ATM LEASEBACK SCHEMES-- any insight?

[worried]

The other team seems conspicuous by its absence and silence.


Crickets.

Hopefully, for their sake, they're all talking to lawyers/accountants right now... that's all I ask of people: get real professional advice and follow it...

[worried]

It's starting to make a LITTLE more sense:

http://finance.yahoo.com/news/pf_article_113032.html

I found the above link on another thread in this forum started by notorialdissent: "Corporate Shells for sale - Not Cheap"

It turns out 'Silverhill Management' (originally incorporated in Delaware, one of three states singled out in the article for hotbeds of shell company activity) looks to have simply been a 'shell company'. There didn't have to be any logic behind Fuel Doctor buying Silverhill other than the already established and (somewhat) 'aged' presence of a shell company with at least SOME history of SEC filings. But, it looks like one of the creditors to Silverhill didn't like the new arrangement (getting paid back with FDOC stocks) and he sued for several things including securities fraud.

It's still a bit murky to me how and when (but not the 'why' I don't think ) Gillis, Wishner, and NASI got involved with FD...

[worried]

Here is a partial answer to Tednewsom's original question ("are there any legitimate ATM leaseback schemes"):

https://www.chase.com/commercial-bank/e ... -equipment

According to the above, there ARE legitimate leaseback arrangements. With some HUGE differences between those and the typical ATM leaseback scam:

#1 it's BACKWARDS. In the legal cases, it's YOU who have no cash but lots of expensive equipment. You sell it to the bank and they lease it back to YOU who continue to use/operate that equipment.

#2 The bank (who is the one forking over the money like you would be in the ATM scam) ACTUALLY KNOWS WHAT THEY'RE DOING (unlike you).

#3 The bank knows where THEIR equipment is at all times and can easily SEIZE it at anytime if you stop making your lease payments. But, YOU can't do that in the ATM scam. Oh, you're promised that the machines are insured and you'll be paid if NASI goes belly-up for some reason... really? prove it. Get the insurance policy and get it vetted through your own professional legal/financial advisor. But... also, say it IS a real insurance policy through a real company... will they be able to refuse to pay out if/when NASI gets busted for securities violations, etc.? That's what insurance companies do you know, they figure out ways to NOT pay....

#4 And... just TRY to execute multiple leaseback arrangements with different banks on the same piece of equipment. I guarantee you the banks will catch you on that as soon as you try and you'll be hauled off to jail for even TRYING. For the ATM leaseback scam, YOU don't really have way of knowing if any of 'your' ATM's exist, actually 'belong' to you, or solely to you... Lots of things to consider...

So, no actual legitimate ATM leaseback schemes found yet. But, it's a little easier to see how some similarity to a legitimate financial trick, along with other misdirection and fast-talk helps to push people into doing what they want to do: BELIEVE....

[MarvinGardens]

There's been quite a lot of activity on this thread since I last visited. Perhaps I can provide a little insight about due diligence from the viewpoint of one who has done a lot of it and can be sued and lose his license if he does a poor job of it.

I ran across this board just by typing in the name of the company in question and following my nose. I'm sure the other professionals who have weighed in did the same thing. It's like a quick and easy first pass. The idea is to eliminate the obvious bad proposals with the least amount of expense and hassle.

Sometimes you find out things very quickly that you used to have to pay a researcher, attorney or other financial type to execute. I love the Internet. It can save a lot of time. It may seem unprofessional to someone unfamiliar with the process, but it's just picking the low hanging fruit.

@worried quite reasonably encourages us to seek sound professional advice on any investment. The problem is, in this case, no retail financial adviser, broker, banker, CPA or financial attorney is really qualified to do this with perhaps a few exceptions. They can advise you on your portfolio, the quality of a contract or, if you spend enough money, whether the purchase of small business or franchise makes sense, evaluate a real estate deal ... that sort of thing.

But they cannot evaluate a deal such as the one at hand because it is simply too complex and too time intensive and therefore expensive to justify it. They will all punt if they are honest, tell you "if it sounds to good to be true ..." and advise you to select from other, more mainstream investments.

