USFIA Update: Gemcoin ATMs (probably not) and warning in Spain about it being unlicensed investment

NOTE: Previous coverage on USFIA can be found here

MLMSkeptic has a special disdain for someone scamming their own kind in order to get ahead, which is pretty much every scammer out there, when the truth is often in plain view, albeit the view may have been distracted.

A certain Gemcoin promoter online claimed that Gemcoin ATMs , THOUSANDS of them, will soon be distributed around the world, so people can get cash through their Gemcoin account. As an example, they showed two ATMs allegedly with Gemcoin listed next to the typical ATM logos like VISA / MASTERCARD / AMEX and so on.

Screencap'ed from investgemcoin.com

As you can see, that's "Gemcoin" 2nd from the right on the top row, and here's a guy that looks like he's getting money from it.

So why is there a "Gemcoin" logo's bottom showing just above the ATMs?

Turns out, these two are probably the ONLY ATMs that display the Gemcoin logo... because they are installed at Gemcoin HQ, i.e. UCCA / USFIA / AFG / whatchamacallit in Arcadia. Don't believe me? Here's a different angle of the same ATMs, from a different Gemcoin promoter:

Then consider this shot from the FRONT of the lobby... at the reception desk

One must conclude that the two confirmed-to-exist (whether you can actually convert Gemcoins to cash is a different matter) alleged "Gemcoin" ATM are located in the main lobby of USFIA/AFG, as this is the SAME paneling used in both pictures.  Albeit it's not in public view, but around the back.

Frankly, other than banks, the ONLY other locations with ATMs, esp. these free-standing kinds, are local convenience stores. You know, something like this:

Bad Argument: The Evil Twin Did it

When confronted with the news that their pet scheme may be a scam, victims of a scam react in various ways to deal with their cognitive dissonance, when two sets of facts collide as they can't both be true.

Some recoil in horror, realize they've been scammed, and quickly attempt to withdraw their money (which are usually stonewalled, leading to further desperation.)

Some are doubtful but vowed to stop taking their upline's word and do some honest research on their own

Some recoil and hide, denying that any "negativity" exists, and you should shut up because they don't want to hear about how they are wrong.

Some react with indignation and attempt to defend their scheme, but when they are armed with little more than PR material and fallacies like "I got paid so it's not a scam (to me)" they rarely have much success convincing anyone but themselves.

Some goes for "special pleading", i.e. come up with reasons why their scheme is the exception, not the rule, i.e. it fits all the definitions of a scam, but it's not a scam

Some go for a "no true Scotsman" gambit, claiming that the company itself is fine. It's only a few "rogue reps" that ruined things for everybody else.

Though recently, in span of a week or two, I saw a new variation on "no true Scotsman"... which I will call...

"The Evil Twin Did It!"  aka "They stole our name!"

A Common Scam Defense: Similarity Between Homeopathy Advocacy and HYIP promotion

A frequent refrain among HYIP promotion are the following points:

• It's a conspiracy to destroy the alternative forms of income they don't want you to know
• You should be in control of your money, not limited to what "they" want you to know
• Various versions of _____ had been around since ______ and we do something like that

You can find this in almost every HYIP. If they were not outright stated, they were surely implied, or weasel worded like "new and profitable enterprise", often cloaked with buzzwords like cryptocurrency, penny auction, e-commerce, VOIP, and so on. 

We've seen the collapse of various scams using such cloaks. 

TVI Express, a huge international pyramid scheme that spanned several continents (India, Australia, US, most of Europe, several countries in Africa, China, Indonesia, Philippines...) claimed to be selling travel or travel club, and promoted itself as combining internet, e-commerce, working from home, and such. Little travel was provided. 

ZeekRewards, an international ponzi scheme was truly global with net winners (and victims) all over the world. It claimed to be earning huge profits through its penny auctions, but in reality it simply shifted money from last investors to the early joiners through facade of "profit sharing". It was shut down by Secret Service and forced into receivership.

Another scam was TelexFree, where owners claimed to be selling VOIP packages which lets you talk international voice calls over the Internet and avoid long distance phone fees (and for a while, they really did) but in reality is operating a Ponzi scheme based out of two separate countries: Brazil and the US, with investors form all over the world before it was shut down in Brazil, then the US, and even FBI and Homeland Security got involved in the raids.  It is estimated that company took in over 1 BILLION dollars from 1.9 million investors. 

