He is a registered Money Service Business (MSB) having his FinCEN Form 107 filed to prove it and that does cover currency exchangers. However the devil, as he frequently seems to be, is in the marketing. His conference calls are focused greatly on what a once in a lifetime investment opportunity that is the Iraqi dinar and one of his favorite catch phrases is that the dinar "is an investment, not a lottery ticket." A rather long and fairly tiresome example of his sales pitch is his "Dinar 101" video on YouTube. The video is close to 15 minutes long and hardly worth listening to except for unintended humor but honestly the first minute alone proves the point I'm trying to make. From which I quote:
This is strictly an opportunity to invest by purchasing the Iraqi dinar at an extremely discounted rate before the pending revaluation. The BH Group is a registered currency trader here to help you procure your dinars at the most competitive rate on the net and receive them in a punctual manner. We will guide, educate and support you through the entire revaluation process where other traders will only sell you dinar.
I am rather certain that holding a MSB registration does not give one a license to sell investments and it's clear that the Iraqi dinar is being sold as not only an investment opportunity but the investment opportunity of a lifetime. My problem is I can't seem to locate a single definitive citation on the FinCEN website that MSB's can not sell investment opportunities.
Perhaps I'm approaching the problem from the wrong direction, instead of trying to prove that being a MSB doesn't include the license to sell securities I should instead be trying to show that the group of people who are able to market investments does not include MSBs. Either way and as I said, my Google-fu is weak today and I'm having a harder time than is my norm in thinking this problem through. I'm not asking anyone here to do my homework for me but if off the top of their head anyone can point me to some applicable legislation or particularly any relevant case law you'd greatly have my thanks.
And in a completely related note, imagine I in no way was licensed to sell securities but wanted to start my own hedge fund. The second part of that is the only one that requires any imagination. What regulatory difficulties might I face if I started accepting application fees to my hedge fund before I filed even a shred of paperwork registering my fund with any controlling authority? Would the fact that I wasn't a licensed dealer/ broker/ investment adviser pose any hurdle in getting my hedge fund registered particularly in light the fact I was using the internet to solicit application fees for that fund?
And.,... I almost saved this for a follow up question but since it pertains to any answers you might offer to questions in the preceding paragraph let me pose a "hypothetical" question. If you were a District Attorney what might you have to say about me if I:
* Was not licensed to sell securities but I tell a lot of people I am.
* I tell people I'm setting up a hedge fund to invest in the "Post RV" Iraqi economy.
* I know that 99.9% of the people who might be willing to pay me a non refundable application fee to join my hedge fund do not qualify as sophisticated or qualified investors under SEC guidelines so I tell people that even though they need to pay me a non refundable $750 application fee to become part of my hedge fund I wont actually create the fund until AFTER that financial miracle known as the revaluation of the Iraqi dinar occurs. You see, after the "RV" all the people who bought Dinar will be overnight millionaires and that will make them sophisticated investors eligible to invest in my hedge fund.
* Did I mention that the $750 application fee to my hedge fund was non refundable and the event that needs to happen before I file any paperwork to initiate my hedge fund will never, ever happen.
Now assuming after any unspecified period of time elapses and at least one of the people who gave me $750 to reserve a seat in my hedge fund grew tired of waiting for the dinar to "RV" and for the hedge fund to be formed and they lodged a complaint, if you were a DA presented with those facts (and the evidence to support them) would you take an indictment to the grand jury and if so, what might the charges be?