Evaluating deals such as NASI's is an occupational specialty and not commonly available to the retail public. Real due diligence, of the type that must be performed before taking a company public, costs several tens of thousands of dollars not hundreds. Since it has not been vetted by any regulatory agency, the problem with the NAS offering is that to fully determine whether or not the company is a legitimate business would require that depth of examination. No one is going to pay the price, so their promise must be taken on faith. I see this as a faith based investment and as such could never recommend it to a client.

The fact that the program has been in existence for 17 - 18 years is irrelevant. That is also the nature of maturing Ponzi schemes. And, that's really the problem, isn't it? The company is indistinguishable from a Ponzi scheme. The SEC does a nice job of listing the characteristics of a Ponzi scheme here: http://www.sec.gov/answers/ponzi.htm.

If you go over the points you will see that NASI ticks all the boxes. This isn't to say that they are guilty. But it does illustrate that we will be unable to verify that fact without enormous expense. Should it prove to be a scam, the investor risks losing all of his investment and perhaps more. That's a lot of risk to take on. There are far less risky investments out there and if you adjust for risk, even NASI's guaranteed 20% is no bargain.

In a later post I'll share with you why I think the ATMs are irrelevant, the price you pay for the irrelevant ATMs is also irrelevant, how I analyze the risk of this investment, what NASI's real product is and perhaps a summary of my conversation with the SEC about whether or not this offering should be considered a regulated security.

Some of you may be wondering why I'm doing this ... why I'm still on this thread. After all, my once over lightly due diligence is completed and my client duly advised. That actually took very little time. Now, I'm just enjoying the conversation. I find schemes and scams interesting though I don't have much contact with them. I'm retired and have a little time to play. And, perhaps I may provide some insight from the other side of the desk, as it were, to a group that might actually be interested.

[worried]

But they cannot evaluate a deal such as the one at hand because it is simply too complex and too time intensive and therefore expensive to justify it. They will all punt if they are honest, tell you "if it sounds to good to be true ..." and advise you to select from other, more mainstream investments....
...Since it has not been vetted by any regulatory agency, the problem with the NAS offering is that to fully determine whether or not the company is a legitimate business would require that depth of examination. No one is going to pay the price, so their promise must be taken on faith. I see this as a faith based investment and as such could never recommend it to a client.

Exactly what I'm hoping people will hear from their own professional advisors probably before they even have to spend ANYTHING if that advisor is honest, right? MarvinGardens sounds honest to me. The things he is saying make sense, they agree with everything else I'm finding on the internet from believable sources. I still wouldn't spend money based on his advice without meeting him, getting his certification information and checking on him, etc. (and he would want that I'm sure, and that's the point), but when somebody believable advises CAUTION, it's a good idea to be cautious.

If NAS is a scam, it needs to be busted and the only way to do that apparently is to choke off the NEW 'investments'. I would LIKE to see current 'investors' start asking for their money back, but I'm not hoping too much for that. But, hopefully, enough potential new investors are internet savvy these days and this website/forum IS at the top of the google search list...

If NAS ISN'T a scam, well, they should do just fine without new investors, right? If it's ONLY a really bad deal (but still an illegal security, that's clear) as posters like JamesVincent(?) have suggested, well, I suppose that's not nearly as bad as a scam.... but what are the chances of that? How many other 'Fuel Doctor' type companies/products/scams are Gillis and NAS involved with? How much of YOUR money has disappeared into those holes?

Thank you MarvinGardens for your time and input...

[MarvinGardens]

Like everyone else on this thread, I was at first focused on ATMs – the industry, the payouts, the costs, the traffic, the locations, whether or not leasebacks are securities as defined by the different regulatory agencies and so on. Trying to sort out the intricacies of the ATM business is challenging. I was scratching my head about this until I watched a particular Bloomberg interview that explored ATMs as an investment. There were two interviewees – one was a man whose company sold ATM franchises and the other was the CEO of an investment firm that specializes in ATM investments of all kinds. You can watch that interview on this page: http://www.tremontcapitalgroup.com/

The investment firm’s CEO is Sam Ditzion and you can find his bio here: http://www.tremontcapitalgroup.com/leadership/

This man is clearly an expert in the ATM industry. In the interview he breaks down the ATM business in broad strokes and shows the primary expense categories. But what leapt out at me was his statement that on average, independent ATM providers earn a 7% return on their investment. Independent, in this case, means private operators rather than banks.

