Two days ago (September 29th, 2017) SEC shut down two companies ran by Maksim Zaslavskiy trying to promote ICOs, or initial coin offerings. Zaslavskiy claimed his cryptocurrencies are backed by Real Estate (REcoin) and Diamonds (DRC - Diamond Reserve Club/Coin). Turns out they are just bogus claims.
For those who track this sort of things, this is a virtually beat-for-beat clone of an earlier scam, Gemcoin, "backed by amber", shut down by SEC back in 2015.
Gemcoin was a fictional cryptocurrency released by USFIA based in Arcadia, California. Its head is Steve Chen (also known as Chen Li 陳力). Chen ran 13 different entities that dabbled in MLM telecom, real estate, jewelry and gemstones, art imports, and so on, and also encouraged recruitment from inside China. In 2014, his latest scheme, American Mining 美洲礦業 collapsed in China leading to multiple arrests. American Mining also promised massive profits by investments in amber.
Steve Chen's final scheme, Gemcoin, is aimed at overseas Chinese ex-pats. It is supposedly a cryptocurrency like Bitcoin but backed by amber. It also claimed amber is very valuable and USFIA has exclusive mining rights and jewelry factory in the Dominican Republic. It had the backing of several local celebrities, including former mayor of Arcadia John Wuo. Steve Chen and his second, Leonard Johnson, ran investment seminars in multiple Chinatowns across North America, sometimes even dressing up his security guard, John Zhang, as a "jewelry appraiser".
When SEC finally shut down USFIA/Gemcoin in 2015, the scheme had taken in over 30 million dollars. John Wuo, who had endorsed Gemcoin, quickly resigned as city councilman "due to health reasons". And the truth started coming out... The receiver who took over the company said there are no gem grade amber in storage, just regular 'souvenir' grade stuff. And the alleged contract for the mine doesn't exist either. It was all one huge hoax scam.
When you go through the history of REcoin and DRC, you will find a familiar albeit accelerated pattern.
a blog about Skepticism, MLM, Scams, and Critical Thinking
Sunday, October 1, 2017
Friday, September 29, 2017
Less than 1/4 of all pyramid scheme victims ever file a complaint, says FTC survey
Some recent surfing brought me to an interesting bit of information:
Here it is important to note that FTC questions were actually 1) Did you purchase an opportunity to operate (your) own business 2) Were you lead to believe most of the money earned from this business would be from recruiting others to join the business, rather than sale of products and 3) Were you deceived by the offer of business opportunity with false income claims or false offers of assistance? (Not exact wording, but you can find the questions in the linked PDF)
It is worth noting that in MLM...
A) Almost all MLM claim you are "owning your own business", follow by a derisive attitude toward a job ("just over broke" is often uttered).
B) You almost always get some lecture that you are NOT in a pyramid scheme, yet you are told to "build your team", which is just euphemism for recruiting.
C) Many questionable "leaders" of MLMs will resort to false income claims and false offers of assistance to get you to join, then blame you for your failure. "You must be doing it wrong", they'll point fingers, "because it worked for me."
But there is a hidden statistic that is not obvious until you read the fine print...
But think about it. If there are so few reported incidents for them to even calculate the odds of underreporting...
Either there are so few instances of fraud in business opportunities...
Or there are so many instances of underreporting in business opportunities that it's like an iceberg...
Let's consider a real ponzi case... Zeek Rewards.
...consumers who had purchased a [membership in] pyramid scheme were the least likely to complain – less than one-quarter indicated that they had complained. -- FTC fraud survey (2004)This is a fascinating statistic. The FTC definition of pyramid scheme specifically means "pyramid marketing schemes", as in MLMs that went over to the dark side.
Here it is important to note that FTC questions were actually 1) Did you purchase an opportunity to operate (your) own business 2) Were you lead to believe most of the money earned from this business would be from recruiting others to join the business, rather than sale of products and 3) Were you deceived by the offer of business opportunity with false income claims or false offers of assistance? (Not exact wording, but you can find the questions in the linked PDF)
It is worth noting that in MLM...
A) Almost all MLM claim you are "owning your own business", follow by a derisive attitude toward a job ("just over broke" is often uttered).
B) You almost always get some lecture that you are NOT in a pyramid scheme, yet you are told to "build your team", which is just euphemism for recruiting.
C) Many questionable "leaders" of MLMs will resort to false income claims and false offers of assistance to get you to join, then blame you for your failure. "You must be doing it wrong", they'll point fingers, "because it worked for me."
But there is a hidden statistic that is not obvious until you read the fine print...
