions before putting up the large leasing fee. In any event, the initial fee is paid and the investor has lost it.
From the promoters viewpoint it is better to collect a lot of initial smaller fees than wait for the big score with the payment of the larger leasing fee. THE PROJECT FINANCING SCAM One of the most common instrument frauds, though it may or may not involve leasing of instruments, is the case where the fraudster offers project financing in exchange for the investor-client paying an upfront fee for the instrument that will fund the project.
This instrument is usually a bank guarantee (which are used outside the U.S.) or standby letters of credit (which are used in the United States and elsewhere). The institution issues the instrument usually in huge amounts to fund big development projects; however, the instrument is only viable and useable provided that the beneficiary delivers either to the issuing bank sufficient cash to back up the instrument (guarantee that if the instrument is called on there will be cash to pay the default amount) or deliver into an escrow with the issuing bank (usually) sufficient funds to build the project (along with a completion bond to guarantee completion of the project) so that the issuing bank knows that the instrument will never be called on for a default payment.
The practical effect, in either case, is that the investor-client cannot get a loan against the instrument unless he independently raises the required balance amount of the project cost (which is also the face amount of the instrument). So now the investor-client has paid for a useless instrument and still has to raise the same money he needed at the beginning to fund his project. This instrument is called by the fraudsters a non-cash back instrument, and that says it all. THE AUTHENTICATION RUSE Usually the first thing the investor wants to do after seeing a copy of an instrument is make sure that it is authentic. Here is a list of what may happen:
1. Low Quality Issuing Bank. Almost all the documentation that the promoter and the investor sign does not require that that instrument being leased be from a quality bank or institution. There is simply no requirement in most of the documentation. There may be a requirement of the Top 25 Banks, but who knows what this means. This important issue is invariable overlooked by the investor, and consequently in some of these leasing transactions the promoter provides an instrument that is issued by an offshore bank that has little or no assets behind it. Thus, the instrument has no value as collateral and no bank or other lender will provide a loan against it.
So when the instrument is authenticated, it is authentic, but of no value whatsoever for any use other than wallpaper.
2. Nonexistent Bank or Inactive Charter. Sometimes the instruments are issued on familiar sounding banks, but the banks either do not exist, their charters are inactive (usually because of bank mergers), or there are other misleading elements presented by the fraudster. For example, if a certificate of deposit is issued by Chase Manhattan Bank (Grand Cayman or BWI), check to see if the Chase Manhattan Bank charter is still active in Grand Cayman after all the mergers Chase Manhattan has gone through over the past few years. Many of these old familiar bank names have inactive charters, and therefore do not have the legal capacity to issue instruments.
Also, dont let a familiar name operating as a trust (e.g. Chase Manhattan Trust Ltd.) be inferred as an issuer of instruments, as trust do not issue these type instruments. But this can be confusing, because there are some banks that have trust in their name which DO issue such instruments, and this has to be checked. A company called Vital Funds out of San Diego headed by a Dr. Mitchell Holland leased a certificate of deposit issued by Chase Manhattan Bank BWI, a bank that does not exist. The people behind this phony instrument have been arrested in Spain, and in my opinion Holland is next (I am working on the case)
3. Parked in a Clearinghouse. In the situations where the instrument is issued and the promoter wants to create a greater aura of authenticity, he will park it in a clearing house such as Depository Trust Corporation (DTC) or Euroclear where it can be confirmed on a screen. I say park, because there is a clear distinction between parking an instrument and placing it for clearing. These houses clear securities; i.e. they complete the trades between buyers and sellers only of securities. However, a bank guarantee, standby letter of credit or a certificate of deposit are not securities and are not subject to clearing at these houses.
But a member of the clearing house group can place a non-security like a bank guarantee, standby letter of credit, or certificate of deposit on the screen so that it can be observed by other members. Here is the important point: placing these instruments on the screen with one of these clearing houses or similar institution (i.e. parking) does NOT authenticate them as being validly issued. So do not let your client be taken in by the relationship of the instrument to a clearing house; it is nonsense. Using the vernacular of another saying, you can park a ham sandwich on a clearing house, but you cant authenticate it.