In more recent news, UFUN out of Malaysia and Thailand enticed members to invest in its cryptocurrency UTOKEN, while claimed to be investing in various enterprises that will realize huge profit for its members. Thailand started a full crackdown weeks ago and had arrested more than a dozen high rankers, with wanted notices out for 200 more, with 300000 pages of evidence handed over to prosecutor's office recently, so there's obviously more to come. Its members were also arrested in Samoa and other places for fraud. 

They all implied that they are new ways to make money, that other people don't know or don't want you to know, and they can actually do what they promise. 

This sounds remarkably like homeopathy and alternative medicine advocacy to me, as they use the same arguments:

• It's a conspiracy of "mainstream medicine" to destroy "alternative medicine"
• You should be in control of your health, not have a limited vision forced upon you
• Various versions of alternative medicine had been around since _____

I'll leave the debunking of the homeopathy advocacy to Michael Vagg, while I tackle the HYIP promotion. 

Fiverr is the Goto Place for Shill Testimonials

Fiverr is a site where people put themselves out to do small jobs for $5.00 USD (thus the name) and recently, a LOT of scams needing "testimonials" from people decided to employ amateurs off Fiverr in hopes that people won't recognize them as shills.

Too bad, here's MyFlexJob getting caught using Fiverr folks for "realistic" testimonials.

Here's a "Mr. Alexander Herring" (Does he go by "Red"?) claiming to have realistic testimonials:

It's realistic, but not real, since she'll do it for anybody for $5!

But wait, there's more!

Any one can be conned: 5 rules of recognizing a con

One of the most frustrating aspects of being a skeptic is the utter... "faith" a victim has in his/her ability to recognize a con, i.e. "it can't be a con... I'd know if it is a con"  usually followed by "I met the owner / officer / vendors and they are sincere and smart people, and answered my questions." then even more social proof ("_____ vouched for him/her/it").

Social proof can be faked, folks. In fact, here are 5 rules of recognizing a con. I've seen the 5 rules before, but never in a single place. This may be as well a time to mention them.


Rule #1: EVERYBODY can be conned.

Sure, people who are naive are considered gullible, but the exceptionally bright are also gullible. The moment you consider yourself immune to cons, you are vulnerable. The EASIEST victims to con are the ones who considered themselves too smart and too knowledgeable to be conned. They are too proud to admit they can be conned.

"I'm sorry I said you were proud. Just stop!" / (c) 2012 Kevin Spear

Is that you, too proud to look down?


Rule #2: You will probably be conned in your area of expertise

Yes, you'll be conned in what you know. Why? Because con-men target those who "know". Your mind, being familiar with the area, automatically fill in the details, and that saved the conmen work. Furthermore, you also feel invincible in your area of knowledge, further increasing your vulnerability. The really smart people know a lot of different things and know enough to be skeptical and cautious as they can't be experts in everything. Remember, most of Bernie Madoff's victims are other money managers who thought they knew what Madoff's doing.

I am an NMR expert. To save time, let's just assume that I am never wrong. (source: Zazzle.com)

Will you have faith in your knowledge of the field, and thus, not ask the questions?

Scam Psychology: The illusion of explanatory depth (especially about MLM)

One phenomenon that initially puzzled the MLMSkeptic is the SEVERE LACK OF UNDERSTANDING by most MLM participants about their own industry. They seem to be completely unaware of the facts, and instead believe in misinformation, such as

• Harvard Business School teaches/endorses MLM (NO THEY DON'T!)
• MLM / Network Marketing Created the Most Millionaires (NO THEY DIDN'T!)
• Having a product means the scheme cannot be a pyramid scheme (WRONG!)

And many more.

It is as if many participants are relying on... "folk wisdom" passed down by their uplines, who are passing misinformation, whether by design or negligence, leading to a game of "telephone" where after a few generations / levels there are no facts left, only misinformation.

That's when I discovered yet another cognitive bias... "the illusion of explanatory depth".

Basically, most people only *think* they know something. This is termed "feeling of knowing" by psychologists, or "FOK". They only follow correlations, and form their own idea about what caused what, even though those can be elaborate ruses or illusions designed to trick them. They actually have NO IDEA how whatever they observed actually works.