The obvious question is this: How can a company pay 25% for money year after year and invest it in an industry that yields just 7%. In 35 years of analyzing business plans I have never encountered such a proposition. Yes, companies in trouble or who are temporarily cash flow constrained may borrow at a high rate for a short period to cover the expenses of expansion or just a rough patch – but as an ongoing proposition? In my experience, debt financing works the other way. One borrows at a lower rate than he sells. The business must return enough money to pay all expenses plus interest on the debt and return a reasonable profit. Over time, to do otherwise would be a sure road to ruin.

Realizing I had become lost in the details (an occupational hazard) and theorizing that if you cut out all the middlemen and operated the machines yourself, the usual return you could expect was 7%, I had to ask myself the question – What business is this company really in? And, should I be analyzing the company as an ATM business at all? That’s when I realized I’d been looking at the business all wrong.

If we look at the investment in a different way much of the confusion of the program falls away. It answers questions like these:

How can the company take different amounts of money for the initial purchase of an ATM machine?

How can we evaluate the risk of such an investment?

How can we be sure that we have true ownership of the machines we have purchased?

How can we compare ATM leasebacks with competitive investment vehicles?

So, let’s do that and take this deal apart so we may analyze it dispassionately.

What is the Real Product?

First, let's talk about what NAS is actually selling. I suggest that the ATMs are irrelevant and I’ll show you why I think so. We start, as we always should, by looking at their market. Initially, I looked at NASI’s market as being the users of ATM services and that’s where I started down the same rabbit trails as most on this thread. After all, isn’t this the firms primary business and like virtually all businesses the financing of the enterprise is secondary? Perhaps not.

What if its market is not ATM users at all - but instead the investors themselves? So I forgot about the ATM business for a while and looked at NASI as an investment company.

What interests investors is the offer of a 10 year guaranteed monthly payment of a certain amount, depending on the size of their initial investment, that results in a 20% annual return on that investment.

That is, by definition, an annuity. If you think about it this way, it doesn't matter if an investor puts up $11k, $12k, $19.8k, or $24.5k all of which I have heard from actual investors or on this thread. 20% is 20% regardless of the amount you deposit. Think of the ATM investment as any other interest paying deposit. With some exceptions, it doesn’t matter how much you deposit, your savings return the same percentage amount.

Or think about it as I have where you are just purchasing annuities of differing size. Looking at the business as a seller of annuities gets rid of the entire issue of how much one pays for an ATM machine. In fact, it makes the ATM issues including the differing amounts you pay up front completely irrelevant. Stick with me here and let’s take a look at how we can evaluate this investment in a way that makes sense.

Analyzing an annuity – what is the investment worth?

I began this exercise because a client asked me to evaluate his portfolio. This client had 40% of his investable funds with NAS, had been involved for about 17 years and was currently living off the interest income spun off by the investment and was re-investing to accumulate more ATM machines.

(As an aside, a person may certainly have the majority of his capital tied up in a business. And, that assumes the person understands his business. But the investors in this scheme know nothing about the ATM business. For them it is a passive investment. And having such a large percentage of one’s money in a single passive investment is asking to take a large draw down, even an insurmountable loss.)

So, in the case of my client who pays $19,800 per contract, what is that annuity worth?

Let’s calculate the present value of that 10 year stream of payments. First, you have to use a "hurdle rate" as a baseline for comparison. Traditionally, that is the risk free rate of return on government bonds. Treasury reports that the yield on a 10 year note is currently 2.7%. Since that’s the period of the NAS annuity, let’s use that interest rate for comparison.

Given those parameters and using NAS guaranteed payments of $330 per month for 10 years we get a present value of that annuity of $34,619. Yet my client pays only $19,800. Now, that's a bargain. But, that's using the risk free rate for comparison. What about the opportunity cost? That is the amount you would get from a competitive investment which is riskier than a government bond.

Let's say the average return from the stock market is currently 4.5% which is being generous. If we use that interest rate the value of the annuity is $31,766. The stock market is riskier than the government, it is widely believed, so the annuity purchase should cost less - since the risk of not getting any, or all, of your annuity is higher.

