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Quatloos! > Investment Fraud > HYIP & Bank Debentures > HYIP

High-Yield Interest Programs, Bank Debentures
& Bank Debenture Trading Programs,
and Prime Banks Programs

OPEN FORUM: Securities Fraud -- Due Diligence in Finance   Stock and Bond Fraud, including Boiler Rooms / Pump and Dump Schemes, Mutual Fund & Hedge Fund Fraud, FOREX scams, plus Churning, Private Placements, Venture and Bridge Funding, IPOs, Viaticals Fraud, HYIP and Prime Bank scams, MTNs, Historical Notes, Recovery Schemes, etc.

This is one of the most common financial scams. The scam artists will a wild tale of fortune including some or all of the following.

The scam artists will spin a long line of hokey nonsense relating to the post-World War II Bretton Woods accords, “off-sheet” financing by the “Top 50” worldwide banks, and “guaranteed” or “risk-free” trading. They will tell you that they (or somebody they are working for) is “one of only five (or six, or seven, or eight – or whatever number they pull out of the air at that particular moment) traders in the world who are familiar with these types of trades and are capable of pulling them off.” They will tell you that these trades are done at the “$100M” level only, but that miraculously you can start off with a very small amount of money and margin yourself into a $100 million position. Alternatively, they tell you that you can get a bunch of friends together and “pool” the necessary funds.

They will also tell you that they or whoever they are working for has done these trades for fifteen or twenty years, and have secretly made hundreds of millions of dollars. They are allowing you to do these trades instead of doing them themselves because they have made enough money and want to help you benefit some church, charitable, or humanitarian purpose. They will tell you that there is “NO WAY” that you money can disappear, and that it will sit in your own bank account unmolested until your hundreds of millions arrive. They will tell you that you can make astronomical interest rates, such as 20% to 80% per week, and that exponentially your profits will skyrocket.

How the Scam Artists
Get Your Money

The scam artists prey on your lack of financial sophistication. If you money was truly “not at risk” there would be absolutely no reason to have to put it up. Yet, the scam artists come up with a bunch of bogus tales about “off-balance sheet financing” and other hooey that convinces you to do one of the following:

+ You deposit your money in an account with a “Prime Bank” such as Citibank (which doesn’t know the scam is being perpetrated). The scam artists forge a letter of credit which they then exercise and transfer your money offshore, never to be found.

+ You deposit your money in an account with a “Prime Bank” such as CreditSuisse (which doesn’t know the scam is being perpetrated). The scam artists didn’t tell you that the account is a “correspondent account” held in that bank for their own bogus bank that they formed, and they simply transfer your money offshore, never to be found.

+ The scam artists convince you to put your money in a safe deposit box. Later, they tell you that it is stupid to keep money in cash where it is not earning interest. Instead, they say they will get “the traders” to accept a “bond”, such as a Houston Railroad Bond or an Emperial Chinese Bond that earns astronomic rates of interest. Only much later do you discover that the bonds are completely worthless.

And so forth and so on. Once your money has been deposited in the bank, there are about a hundred different ways for the scam artists to get at it.

THE LIES MADE TO PERPETRATE THE SCAM

"A big lie is more plausible than the truth."
-- Ernest Hemingway

Complete Lie: "There is a secret banking system where the big banks make astronomical returns, and you can't participate unless you pool with others or place your money with someone who has an place in the system."

This is a COMPLETE LIE, and anyone who says this is a scam artist. We regularly work with the major offshore banks, and have any friends and acquaintances at these banks, and can tell you that they laugh at the allegation that there is a "secret" banking system which produces crazily high returns as the promoters of the bank debenture scam suggest.

COMPLETE LIE: "The U.S. government is covering up this secret banking system."

This is a COMPLETE LIE that the U.S. government is somehow covering up this phantom banking system. This is NOT TRUE and anyone who says this is a scam artist. First, as shown above, it doesn't exist. Second, trading in currency is tightly monitored by literally hundreds of private groups worldwide, and even a small trade would instantly be recognized by these private groups.

COMPLETE LIE: "The program uses International Chamber of Commerce Approved Forms."