4. Escrow by Law Firm. The fact that a law firm is holding the instrument in escrow is sometimes used to create an aura of legitimacy and enhance the appearance of authenticity of the instrument. Let me tell you from my experience, some of the most prestigious New York law firms have held fraudulent instruments, and usually did not know the instruments were invalid.
Most lawyers have no idea how to authenticate an instrument, and that possibility is substantially enhanced when the lawyer is a one a one man office in a one horse town in Mississippi or similar abode. Further to my observations over the last 30 years, relying on lawyers is the largest cause of clients losing money to these fraud schemes than any other cause. So, lawyers be careful and give competent advice. And what else you should know is that these losses to fraudsters are usually considered business transactions and not covered by malpractice insurance (but I try and go after the insurance anyway).
So if you are going after a lawyer, you have to go after him and his firmnot his insurance carrier. [On a case I am working on, there is a lady lawyer in Miami who well may be on her way to free room and board for several years.]
5. Bait and Switch of Instrument. I have seen the situation where a sample of the instrument initially shown is from a major bank (e.g. Citibank). But the documents signed by the parties do not define what bank has to be used as issuer of the instrument to be leased, though using the sample infers that the issuer will be a major bank (Citibank in this example). Without a clear definition of the issuing bank, the promoter substitutes in a bait and switch maneuver a lower classified or worthless bank or other institution (e.g. brokerage house). Usually on review of the documents, the fraudster is found to be correct. It is not covered.
6. Misleading Instruments. In example #4 above where Citibank is purported to be used, the promoter changes the spelling of the bank to Citybank and this is usually not picked up by the investor. This was done on one of my cases and the lawyer involved was disbarred and served time and his client is still in prison (Let me say, it was very hard work getting him there.). Another thing they will do is to use the name of a major bank (e.g. Bank of America), but add to it a branch that does not exist; for example, the name of the issuing bank may be Bank of America of North Island). Authenticating this is usually done very easily by a Google search for such a bank, but unfortunately, most investors never check. Their greed along with blind trust and awful judgment just sees Bank of America.
7. The Translucent Cash Balance Account. In this situation the investor-client pays for the leased use of a cash balance in an account either in a bank or brokerage firm. Usually the bank or brokerage firm is offshore. The promoters pay a bank or brokerage house to represent that they have a large cash balance account that the investor-client can lease for use as collateral for a loan. Now sometimes the money is actually in the account or sometimes it is not.
It makes no difference, because the same account is simultaneously used over and over again for a multitude of investor who lease the same funds for collateral purposes while the Lessor knows that the structure is such that none of these investor will ever be able to have a lender verify the existence of funds that can be used as collateral and consequently no lender will ever loan against the account. The reasons that the funds cannot be verified for collateral purposes are set out under the section on REASONS THAT THE INSTRUMENT WILL NEVER BE CALLED UPON DEFAULT.
8. The SWIFT Transfer Transaction. Sometimes the instruments are purported to be transferred by SWIFT message code transmission. This gambit is used to create an aura of authenticity. The main thing to understand that any form of a guarantee transmitted by SWIFT message can be such as to make it impossible to call on that guarantee; thus the SWIFT transmitted guarantee is useless when this is done. First, it is important to note that often these SWIFT message codes do not operate as represented by the fraudsters.
For instance, the representation that the instrument will be transmitted to the beneficiary by SWIFT code MT799 is a red flag. Swift code MT799 is not a binding transfer; i.e. it is tantamount to a non-binding letter either advising that the sending bank may do something or requesting the receiving bank to do something. Neither bank has to do it under MT799. The MT 799 is a swift message used between banks to communicate in electronic written form which is usually referred to as a pre-advice. For example, Red Bank may send a MT799 message to Blue Bank stating that,
We confirm $1 million on deposit and are prepared to block this amount via MT760 in favor of account 0001 at your bank. Please confirm readiness and receipt. Often the MT799 will be sent prior to the MT760 being issued. [Typically the MT 760 is issued and the investor-client pays the initial fee or sometimes the leasing fee; he thinks that the MT799 is binding and can operate as collateral. Remember that it is nothing more than a nice letter sent electronically.] However the fraudsters will misrepresent that the MT799 is a collateral instrument. Also, it cannot be used in a platform trading transaction.