The difference is the risk premium. If you divide the target return 20% by the risk free rate of return or the opportunity cost we can estimate the comparative risk of the NAS offering. Simplistic, yes, but useful. By this measure, the 20% annuity is four and a half times more risky than a diversified portfolio of stocks and seven and a half times more risky than the 10 year US Treasury note.

NAS investor's pay about $20k for the same stream of income. Why? Because the risk of getting repaid is way, way higher than the government or an annuity backed by stocks (which no one actually does.)

People generally purchase annuities because they generate periodic income. They are buying a stream of guaranteed income payments. And, the safety of that income stream is paramount. Annuities are an insurance product and the safest ones are backed by some of the largest and most stable companies there are. The insurance industry is heavily regulated and their annuities rated by independent rating agencies.

The annuity we are examining is guaranteed not by a huge, stable, regulated insurance company backed by the profitable business of selling insurance, but by a couple of guys in a small office in Calabasas running an ATM business that according to the ATM Council returns an average of 7%. If it were backed by a Swiss bank, a major insurance company or a large diversified financial firm the price of that annuity would be well north of $30k as we have demonstrated.

That investors pay a third less than that to NAS for the same stream of payments shows what a huge risk premium is attached to the investment offered by NAS. In plain words, NAS is telling investors that an investment in their product carries considerable risk.

I would agree with that assessment. Yet, those who would bring us into the scheme tell us that it is risk free.

And, all we are evaluating is business risk. What is the probability that borrowing at 20% for a business that yields 7% is unlikely and may indicate fraud? If we think it is even money, then we double the risk.

It is puzzling that the firm is willing to extend the period of that annuity without requesting additional investment as I have verified occurs. I don’t believe any legitimate company would do that without requiring additional investment. I can think of no motivation that makes business sense.

Summary:

I believe the actual product marketed by NASI is a 10 year (or beyond) monthly annuity whose price is infinitely adjustable and returns a 20% per annum return. We have explained why the price of the ATM machine doesn’t matter.

That annuity is not backed by a large secure institution, but by the small business of placing and servicing ATM machines. But the business could be anything. It could be a dry cleaning chain, a string of restaurants or anything at all. Or, as some on this thread have suggested, nothing at all. That it is an ATM business is irrelevant and serves to misdirect the investor from the true nature of the business.

The business pays a much higher rate of return than virtually all mainstream investments. To put this in perspective, with this rate of return, Warren Buffett should sell his other investments and buy NASI leaseback contracts. He won’t. Neither will I.

Perhaps, those of you who are invested in this scheme might want to consider if you should.

In the next post I’ll address the nature of risk in a portfolio, identify the risks that investors face in this particular investment and summarize my investigation into the issue of whether or not this annuity is a security that should be regulated under the Securities Exchange Act of 1934 including highlights of conversations with regulatory agencies.

I hope that analyzing the NAS offering in this different way has been illuminating. I run the risk of confusing the issue further, I know. But it has clarified the issue for me and focused my attention on the risk of this scheme. My hope is that potential investors may also be made aware of the level of risk implied by the pricing of this offering.

The old saying that "If it sounds too good to be true ... it is too good to be true" is a good thing to keep in mind. All I've tried to do in this post is illustrate through more detailed analysis just how much too good to be true this offer is.

[worried]

The business pays a much higher rate of return than virtually all mainstream investments. To put this in perspective, with this rate of return, Warren Buffett should sell his other investments and buy NASI leaseback contracts. He won’t. Neither will I.

[worried]

My family member is going to be truly and completely devastated when the NASI Ponzi scheme goes bust. That devastation will be more than financial as well. There will be others associated with direct victims that will be affected as well, some who had no idea what was going on, some who will be profoundly affected, maybe devastated too... that's what makes these schemes such heinous crimes...

[worried]

This is from a discussion between SomeYuppie (NAS proponent) and TedNewsom from mid January 2014 (on page 5 of this forum):

Really-truly: do you know of any other kind of legit investment enterprise which guarantees a 20%/annum return on " uncommon and irregular instruments"?

As a matter of fact, yes.

No,... no legitmate company guarantees any profit, this is a key statement made my SomeYuppie who claims to be knowledgeable about investments and business... read on...