Here's one example. Do you know how bicycles work? Are you sure? (Those who can look at a bicycle or ride a bike several times a week can probably skip this test)  Without looking it up, draw the bicycle frame, wheels, where are the pedals, and where does the chain go.

Go ahead, draw it. When ready, click "continue".

Scam Psychology: How Scammers Push Your Buttons through your personality disorders

The Age of Uncertainty
(Photo credit: Wikipedia)

As the MLM Skeptic, it is rather interesting to see many people who are defending their particular scheme from criticism suffer from personality disorders (not that I am a professional of any sort regarding psychology). They are often self-obsessed and arrogant as well as intolerant of ambiguity, and lack of empathy.

Many unscrupulous multi-level marketers and scammers play to these personality disorders by claiming they are VIRTUES, not disorders. These disorders are, instead, presented variably as confidence, conviction, certainty, and "they are not us".

People develop coping mechanisms when their self-image was diminished. One of the most common coping mechanism is retaliation: when they feel devalued, they devalue others as a response. Scams often play up this personality disorder by encouraging it with "they are not us; they don't think like us; they just don't understand us". It is then followed with epithets like "They have JOB -- just over broke", or "they will stay wage slaves while we achieve financial independence".

Any one who questioned the person's choice (the scam, in this case) will be devalued, even if they are best friends and family, and even spouse. That's why "intervention" when it comes to scams rarely succeed.

Another coping mechanism people develop is equating conviction with certainty. Conviction is a collection of your strong beliefs about the morality of your choice and/or behavior. If you don't really have much conviction, you'll often adopt certainty as if it is conviction. Thus you'll also develop certainty about other people (and what you believe to be THEIR conviction or lack thereof). This comes across as arrogance and intolerance. Scams play up this aspect by creating fanciful stories about the critics asking questions, such as "you're just jealous; you're just out looking for hits for your blog; you must have hated the owner; you're the 1% out to fleece us the 99%".  After Zeek Rewards ponzi scheme was shut down in 2012, some started floating fanciful stories about "SEC doesn't have a case because they privately admitted to our lawyers". Others even explained to newspapers that Security and Exchange Commission does not know what securities are.

However, what people don't understand is very often, certainty is an ILLUSION.

Scam Detector: What is "Cockroach Theory", and how does it apply to suspect schemes?

cockroach (Photo credit: TomSpinker)

Ever heard of the "cockroach theory"?

It's quite simple, actually. When you see one cockroach, there's probably a lot more hiding nearby.

When applied to investments and companies, it means when you see one problem, there's probably a lot more problems that you are not seeing. (And you should jump ship ASAP)

The theory is also applicable to potentially shady opportunities, actually. If you are smart enough to read the signs, and not ignore them.

Let's take one very obvious example: Zeek Rewards. They were shut down by the Feds in August 2012. But signs had been there for MONTHS that it was in trouble.

Zeekler, the auction, had been in operation since 2010 (as FSC auction and later Zeekler) without an auction license (required in North Carolina, their home state). They did not obtain an auction license until March 2012! But nobody checked. That may have been a roach but nobody saw it. Because everybody assumed it's all legal.

Did you know that Paul Burks, head of Zeek, was performing as "the singing magician" before he retired from performing and started MLMs instead? You know magic is just deception for entertainment, right? That may have been a roach but nobody saw it, because they've been distracted. 

In April 2012 Zeek Rewards suddenly banned a dozen or so European countries from participating, and gave several bogus reasons, one even blaming the US State Department Office of Foreign Asset Control (OFAC) uttered by the head Zeek Paul Burks himself. However, this was all proven to be lies only weeks later. Turns out they were both hit with thousands of stolen credit cards and by Denial of Service attacks. And their system can't handle it. The lie was pierced by BehindMLM within two weeks. Is that a cockroach you see? Did you miss it?  

By June 2012 they apparently got a local TV station to report on their "success", and even got the reporter to state that the North Carolina's Attorney General office had deemed the business legal. (Wonder whose palm they had to grease to have that happen?)  AG's office was so shocked, they demanded the video be taken down and the text changed on the TV station's website. Oh my, another roach! Did you miss this one too? Or is that "I see no roach (negativity)?"