Scam Hilarity: Suspect ponzi claims to be mining bitcoin w/ perpetual motion engine

Woo, short for woo-woo, is a term used to describe something that is completely implausible, yet explained with pseudo-scientific and potentially-plausible jargon that can fool innocent sheeple. You can encounter woo in all sorts of places, and most of the time they do no harm. However, when they show up in medicine and finance, they can do quite a bit of harm indeed. And today, we'll discuss the a new wrinkle... physical woo on top of financial woo.

But let me start from the beginning.

HYIP, or "high yield investment program" is a form of ponzi scheme that promised impossibly high yields. Claimed returns like 1% per day is not uncommon.

Some of them are pretty transparent in being a scheme, while others may adopt weasel language like "crowdfunding" or "charity". Yet others turn to woo explanations for their ability to pay such high yields that makes absolutely no sense when examined in detail. Frankly, it failed to pass the smell test... If they have techniques that can reliably generate such income, just put down a mortgage or borrow X dollars from credit card or bank, and they'll make it back in no time. Right? Yet there have been, for decades, schemes that attempt to explain their ability to generate such returns, with bogus excuses such as "bridge loans" [DOJ], "P2P lending" [CNBC], "forex" [DOJ], "arbitrage" [wikipedia], "penny auctions" [CBSnews], "prime bank" [SEC] and so on.

The latest buzzword is cryptocurrency, and it's no wonder ponzi schemes have latched onto it as the latest craze, by incorporating something people who have heard of, but do not understand, as their woo. Some launch their own cryptocurrency (that nobody would ever use), yet others latch onto the idea of cryptomining, the idea that you can "mine" bitcoin and other currencies.

While cryptomining is real, it is hard to make money in such because the hardware to mine and the electricity to run them, not to mention cooling, are expensive as well. It may be possible to run such in China and Eastern Europe, where electricity is cheap (by government mandate) and hardware and labor are cheap, esp. if one exploit scale by running massive crypto-mine.

So the latest crypto-woo is launched by a company called USI-Tech, which used to be Forex HYIP (see above), but they've since switched to Cryptomining as their new woo. Recently in London, they've shown their latest "innovation"... they can create "virtually FREE energy" to run their cryptomining machines.

USI-Tech claims they can create "virtually free energy",
but they only want to run cryptomining rigs with it

Perpetual motion machine doesn't exist, as it violates law of thermodynamics. Yet there are plenty of kooks who claim they made one, or claim the knowledge was suppressed by the evil government or energy consortiums or something. Though you had to admit, using one to power cryptomining is rather cute.

But what does this thing look like?

Scam Psychology: Theory on Stupidity, Scam, ponzi, and pyramid schemes

Ever heard of Professor Cipolla's theory on stupidity? Neither have I until recently, but it explains quite clearly how the world works, esp. scams.

According to professor Cipolla, you can measure a person by 2 axis: benefit derived from their own actions... and benefit to others because of their own actions

It roughly goes like this:

Cipolla's theory on stupidity, summarized

Scam Psychology: The Secret's real secret is victim-blaming and reckless thinking

Recently, I came across MLM "inspirational" propaganda that permeated social media. An example is embeded below, along with my reply:

“But all the love in the world won't save a sinking ship. You have to either bail or jump overboard.” -- Sarah Dessen

— Kasey Chang (@kschang777) October 28, 2017

The original tweet is an attempt to reframe sunk cost fallacy as a virtue, when it's really a cognitive bias that leads you into making irrational decisions.

Think about it... Why is "working through" the pain is preferred way to resolve the pain, when it is just as easy to stop the pain altogether?  Yet that is clearly the implication of the original tweet... by implying that your setbacks are only temporary, and as long as you dedicate sufficient effort you will succeed.

This is unrealistic, dangerous and utterly reckless thinking, yet what MLMers call "positive thinking".  Positive thinking was repopularized recently because some author copied a 1910 book and added some pseudoscience to unproven pop psychology. And MLMers ate it up. 

Yes, I am talking about "The Secret".

First of all, the Secret is not new. As I said, it's a rewrite of a 1910 book with some new pseudo-science references to quantum physics that really made no sense. It is basically magical think: if you ask and believe, you shall receive. It's a rephrase of Bible Matthew 21:22, yet somehow this was generalized to anything in life.

Yet there are a lot of stuff you don't know that's in The Secret...  And they are things you won't hear about from the MLMers who don't want to read about "negativity", even if it's in the book that taught them about positivity.