... In conducting this test it was necessary to drop the government jobs and business opportunities categories because there are too few consumers who experienced these types of frauds to meet the necessary statistical properties to conduct a Chi-square test.The "government jobs" fraud is victim paid for false promises of government jobs. And business opportunities... needs no introduction.
But think about it. If there are so few reported incidents for them to even calculate the odds of underreporting...
Either there are so few instances of fraud in business opportunities...
Or there are so many instances of underreporting in business opportunities that it's like an iceberg...
Let's consider a real ponzi case... Zeek Rewards.
Friday, September 22, 2017
Commentary: Is LuLaRoe eating its own tail?
Recently, multiple news outlets reported several disturbing reports that LuLaRoe is not only rescinding money back policies, but also threatening to sue a blogger critical of its operations to obtain information that it claimed were "proprietary". This has raised questions about why would a company with claimed 80000 reps would turn on its reps like this.
First, multiple TV stations reported that local reps are worried when LuLaRoe rescinded its no-fee 100% money back and free return shipping policy, which has only been in effect for a month. Instead, reps are to use the regular return channel, which only return 90% of price, but also have to pay shipping.
According to reps, the inventory you get from LuLaRoe is like hitting a lottery, as you cannot specify designs, merely quantity and size. Similar to collectible card games. Certain rare patterns sell quickly at inflated prices on eBay or such, while the rest languish in rep's stock, until the rep either liquidate them on eBay and give up, or try to go through the buyback process. There are rumors that up to 4000 cases of refunds are pending, and people have been waiting for months
And unlike other MLMs, LuLaRoe's startup costs are extremely high, as much as 5500 dollars to start, and if rep can't sell them, often the advice one gets from rep's upline is "order more!" Some reps claimed you need about 15000 in inventory and markup of over 40% to earn a profit. And if you get a bunch of duds from the factory order (remember, it's random), you will have to arrange a trade with a different rep... if you can find someone who wanted your duds and trade you something they considered duds.
One blog that exposed such practices, and other complaints about LuLaRoe from disgruntled customers and reps was Christina Hinks, better known as MommyGyver online. And after publishing many such complaints, including documents shared online by such, Hinks has been served with a "discovery petition" from LuLaRoe demanding that she...
LuLaRoe so far has yet to comment about this potential SLAPP suit, though they did respond to the change in return policy (which is technically against their own company policy that changes in return policy must be announced for 30 days before it can go into effect). LuLaRoe's statement claimed the policy was always 90% buyback. The "improved" 100% buyback and free shipping was merely a temporary "waiver".
First, multiple TV stations reported that local reps are worried when LuLaRoe rescinded its no-fee 100% money back and free return shipping policy, which has only been in effect for a month. Instead, reps are to use the regular return channel, which only return 90% of price, but also have to pay shipping.
According to reps, the inventory you get from LuLaRoe is like hitting a lottery, as you cannot specify designs, merely quantity and size. Similar to collectible card games. Certain rare patterns sell quickly at inflated prices on eBay or such, while the rest languish in rep's stock, until the rep either liquidate them on eBay and give up, or try to go through the buyback process. There are rumors that up to 4000 cases of refunds are pending, and people have been waiting for months
And unlike other MLMs, LuLaRoe's startup costs are extremely high, as much as 5500 dollars to start, and if rep can't sell them, often the advice one gets from rep's upline is "order more!" Some reps claimed you need about 15000 in inventory and markup of over 40% to earn a profit. And if you get a bunch of duds from the factory order (remember, it's random), you will have to arrange a trade with a different rep... if you can find someone who wanted your duds and trade you something they considered duds.
One blog that exposed such practices, and other complaints about LuLaRoe from disgruntled customers and reps was Christina Hinks, better known as MommyGyver online. And after publishing many such complaints, including documents shared online by such, Hinks has been served with a "discovery petition" from LuLaRoe demanding that she...
...disclose the identity and contact information of potential defendants who have damaged LLR and its goodwill by providing Respondent with LLR's confidential and proprietary business information, information about LLR and its merchandise, and false, derogatory information regarding LLR, much of which respondent has posted on her blog, www.mommygyver.com.The interesting thing is much of the information had already been shared online via various social media platforms.
LuLaRoe so far has yet to comment about this potential SLAPP suit, though they did respond to the change in return policy (which is technically against their own company policy that changes in return policy must be announced for 30 days before it can go into effect). LuLaRoe's statement claimed the policy was always 90% buyback. The "improved" 100% buyback and free shipping was merely a temporary "waiver".