And since I guess you've missed this: the company's application explicitly stated they do not guarantee any annual returns to customers. They made the promise to customers from the first, they did at the time of that application, and they still do now-- yet they said precisely the opposite when applying for official status. Why? Because a promise of a "guaranteed return" would set off bullshit detectors in any halfway intelligent examiner at the SEC or in Sacramento.

See, this is why you're full of it. What application? it's no security and they aren't currently registered with the state securities regulation division or the SEC, why does any of that matter? .....
I find you the least credible person here. ...

A link to the SEC application has been provided in posts prior to and after this discussion.

SomeYuppie has written a lot of long posts engaging in point-for-point debates with several posters including myself. It takes a while to read them, and trying to sort through the omissions, repeated misinterpretations, misstatements, and just plain denials of fact is really confusing and time-consuming...BUT THAT'S THE POINT OF HIS POSTS... I've already written my opinion of the post by BeverlyHillsMan showing how it clearly has some of the hallmarks of tools of con-men in his posts (and don't forget WebHick determined he was lying about where he was posting from).... SomeYuppie's posts seem to me be more carefully orchestrated. At first I just thought maybe he's really just completely fooled himself. But, clearly the author of SomeYuppie's posts is not stupid, he is able to carry on a multi-faceted, complex conversation over many sessions, and he does this with more than one person at at time. He can clearly read and comprehend and he clearly has a decent memory (he would have to be if he's the successful and shrewd investor he claims to be)... So...

Why does SomeYuppie not acknowledge the link to the SEC application for Gillis' ATM leaseback business posted and discussed on this forum??

Why does SomeYuppie, the shrewd and successful investor, state that he knows of businesses that guarantee profits when we all know that to be false??

Not only am I'm finding SomeYuppie to be less than credible (to use the words he himself directed to TedNewsom), I think I've caught him deliberately lying based on those two statements. ... AND... I would go farther to say that his many, many posts riddled with misstatements, omissions, etc., are once again the hallmark of a con-man who seeks to confuse and obfuscate. If he ISN'T a con-man, he should seriously consider being one... or at least a salesman...or a lawyer... except that if he ISN'T a con-man, he has this terrible affliction that causes him to miss IMPORTANT details (like the SEC application pointed to) that would seriously hamper a successful career in sales, law, or even INVESTING....

I found SomeYuppie's last response to me the most telling (toward the bottom of page 10 of this forum): it is not really comprehensible and is one step above gibberish. In the next post in response to someone else he makes a remark about some posters not being able to 'focus'... yeah... like an illusionist (or con-man) wants you 'focus' on his misdirection being shown with one hand, NOT what the other hand is doing under the table....

[worried]

I forgot to include this puzzling statement by SomeYuppie:

You cannot simply call these guys out of the blue and say, "I'd like to buy one of those things." You have to be referred; there has to be a connection they know. They want to know how you heard about their business. (That in itself is indicative. Why?) And I have no intention of dragging the names of any friends or even friends-of-friends into this.

I called saying I found them on the internet and made no mention to any friends who own machines. Wasn't a problem for me. Make up a common name if they ask.

I have not been able to find one mention on the internet about Nationwide Automated Systems, Inc., NAS, or NASI, engaging in leaseback arrangements. Where did SomeYuppie 'find them on the internet' and know to call about 'investing' in leaseback of ATM's ???

The only place I can find mention of it, other than the contract Joel himself sent me some time ago, is on the SEC site that SomeYuppie has missed apparently...

Added in edit 2/21/2014:
This is from SomeYuppie's post on the top of page 7:

With NAS, the only public marketing I see is to business owners to place their machines. They don't market anything to potential investors. ...

Never did SomeYuppie say he ran a business and was looking to have machines placed... in fact, this is from SomeYuppie's post on page 3:

No, I'm not an owner or an employee of NAS or any of its affiliates or anything relating to them. Just an investor ...

SomeYuppie,... who exactly are you? You spent a lot of time and energy on this board and are now silent.... please, when you get back from whatever money-making venture, or amazing vacation you're on, and have time... please explain to us how you found out about this 'investment' opportunity on the internet...??

Ok... so ignoring the question of "why doesn't NAS advertise the investment opportunity", because the answer is all too obvious...