The MT760 message can operate as a guarantee. If an MT760 is actually sent, it is subject to all the reasons that the guarantee cannot be called on as stated above. I say IF it is actually sent, because after collecting the funds via a MT799 transaction there often is no intent to send a MT760. No matter how nice this appears, the terms of the guarantee can be such as to guarantee nothing because this MT760 guarantee is susceptible to the same non-performance reasons of other transactions described above.
I have spent many an hour with the wire departments of major banks trying to get the language of a SWIFT message correct. Sometimes getting the right wording is not easy, but you can eventually get the wording down to create a real guarantee for lawful purposes or a fraudulent instrument for no good. UTHENTICATING AN INSTRUMENT
Sometimes the fraudsters will give the investor-client a copy of the instrument that they will be leasing. The initial inclination, of course, is to authenticate it. Authentication issues to check
a. The quality and existence of the issuing institution. You want to determine the financial strength of the issuing bank. In this process you must also check to see if the bank really exists as a bank (or brokerage house), and believe it or not you have to see if the bank is really located where it is represented to be situated. One time a client of mine had an instrument from Bank One of Columbus Ohio.
It had a street address, and as standard procedure I hired a private investigator to drive by the address and see if there was a bank there. There was not. It was a vacant lot. I was negotiating a bank guarantee with a bank in Beirut for an Egyptian development project. On the last day of negotiations when the instrument was to be issued, I got up that morning and walked from the Phoenicia Hotel down to the bank, and overnight some terrorist had blown up the bank.
The bank was gone. There was no fraud involved, but the story illustrates that a bank can be here today and gone tomorrow. (I had to fly that morning back to Cairo and tell the Egyptians the bad news, The bank was blown up and I have to start over with their office in Zurich Never had to say anything like before or since.)
b. Confirm that the signatures on the document represent people who work at the bank. Usually the instrument is signed by two purported bank officers. Check to see if these people actually work for the bank and ask them if they sign these types of documents. One time I had a meeting at Barclays Bank in London, and my client and I were to meet the officers of the bank in the banks lobby. We arrived and were met by two fellows who each appeared to be dressed like a banker. We were invited to follow them to an empty desk on the lobby floor where we sat down and signed some documents transferring a large fee to them for services.
Right after I reviewed the documents and my client signed them, a young man from the bank walked up to all four of us and asked, May I be of assistance? I slowly took the signed documents off the desk and put them in my brief case, and asked the young man if he knows my two bankers. He said, I do not, but Barclays is a big bank. At that point the two bankers ran out the front door.
c. Check Telephone Number. If the documents state a phone number (e.g. on letterhead accompanying the instrument), check and see if it is a cell number. Or if there is no telephone number visible on a document, ask the promoters for a telephone number for the bank. Banks do not use cell numbers.
d. Do not take an instrument to issuing bank for authentication or borrowing. Sometimes either you or your client decides to take the instrument to the issuing bank (or a branch) to see if the people who work there can authenticate the instrument. DONT DO IT! Whomever you talk to, unless you know them VERY well as an existing customer, will not know the answer, and security will eventually be called. BANK SECURITY OFFICERS ARE CRAZY! DONT TRUST THEM TO USE THEIR HEADS!
The chances are almost 100% that one of these people will call security, and when security comes they hold you and have you arrested. That is, Security calls the cops and you are put in jail, often with a high bail. I had a client who called me from the San Francisco jail. Previous to her incarceration, she had come to my office and showed me a bill of exchange for a large multi-million dollar amount issued by a Turkish bank.
I confirmed that it was authentic. Unknown to me she took it to Bank of America in the financial district of San Francisco intending to borrow against it. It was referred to security; the security officers never heard of a bill of exchange (Is that a surprise?) and called the police. Nine months passed before a friend of hers got her bailed out. The way to do this is for the attorney to CALL the bank and tell them that you think that one of their instruments is circulating and that it is fraudulent. Tell them that you hope that they can confirm this and get it out of circulation before it can harm a victim or the reputation of the bank.