Tuesday, September 19, 2017
Scam Tactic: Moving the Goalpost (aka Special Pleading)
Moving the goalpost is very simple to explain with a single image:
If someone moves the goal post, you'll never to be able to score a goal.
So what does that have to do with scams? Two ways:
1) when scammers promised one thing, then moved the goalpost with some excuses, or
2) when scam deniers tried to deny the evidence of the scam by moving the goalpost.
Some suspect that recent attempts by Visalus to roll back the promised "founders equity incentive plan" may also be "moving the goalpost" after one side had already satisfied the requirements, only to be met with even MORE requirements from the other side or lose the supposed equity incentive they have gained, that a judge had to issue a restraining order.
OneCoin, which has been accused by multiple regulatory bodies on multiple continents of being a scam or a suspect scam, has repeated changed or delayed its IPO or ICO (depending on when you asked). In January and February 2017, OneCoin announced they will go IPO in "early 2018", then the date was moved to July 2018 according to a Chinese website on OneCoin. However, in September 2017, the news completely changed. Instead of IPO, affiliates of OneCoin claimed that OneCoin will conduct an ICO (initial coin offering) instead, and it will not be until October 2018. That's at least THREE delays in less than a year, and it's ALWAYS a year away.
"Always delay the day of reckoning" is a standard bull****er tactic.
Let's go onto our next topic, scam denier moving the goalpost
 |
| Moving the goalpost, courtesy of zapiro @ zapiro.com |
So what does that have to do with scams? Two ways:
1) when scammers promised one thing, then moved the goalpost with some excuses, or
2) when scam deniers tried to deny the evidence of the scam by moving the goalpost.
Scammer Moving the Goalpost
Scam companies that promise an IPO (initial public offering) while offering stocks or options to affiliates are known to move the goalpost because the IPO either will never take place, or takes place but were completely useless. One such example was Wantong Miracle 萬通奇跡 scam in China, where a known scammer who launched multiple scams in China AND in the US seem to have finally been arrested by Chinese authorities.Some suspect that recent attempts by Visalus to roll back the promised "founders equity incentive plan" may also be "moving the goalpost" after one side had already satisfied the requirements, only to be met with even MORE requirements from the other side or lose the supposed equity incentive they have gained, that a judge had to issue a restraining order.
OneCoin, which has been accused by multiple regulatory bodies on multiple continents of being a scam or a suspect scam, has repeated changed or delayed its IPO or ICO (depending on when you asked). In January and February 2017, OneCoin announced they will go IPO in "early 2018", then the date was moved to July 2018 according to a Chinese website on OneCoin. However, in September 2017, the news completely changed. Instead of IPO, affiliates of OneCoin claimed that OneCoin will conduct an ICO (initial coin offering) instead, and it will not be until October 2018. That's at least THREE delays in less than a year, and it's ALWAYS a year away.
"Always delay the day of reckoning" is a standard bull****er tactic.
Let's go onto our next topic, scam denier moving the goalpost
Thursday, September 7, 2017
Even "Hedge Fund of the Year" Got Tricked By Ticket Ponzi Scheme
A sports talk show radio host claims he has access to an almost unlimited amount of discounted major sports tickets, and he needed a lot of money to buy them in order to share the profits. Do you believe him?
A "hedge fund of the year" with 18 billion assets did, and it appears they have lost $4.3 million they put into two companies controlled by this talk show radio host.
You may think who'd believe this sort of stuff, or how can they be this stupid, but really, think about it...
Hedge funds, esp. fund of the year are NOT stupid.
However, there's no doubt that this is a ponzi scheme... When the Feds arrested the radio talk show host and uncovered a trove of communications between him and his co-conspirators, as well as evidence of his millions in gambling debt. Robbing Peter to pay Paul is the very definition of Ponzi scheme. This radio talk show host, who co-hosts with a VERY famous former NFL celebrity, had been accused with running this scheme.
Yet you can see this sort of argument proliferate in the "make money fast" market, and promoters use the language of "this can't possibly be a scam because it associated with _____", and this guy has it in spades. A famous hedge fund gave him millions of dollars. He co-hosts a show with a celebrity. He can't possibly be a scammer, right?
WRONG!
Lesson to take away: when someone tries to sell you something on reputation only, think VERY VERY HARD on it. The risk is probably much higher than you think.
A "hedge fund of the year" with 18 billion assets did, and it appears they have lost $4.3 million they put into two companies controlled by this talk show radio host.
You may think who'd believe this sort of stuff, or how can they be this stupid, but really, think about it...
Hedge funds, esp. fund of the year are NOT stupid.