The International Chamber of Commerce does NOT approve forms for these programs, and anyone who claims this is a scam artist. To the contrary, the International Chamber of Commerce has put out warnings that it has not approved any such forms, and that forgers are illegally making up such documents without either the knowledge or approval of the ICC. Other forgeries which have been found include forgeries of documents purporting to be from the U.S. Federal Reserve Bank (FRB), the U.S. Department of Treasury, the Bank of England, and even the Queen of England!

If you see anywhere in the scam artists' materials that they or their forms are "approved" by the ICC run! This is the baldest of lies.

COMPLETE LIE: "These securities do not need to be registered with the U.S. Securities & Exchange Commission or the State Securities Commission of the state wherein they are marketed or sold."

This is NOT TRUE and anyone who says this is a LIAR. To the contrary, when legitimate bank debentures are sold to the public, they are ALWAYS registered with the Securities Commission of the state wherein they are sold, and in most cases are also registered with the U.S. Securities & Exchange Commission. IF YOU CANNOT CALL YOUR STATE SECURITIES COMMISSIONER AND CONFIRM THAT THE DEBENTURES HAVE BEEN REGISTERED, IT IS ALMOST CERTAIN THAT THEY ARE BEING MARKETED AND SOLD ILLEGALLY.

Private Placement Lies: Many scam artists will pitch that their schemes are somehow exempt from regulation because they are a "private placement". The truth is that many states require private placements to be registered, and at any rate if the scheme raises over $2 million aggregate amongst the states (i.e., $2 million anywhere) it MUST registered with the Securities & Exchange Commission!!!!! So, if someone says that they have raised $20 million dollars but they are not registered, it ain't a legitimate deal.

COMPLETE LIE: "There is a major U.S. bank which guarantees these instruments."

This is NOT TRUE and anyone who says this is a LIAR. The scam artists will tell you that they cannot disclose the identity of the U.S. bank which guarantees the investment, or else will tell you the name of whichever bank they pull off the top of their head, but either tell you that you should not contact the bank directly, or they get one of their scam artist buddies to call you up and represent that they are a bank officer. No U.S. bank participates in these schemes, period, and many of them issue warnings to the public not to get involved in this scams.

A recent variation of this scam is for the scam artists to set up an offshore bank with a name which is very similar to an international bank, such as "Barclays International Bank" (which doesn't exist and plays off the Barclays name). These offshore banks never have any real assets or backing, and their guarantees are worthless.

COMPLETE LIE: "Others have made money with these programs."

Nobody except the scam artists have ever made money with these programs. A few people have gotten a small portion of their money back, usually for helping the scam artist scam somebody else, and that is it. We've seen hundreds of these scams the past year, but not a single person who could actually document that they made even a single penny over what they invested into it.

People who claim that they have made money on these programs always fall into one of two categories:

  • Ringers, being persons set up and in cahoots with the scam artists to claim that they have made money; and
  • Suckers, folks who have been scammed and are now going along with the scam artist on the condition that the scam artist will repay them a portion of their money lost for getting new suckers into these programs.

COMPLETE LIE: "These programs are back by or involved with the International Monetary Fund."

This is a total load of bull hockey (see Notice at right). The IMF has repeatedly warned about this scam.

So, if somebody claims that their investment has IMF involvement, you know it is a total lie.

 RESOURCE   Prime Bank/High Yield Investment Schemes
Report from the Fraud Section, Criminal Division of the Department of Justice.

 FINALLY!  An HYIP Program that Works! - Parsons Heritage Offshore Opportunities Ltd. is the ONLY prime bank and HYIP program that YOU can trust! Strongly Endorsed by Quatloos!

 RESOURCE  HYIPs and Prime Bank Notes: Fact or Fraud?
Expose of Prime Bank NOtes, Corporate Roll Programs, Medium Term Notes, Bank Guarantees, Letters of Credit, and Stand By Letters of Credit, written by Investor Data Exchange.