Then fax a copy over to themdo not go to them at the bank! HYIP AND LEASING INSTRUMENTS One of the primary purposes for an investor to lease an instrument is to raise funds to invest in a high yield investment program (HYIP) or a trading program. Here is what happens where this is the purpose:
a. You Cannot Use Leased Instrument to Directly Invest in HYIP. Not only can you not directly use an instrument for a trading program because you have to have cash, you cannot use a lease instrument indirectly in such programs. The investor-client tells the fraudster Lessor of the instrument that he wants to lease the instrument in order to raise capital by borrowing against the instrument for investment purposes in a high yield investment program.
The fraudster knows that one cannot get a loan against the instrument and consequently with no loan, there can be no investment in a HYIP, because when you buy and sell securities you have to pay for them in cash before you can sell them for a profit. No cash, no HYIP! The fraudster does not tell the investor-client that leasing will not work with a HYIP program investment. In fact, he will often say he knows of such a program in which the victim can invest the funds generated by the leasing of his instrument. Sometimes the investor-client has been lead to believe that the instrument itself can be used as the investment in a HYIP, but, again, you cannot buy and sell securities without paying cash, and you cannot get cash from a fraudulently leased instrument. NOTE: Forget about so-called blocked funds transactionsall frauds.
b. More on HYIPs. If you want to know more about high yield investment programs, then see my book, Lawyers Guide: Advising Clients on High Yield Investment Programs. It is 120 pages of truth about such programs, including how to tell the real from the fraud. The book may be purchased at www.hyip-book.com. For further information on these programs, see my free article The Misunderstood World of Private Securities Trading at www.townlaw-hyip.com. WHY IS YOU CLIENT HAVING DIFFICULTY FUNDING AGAINST THE LEASED INSTRUMENT (CALLED BY BROKERS MONETIZING)?
If your question is, Why doesnt a lender want to loan money against collateral that cannot with certainty be called on in the event of default? the answer is so obvious to be unworthy of comment. Would you? If you need clarity, see The Scavengers of Leasing Deals immediately below.
The scavengers (or worms) of these leasing deals are the people who represent that they can fund (monetize) the leased instruments; i.e. they can find someone to lend against the unlendable instrument. They are also known as brokers. They will always charge an upfront fee (Sometimes a million dollars) for their services, because they have to get their money upfront as they wont get paid on the completion of promised performance, as they KNOW that they will never be able to fund or monetize the leased instruments.
They know that funding is not possible, or should know, as they are knowledgeable in how the leased transaction scam works (i.e. or doesnt work for the investor-client). Sometimes, the scavenger is in a conspiracy with the promoter of the lease transaction, as the promoter is the one who refers the investor-client to the scavenger. Also, it makes it easier for the promoter to sell the leased instrument to an investor-client when he can introduce a third party co-conspirator who says he can fund (monetize ) the leased instrument; he is then selling a complete package of instrument and funding. Who can resist that? And for this referral, the promoter shares the front-end fee paid by the investor-client with the monetizing guy.
Also, the broker who introduces the promoter to the investor-client will often introduce the scavenger as well. You have to bring all of them to justice! AL(Secret of Real Instrument Leasing Deals) The secret of making instrument leasing deals work? Get the Applicant Involved! I have been involved in transactions where leased instruments have been used for project funding.
Go back to the idea that the applicant who deposits the cash to back a bank guarantee or standby letter of credit (or other collateral instrument) is not going to risk that deposit in return for a payment of one tenth of said amount. For example, if the applicant deposits $100 million in an account to back a $100 million standby letter of credit, the applicant is not going to risk the default on any loan secured by that standby letter of credit in exchange for a lease fee payment of $3 million.