Allowing for the one possible answer out of SomeYuppie that I can imagine: "oh... I called them and just didn't mention that a friend referred me, ...", etc.... then... SomeYuppie robbed his friend that referred him(/her) of their $1000 referral bonus... ALSO.... since NAS KNOWS they don't advertise for investors (again for obvious reasons, and would be on the lookout for people that are NOT referred), they would ASK SomeYuppie for the referral.... oh... SomeYuppie could say: "I just overheard a conversation and I couldn't get the person's name...".... really?.... well... if NAS was willing to just take cold-calling customers out of the blue, WHY DON'T THEY ADVERTISE?

I'm really hoping SomeYuppie answers, as, I'm sure, are many others... it's actually quite entertaining...

[Tednewsom]

Well, let's give him his due. He was claiming to have called the place blind for information and gave the explanation to them that he saw them on the net.

And there are quite a few listings for NAS on the net, along with contact information.

[worried]

I'm afraid I can only give SomeYuppie credit for either being a pretty good con-man, or a very gullible, bad investor (the SEC link is on the first google page)

[worried]

I wonder if Joel has increased the 'referral bonus' for recruiting new 'investors' yet?

Surely, many of the new potential investors have found this site and decided to be more cautious. I'm sure some new investors don't bother researching Joel on the internet, but to make up for the ones that do, Joel would need his recruiters to be working harder. That, to me, is another indicator of a Ponzi scheme. The scheme can't run on its own on the 'income' from the 20,000+ ATM's spread across the country (and even out of the country) that, somehow, Joel is intelligent enough to manage (go ahead and research all the licensing issues (disability access), technical details, differences between each state, taxes, insurance)) but, in the words of SomeYuppie, is just another dumb millionaire who blindly throws money at dumb ideas like the FuelDoctor (if he's really smart enough to run an ATM empire all by himself, he would be MORE than smart enough to know that the FuelDoctor is a scam).

So, it would be interesting to hear from anybody if/when Joel increases that 'referral bonus'...

And, remember: Always get professional advice before handing over your money. Go read MarvinGardens' posts, if you have a hard time understanding everything he's saying, why in the world would you invest large sums of money on your own?

And, if you're a potential investor who has been solicited, refer your friend/acquaintance who is recruiting you to this forum ...

oh... and...

Hi Joel!

[worried]

It seems kind of easy to predict. Tednewsom wrote in an early post that he had seen 'newsletter'-type communications distributed by Joel to current 'investors' announcing the sudden 'availability' of more ATM's and encouraging investors to take advantage of the 'opportunity' before they're gone.

I can all too easily imagine a similar newsletter from Joel announcing a sudden influx of a large number of ATM's, and, due to the improving economy, he really wants to make sure he helps the company (and the investors) maintain their market share to ensure a healthy long-term 'profit potential' .... SO, the company will (for a short time!) offer a $5,000 referral bonus for helping to meet the goal of 'selling' all the available ATMs. If he's really desperate, he might offer up to $10k...

[Tednewsom]

The stated, consistent price my friend has bought her ATMS for several years from her friend, who works directly for NAS -- $19,500 -- and the consistent price repeatedly stated by others -- $12,500 -- makes me think this sort of thing has been going on for quite some time.

I hate to think this is the case, that there is a $7000 gouge built into the price for "special friends." Unfortunately, that makes a lot more financial sense for the salesperson than knocking one's self out for a mere $1000 referral fee.

[worried]

Maybe you're right Ted. Maybe that's been a clever way of disguising a more motivating referral bonus. The higher prices for one machine increase the minimum buy-in which seems like the desired goal for a scam. As MarvinGardens pointed out, each machine still has a 20% return obligation pegged to its 'purchase price', so the seller/recruiter can't get away with skimming, but, with the higher revenue Joel could afford to give the recruiter a couple extra thousand (or more I suppose for larger bulk 'investments') giving that recruiter some extra motivation and achieving the goal of increased revenue.