HYIP/PRIME BANK/BANK DEBENTURES CASES

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A Scam With Many Names

• Bank Debenture Trading Program
• Bank Debenture Roll Program
• Seasoned Bank Debentures
• Collateral First Debentures
• Fresh Cut Bank Debentures
• Renting or Leasing of Treasury Securities
• Blocking of Assigned Treasury Securities
• "Limited Edition" Treasury Securities
• U.S. Dollar Bonds
• Federal Notes
• De-Facto Treasury Securities
• High-Yield Promissory Notes
• High-Yield Bank Notes
• Guaranteed Bank Notes
• Intermediate Bank Notes • Medium-Term Bank Notes
• High-Yield Investment Programs (HYIP)

Forum

Securities Fraud - Due Diligence in Finance - Stock and Bond Fraud, including Boiler Rooms / Pump and Dump Schemes, Mutual Fund & Hedge Fund Fraud, FOREX scams, plus Churning, Private Placements, Venture and Bridge Funding, IPOs, Viaticals Fraud, HYIP and Prime Bank scams, MTNs, Historical Notes, Recovery Schemes, etc.

Excellent

Some Thoughts on the History of Prime Bank Fraud -- Bureau of Public Debt explanation of Prime Bank Trading Programs, High Yield Investment Programs, Roll Programs and Private Placement Programs.

Articles

U.S. Department of Justice Explanation of Prime Bank/ High-Yield Investment Schemes

FBI Shuts Down Prime Bank Investment Frauds That Cost Investors $500 Million -- In a stunning series of nationwide raids, the FBI executed over 100 arrest and search warrants on persons involved with "Prime Bank" and "High Yield Investment Programs" and similar programs. From http://www.fbi.gov/ pressrel/ pressrel03/ mueller 030703.htm

Mastermind, Accomplice Sentenced to Prison in Prime Bank Fraud Schem

Three People Charged with multiple fraud counts related to a scheme to promote HYIPs

Combating Prime Bank and High-Yield Investment Fraud - Outline of speech by Ms. Rosalind Wright, Director of the UK Serious Fraud Office, that describes prime bank and HYIP scams and offers suggestion on combating these crimes

Judge Deems Lawsuit Re: Morganthau Bonds Bogus -- Judge Posner rips the plaintiffs in Marques v. Federal Reserve Bank for bringing a totally bogus lawsuit seeking payment of worthless historical bonds.

FBI Warning About HYIP and Prime Bank Programs -- The U.S. Federal Bureau of Investigations warns investors about bogus programs called HYIP or Prime Bank Programs, and also advises that anybody who helps sell such instruments is committing a serious federal criminal act.

U.S. Department of Treasury -- Bureau of Public Debt explanation of Prime Bank Trading Programs, High Yield Investment Programs, Roll Programs and Private Placement Programs.

U.S. Federal Reserve Board -- Sworn, under oath testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs about this scam.

International Chamber of Commerce -- Warning about Bank Debenture Trading Programmes

U.S. Securities & Exchange Commission -- Warning to All Investors About "Prime Bank" and Other Banking-Related Investment Schemes.

Office of the U.S. Comptroller of the Currency -- Fictitious Financial Programs Erroneously Attributed to the Federal Reserve.

U.S. Department of Justice -- Fraud Alert.

Better Business Bureau -- International Investment Schemes Very Risky / Investors Warned to Avoid Secret "Debenture Trading"

Declaration of Professor James E. Byrne -- Testimony given under oath in the case of SEC vs. Concorde Capital Enterprise, et al.

Sell HYIP Programs and Go to Prison -- The case of U.S. vs. Bollin.

"Preventing Financial Instrument Fraud" -- prepared by the ICC Commercial Crime Services, the anti-crime arm of the International Chamber of Commerce. This unique reference guide uncovers the mysterious world of High Yield Investment Programs (HYIP) and Financial Products such as Letters of Credit, Bank Guarantees, CD's, Safe-Keeping Receipts and more as used by Fraudsters. By Jon Merrett and Paul Renner

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If You Have Been Scammed or Have Been
Approached by Promoters of this Scam

Call your local FBI branch immediately, and tell them how you have been approached. Call also your state's securities commission. Contact the SEC at their Online Complaint Center. Cooperate with law enforcement -- maybe you can help them to catch the promoters!