Only a lunatic would do such a thing. Therefore in order to actually use the instrument as true collateral to fund a loan that can be spent on a project you have to have the approval of the applicant for such use and exposure. The applicant has to decide to risk the call on his money in the event of default on a loan collateralized by his standby backed by his money. So you have to present the project to the applicant (e.g. real estate development) and get his approval to use his cash backed standby as collateral for a loan to develop the project.
The applicant, at this point, becomes an investor in the project and he will want some controls on the expenditure of the money as well as an equity position in the project. This is very complex legal work, and if you are representing the applicant you have to protect him from all possible risks other than the risk he signs up for. For example, if the beneficiary has a tax problem and owes the IRS back tax payments, they may collect the tax liability from these funds to the detriment of the applicant. Consequently, you may have to set up a new special purpose corporation (SPC) that is free of any liens or claims to handle the transaction and avoid these extraneous risks.
It isnt easy, and when I have done them it has taken a lot of legal works, including extensive negotiations with the various counsels involved. Be prepared to spend upward of $100,000 in legal fees and related travel, and it may some time to put together. But the profits may be outrageously high. Tip: It may work when buying something (e.g. gold, hotel, securities, etc.) and the Applicant is providing bridge financing by causing a leased instrument to be issued for leasing to the Lease Instrument Purchaser.
Using the purchase and sale of gold as an example, the Applicant allows a loan to be collateralized against the leased instrument the Applicant provides for the purpose of purchasing gold, and the Applicant receives temporary rights to the ownership of the gold which is then serving as collateral until resold, which reduces the risk to the Applicant, because the on the resale of the gold to a locked-in exit buyer the loan is repaid (and the collateral instrument released back to Applicant). The Applicant earns his leasing fee and a reasonable share of the profits from the resale of the gold, and the Lease Instrument Purchaser receives his major share of profits from the resale of the gold. Here is a warning on what appears to be a legitimate proposal where the Applicant wants to see a business plan to approve the project.
The desire to see a business plan may be window dressing to establish the credibility of the transaction, but beware the showing a business plan requirement should be a red flag to a possible fraudulent situation. Sometimes the fraudsters will put on a big show about wanting to see and approve the business plan; it is all part of the scam. The key to the deal is whether or not there is access for the time required to an instrument that can be used as collateral for a loan.
In these cases, ask for a pro forma copy of the instrument, and attach it to any agreement. as an incorporated exhibit. Then take the pro forma to lenders and ask them, If I deliver this instrument to your control as collateral for a loan in the sum of $_______________, will you make a loan to me? If the answer is in the affirmative, then get an irrevocable commitment and pay for that instead of the upfront fee for a bad instrument that cannot be used. Warning! Do not take the pro forma instrument to a lender until your client and you are comfortable that it is a replica of a valid instrument. Remember, you or your client may be thrown in jail if you have a fraudulent instrument on such an inquiry (supra).
This is a treacherous business, and you need experienced legal help. No training on the job types! REMEDY AGAINST PROMOTERS AND SCAVENGERS ( The ordinary reaction of most attorneys is to file a lawsuit and enjoin the movement of the funds. This may be a good first start if you can find the funds. Also, it may work if an escrow has been used where the escrow holder has insurance; then consider going after the escrow holder if you can find that it was part of the fraud or there were funds released without following the escrow instructions.
But following up on my initial point, I have found that the criminal courts are better prepared to marshal these defrauded funds than the private lawyer. They can order the return of the funds to an appointed court receiver using the threat of a long or longer prison termsomething I as a private lawyer cannot do. It can be most effective. NOTE: I know that civil courts have the right to enjoin assets, but make sure that the fraudster has not defrauded others, as the others will seek their remedy in the criminal courts, and the funds collected in the civil matter will be transferred to the criminal court and redistributed among the all the people who lost money (called clawback). In these civil suits only the lawyers make money.
DO NOT THREATEN CRIMINAL PROSECUTION TO COLLECT THE DEBT. IN THE U.S. SUCH THREATS ARE AGAINST THE LAW. But you want the case where it belongs; i.e. with a criminal prosecuting authority. So I prepare a pro forma prosecutors case with affidavits, declarations, indexed documentary evidence, etc. and take it to the prosecutors and lay it on their desk