I hadn't thought much about this 'referral bonus' thing until just yesterday. It really is laughably obvious though when you think about it. Joel has some websites extolling the virtues of NASI as ONLY an ATM machine supplier to businesses. Then, Joel pays people to quietly recruit 'investors'. If he's paying people to drum up new investors, then he NEEDS those investors, but if he needs them so badly, why doesn't he just add a couple lines of text on all the websites that he's already paying for to ADVERTISE for investors? ...

What a joke.... what a scam.... and people fall for it, because as you yourself pointed out a long time ago on this board, it's the smart people who can be easier to fool by letting them rationalize for themselves why it CAN'T be a scam. And THAT'S only possible because humans are so amazingly capable of BELIEVING things even in the face of overwhelming contradictory evidence... And that starts me thinking how tragic all this is. It's our human-ness that gets used against us. I'm not faulting people for being able to believe in irrational things, that's what makes us human, allows us to dream, love, etc., but it also makes us vulnerable, even the smartest of us.... and the damage isn't restricted to just the 'gullible and/or greedy' direct victims. For each direct victim, there will be many people affected. That's why Bernie Madoff will rot in jail. For Joel and Ed, I think they've already attained their goal of living the high life. They're in the mid-late 70's by now and may or may not care if they get caught anymore. Maybe, as you've suggested, he's already been implementing a higher referral bonus in a much smarter way than I would have thought of and he's laughing at my amateurish idea

[worried]

I'm puzzled now by the higher purchase prices and SomeYuppie's insistence that: 1) Joel 'sells' all machines for ONLY $12k, and 2) people who are 'selling' at higher prices must be 3rd party skimmers....

Why would SomeYuppie say this if he was a scammer (even Joel himself) trying to prop up the NASI propaganda? Wouldn't all the people who are actually paying the higher prices be alarmed? It didn't take me very long once I started thinking about the higher prices and the referral bonuses to realize that there's no way anyone would get away with skimming because of the 20% return pegged to the purchase price (because, as MarvinGardens pointed out, it's really just an annuity with different minimum buy-ins offered to different people). If SomeYuppie was half as good at investing as he says, he would have figured this out too.

So, now, despite being vocally suspicious of SomeYuppie being a willing con-man, this statement about the 3rd party skimmers seems inconsistent with that. And that statement is certainly inconsistent with being an astute investor. Maybe SomeYuppie really is just an unwitting (and I mean REALLY 'unwitting' judging by the contradictions in his posts, some of which I and others have pointed out,... not that he's 'stupid', that would be 'stupid' of me, he could just be another victim of his 'human-ness' (there, but for the grace of God, go I,... right?)) victim who, like many people who try to convince other's of their beliefs in a subconscious desire for validation of those beliefs, was simply trying to make himself feel better about his own position. Maybe his silence means he's rethinking.... I hope so... or if I'm wrong, I hope he/she, or ANYBODY else can convincingly educate me....

[Tednewsom]

It's not third party. The person works for NAS.

[worried]

right... and there's no way they'd get away with skimming either way...

I'm starting to share your curiosity about this difference in prices. It's hard for me to imagine a credible scenario in which somebody perpetrates an elaborate skim, or even runs their own Ponzi while making it look like it's still NASI's, taking advantage of the facade that Joel has built up. It's easy enough to get a partially filled in contract with Joel's signature, just get referred, tell him you want to invest, and he'll send you one. But, what could you do with that?

Is the difference in price Joel's way of experimenting with the economics/psychology of price vs. demand of his 'product'?

I guess there wouldn't be any reason for any investors to get mad over it, Joel would just point out to them that they're getting 20% no matter what. He might 'admit' that he pumped up the price so he could buy 4 or 5 machines for himself instead of only 2 or 3 for each 'sale' to an 'investor'.

[Tednewsom]

Beats the hell out of me. Could just be whatever the individual market (or purchaser) will bear. One possibility: keep the $19.8K people separate from the $12.5K people. The source of the recommendation would tip you off: if a newbie is recommended by Bobby, who bought in at $19.8, then you charge Newbie $19.8, so they both think that's the consistent rate. If Newbie is recommended by Sammy, who's been buying his for $12.5K, you sell at that price instead. Which is a good reason to sell only through recommendations, so you know going in what the rates are to the new person. And a good reason not to have a roomful of assorted customers talking together and comparing notes.

Or the company could be the only honest ATM leaseback company in the USA.