If you have signed one of the "Secrecy and Confidentiality" agreements (however it may be titled) please be advised that the agreement is NULL AND VOID because it is part of an illegal agreement -- that is, you CANNOT be successfully sued because you signed one of these hokey forms and later went to law enforcement to lodge a complaint. Promoters often try to threaten people when they want their money back that they will be "sued" for violating the agreement, but the plain fact is that these agreements have no effect as a matter of law because the underlying scam transaction was invalid.

Note also that if you are a VICTIM of this scam, you have done nothing wrong and will not be prosecuted for cooperating and assisting authorities. Therefore, there is NO REASON NOT TO CONTACT THE AUTHORITIES to at least help prevent someone else from being scammed.

Finally, the BEST WAY that you are going to get your money is by way of a Victim's Restitution Order. That is, if the person who has scammed you is convicted, they will have to pay you your money back before they will be released from parole. This is another reason which you should immediately go to the authorities and disclose the fraud.

THE END GAME

Once a victim has figured out that he or she won't be getting their money back, they are then often lead into the "end game" where they will essentially assist in the fraud. The line the promoter will give is this: "Look, I can't give you your money back unless you bring someone else to me. Bring someone else to me, and I will give you a cut of their money." If the victim goes along, the victim is now also a promoter, and is guilty of fraud, securities fraud, embezzlement, and aid & abetting fraud, securities fraud, and embezzlement -- so don't go along: Turn the promoter in to the authorities instead!

As mention above, the BEST WAY to get your money back is to file criminal charges against the promoter, and seek a Victim's Restitution Order. Not only does this offer you your best hope of getting at least a portion of your money back, but it will also take the promoter off the street and hopefully save somebody else from being sucked into this scheme.

Please note that when someone tells you that they have made these astronomical returns off the program, it usually means that they have already been scammed, and are trying to get you into it so that they can re-coup part of their investment. Well, turn these folks in to the authorities, too, because they are no better than the original scam artist.

DENIAL

Like any other scam, people who have been scammed with these programs go into denial that they even have been scammed.

Many people can't get over the mental barrier that they have lost everything. The only thing they have to live for is the hope that their money might come back, and we have seen people wait for years even after the scam artist has completely vanished and they don't even know who to call to check on their investment. But they still sit around, thinking that someday, somehow, a check for millions will somehow miraculously appear in their mailbox.

Many people are embarrassed because they have been scammed. They've told their family and friends about this great investment, and simply can't face them to say that they did something stupid.

Many people are culpable because they have also gotten their family and friends to invest in these programs, and even if the scam artist can't be found, they will go to jail for aiding and abetting the felony sale of securities without a license, embezzlement, etc.

Well, all you folks who fall into these categories NEED TO WAKE UP AND SMELL THE COFFEE. Your money is gone, vamoosed, and you will never, ever get it back. The least you can do is report your losses to the police and to the FBI so that at least they can stop the scam artist before they hurt someone else.

STUPID ARGUMENTS

About twice a month, we get actually get calls from the scam artists themselves, posing from everything from an interested investor to an attorney acting on behalf of one of the roll programs. These idiots offer all sorts of B.S., arguing that their program is somehow "different" or that they have "guaranteed returns" or other such nonsense. Notably, they almost all hang up when we suggest that if their program is so good, that they should take it to the U.S. Securities & Exchange Commission and register it!

Again, we have seen literally hundreds of these programs over the last several years but we have YET to see even a single legitimate one. Not one!

THEY DO NOT EXIST

Every couple of weeks, some sucker who is about to be scammed calls us and says essentially "I've read your website but isn't it possible that some of these might be for real?"

No! Hell No!

None of these are for real, period. This scam has been going on for years, and to date NO program has been legitimate. If you can't find the proposed program investment in either the Wall Street Journal or the London Financial Times, and if it has not been registered with your State Securities Commissioner, then it is a scam. Any and all reasons why it is not so listed are the purest of lies.

During the course of the last several years, we have seen hundreds of these programs, but we have yet to see a real one! If there is a real one out there, we'd like to know because it would be the first. We're not holding our breath, however.

[Please do not send us information to evaluate these programs, unless you also send us the U.S. address of the promoter so that we can forward this information to law enforcement for them to check against their records.]

 

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