MLM History: Weight Loss, DMCA Abuse, and Child Porn, Oh My

Weight loss industry is a 60 BILLION dollar business (2013 figure) and it's no surprise there are a lot of various unproven claims from companies that sell magic weight loss formulas, each with its own claims how its own secret ingredient can help you lose weight through some semi-plausible mechanism. Frankly, all of them are bull****. The more you diet and exercise, the more your body adjusts to counteract your efforts. Most of the contestants in "The Biggest Loser" gain back all the weight they lost in a few years, despite all attempts to keep off the weight.

Consumers are getting wise to the various weight loss woos, and the entire diet industry is seeing a slow down, no doubt helped along by magic claims such as "alternative" to gastric bypass surgery by simply swallowing something. That company is called Roca Labs.

To quote the FTC director of Bureau of Consumer Protection, "Roca Labs Has An Adversarial Relationship With The Truth". And that's only the beginning.  (for a complete list, see TechDirt's Roca Labs coverage)

They claimed their product has a 90 percent success rate. In fact, they conducted no trials or clinical studies with their own products.

They offer 50% discount to people who videotape their "success stories", but did not tell people to disclose that they were compensated for such stories.

They operated a website that showed dangers of gastric bypass, with a page that links to selling Roca Labs products, without disclosing they actually own and run the website.

They have a "gag clause" in their contract that if you buy their stuff, you are contractually prohibited from saying anything negative about them for ever and to anybody including review sites and even BBB. And they have sued such customers.

They also claim if you say bad things about them, they'll rescind any discounts you've been given and they'll sue you for the difference. (!)

They tried to sue pissedconsumer.com to shut down negative comments left by members. (They lost)

They threaten to sue the witnesses at their trial for violating the unenforceable gag clause, in a clear case of witness tampering, threaten to sue the other party's expert witness and threatened him with criminal violations, as well as sue the other party's lawyer for statements made in court.

They tried to use DMCA takedown to hide criticism against them

They threaten to sue TechDirt (twice) for reporting on the above egregious behavior, including once from merely QUOTING the lawsuit.

They claimed their opposing lawyer had bribed a state senator into passing the anti-SLAPP law of Nevada which hindered their SLAPP lawsuit. (It was dismissed)

If you are a victim in Ponzi scheme under receivership, you MUST file a claim BEFORE the deadline!

A lot of ponzi schemes were caught by authorities and assets seized so the victims can be repaid.

• ZeekRewards Receivership has sent out hundreds of thousands of checks for hundreds of millions of dollars. All victims with allowable claims have received funds for at least 75% of their losses. 

This was a huge ponzi involving almost a billion dollars and a million victims. And this was one of the most successful repayments by the receivership.

But notice the term:  All victims with allowable claims

That means victims who filed all the proper paperwork proving the amount of their loss and other requirements.

Victims who did NOT file the paperwork will probably NOT get anything.  And one case that was adjudicated September 2017 illustrated this clearly.

Scam Tactics: Knowing the Differences among FDA Registered, FDA Certified, and FDA Approved

Recently, someone posted the following comment on BehindMLM

"Davie Watkins" claimed on 6-OCT-2017 that "FDA approved
Vida Divina's Coffee Line in October 2017"

Let's first examine, what did "Vida Divina" reps say about FDA? If you Google, you may find:

The search results says "FDA certified", or "FDA Approved". But what is the truth?

None of the actual results link to FDA, it's just announcements, and they can't even agree on the language. Some say "certified", some say "approved". What is the truth? As it turns out, it was NEITHER.

Scam Psychology: Why Scammed Victims Refused to Believe They've Been Scammed

As the #mlmskeptic, it is often sad to see how people turned absolutely illogical when it comes to money. We all like to believe we are rational creatures, capable of evaluating problems objectively. However, scientists have shown that our biases have far more hold on our processes than we think, and skepticism must be learned to combat those biases.

Let's take ZeekRewards for example. ZeekRewards is a convicted ponzi scheme that was closed in 2012 by US Secret Service and SEC.  You can learn more about Zeekrewards on Oz's website BehindMLM.com , or check my attempt to track the scam throughout 2012 until just as it closed.  But basically, even AFTER the scam was closed by the authories in October 2012, people CONTINUED to believe in the scam.  One of them even posted this note on the closed office window of Zeek:

"We forgive you / Please restructure and save our Dreams"

There are comments posted by conspiracy theorists who insisted that Zeek was closed for nefarious reasons, and Zeek cannot possibly be a Ponzi scheme.

Curt Miller: It was the SEC that slowed your growth, sorry. There were no victims until the government came around...
only 2 million happy affiliates. It was no ponzi and the program would NEVER have gone bankrupt. 

Basically, people are in denial. They refuse to believe they have been scammed. Instead, they behaved irrationally by spinning tales that fit their own biases.

Scientists have been studying this for a long time, and they now have more proof that we would rather believe in something that cost us $$$ rather than accept bad and unpleasant news.