However, there's no doubt that this is a ponzi scheme... When the Feds arrested the radio talk show host and uncovered a trove of communications between him and his co-conspirators, as well as evidence of his millions in gambling debt. Robbing Peter to pay Paul is the very definition of Ponzi scheme. This radio talk show host, who co-hosts with a VERY famous former NFL celebrity, had been accused with running this scheme.
Yet you can see this sort of argument proliferate in the "make money fast" market, and promoters use the language of "this can't possibly be a scam because it associated with _____", and this guy has it in spades. A famous hedge fund gave him millions of dollars. He co-hosts a show with a celebrity. He can't possibly be a scammer, right?
WRONG!
Lesson to take away: when someone tries to sell you something on reputation only, think VERY VERY HARD on it. The risk is probably much higher than you think.
Saturday, September 2, 2017
How to spot truth in sea of lies, rumors and myths
Spotted this in the Lifehacker archives (originally published 2012) but it's still relevant
http://lifehacker.com/5950871/how-to-spot-truth-in-the-sea-of-lies-rumors-and-myths-on-the-internet
The internet is full of crap. For every piece of reputable information you'll find countless rumors, misinformation, and downright falsehoods. Separating truth from fiction is equal parts a mental battle and diligent research. Here's how to make sure you never get duped.As long as words are hitting the page, news and facts are filtered through someone. Sometimes this is a ludicrous rumor that somehow morphs into a fact, or even just a small tip that doesn't work at all. Filtering out the junk from the facts is hard, but it's not impossible.
http://lifehacker.com/5950871/how-to-spot-truth-in-the-sea-of-lies-rumors-and-myths-on-the-internet
Friday, August 25, 2017
IPro Network One Month Update: still no proof of any original claims
More than a month ago, I highlighted some spurious claims by (over-)enthusiastic IPro Network members claiming that some famous personalities have "endorsed" IPro Network.
Two anon comments were left claiming I know nothing, blah blah blah, but left NO evidence to rebut any of the observations. I invited them to leave publicly verifiable evidence, not "I know the secret call me" or "my friend told me" evidence.
It has been about a month, and I haven't gotten a single reply.
So I decided to go search for some myself. Is there any news that Kevin Harrington endorses IPN?
Google says... nope. Indeed, there is ZERO mention of Kevin Harrington with ANY sort of cryptocurrency or blockchain opportunity in the entire 2017 when searched via Google News.
Instead, it appears that in 2017, Kevin Harrington is jumping into soap, cannabis, marine phytoplankton (sea scum), and horse racing, not to mention lending his name to entrepreneur bootcamps and invention services. But nothing about cryptocurrency, and definitely not IPN.
Indeed, the ONLY webpages that mention Kevin Harrington and IProNetwork together are IPro Network members webpages (or social media) and event listings that mention his one-time appearance.
Yet this tweet is still there:
And here's a claim that Kevin Harrington has "JOINED" with Pro Currency Team (i.e. IPro Network)
https://plus.google.com/115931890863103213165/posts/VXckhxCjDJk
I am still waiting for the evidence, guys.
Two anon comments were left claiming I know nothing, blah blah blah, but left NO evidence to rebut any of the observations. I invited them to leave publicly verifiable evidence, not "I know the secret call me" or "my friend told me" evidence.
It has been about a month, and I haven't gotten a single reply.
So I decided to go search for some myself. Is there any news that Kevin Harrington endorses IPN?
Google says... nope. Indeed, there is ZERO mention of Kevin Harrington with ANY sort of cryptocurrency or blockchain opportunity in the entire 2017 when searched via Google News.
Instead, it appears that in 2017, Kevin Harrington is jumping into soap, cannabis, marine phytoplankton (sea scum), and horse racing, not to mention lending his name to entrepreneur bootcamps and invention services. But nothing about cryptocurrency, and definitely not IPN.
Indeed, the ONLY webpages that mention Kevin Harrington and IProNetwork together are IPro Network members webpages (or social media) and event listings that mention his one-time appearance.
Yet this tweet is still there:
Kevin Harrington of shark tank endorses https://t.co/pnBqODzynX— IPRO NETWORK (@IPNCrypto) June 24, 2017
The revolution is here!
Vid-https://t.co/sag7Ur2vh1 #bitcoin #proc #ipn
And here's a claim that Kevin Harrington has "JOINED" with Pro Currency Team (i.e. IPro Network)
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| "Kevin Harrington from the Original hit TV show (Shark Tank) Joins With Pro Currency Team (IProNetwork)..." claims G+ post |
https://plus.google.com/115931890863103213165/posts/VXckhxCjDJk
I am still waiting for the evidence, guys.
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