75% Return on Your Investment! Honest!!

Fraud Is Everywhere

Bankers should avoid working with crooks and ignorant people.
But if you have no choice, I'd rather go with a crook because he can steal from someone else to repay his bank.

- Frans Afman, ex-head of entertainment lending
Credit Lyonnais Bank Nederland (CLBN)

US Scam Dupes Kiwis

by James Weir

At least 35 New Zealanders have been caught out in a United States-based futures contracts fraud. The Securities Commission in New Zealand said there were big sums of money involved but could not say how much the New Zealanders may have lost. The case showed bow important it was for people to be cautious when approached with overseas investment propositions over the phone, the commission said. "The proposition may sound extremely attractive but the reality may be quite different," it said. "There is a good chance that you will lose your money."

The New Zealanders were enticed into the scheme with claims that investing in the futures contracts could earn up to 75% returns within a couple of months, commission senior executive Norman Miller said yesterday. There may have been more than 35 people caught by the fraud in New Zealand. Investors were contacted in New Zealand by phone calls from the US. The commission said nearly all customers had lost most of the money they invested. The cash had gone on commissions and fees not disclosed when customers entered into contracts. The contracts themselves were illegal under US laws and there was no evidence the promoter complied with New Zealand law.

The US Commodity Futures Trading Commission began court action yesterday against the scheme which involved the fraudulent marketing of illegal futures contracts for precious metals and other commodities. It was alleged Alan Stein, Joseph Finateri and Michael Temple and related companies IBS Inc, IMS Trading Inc, Joe Miller Company and Mazuma Trading, were involved. The promoters claimed to operate out of the Bahamas but were really based in Charlotte, North Carolina.

The Futures Trading Commission said it considered the telemarketers misrepresented the likely profits to be made and failed to disclose the risk of "near-certain losses".

Source: The Dominion 2 August 2000

We lived in Charlotte (among many other places) for several years before coming to New Zealand. I found it ironic that someone from Charlotte took investment money which provided no return from New Zealanders while some New Zealanders took investment money which provided no return from people from Charlotte.

One thing I would like to stress is that the immigrants who invested in forests and other ventures to qualify themselves as business investment migrants did not select their investments with the idea in mind that they were going to make preposterous returns. We expected modest dividends and were also told that our funds were guaranteed and would be returned at the end of our qualifying period. When that didn't happen, we were told not to expect sympathy as we were "not naive investors." (And they knew that? I wonder how. Even I hadn't known that - then.)

I've included the following article to illustrate that many countries have difficulty formulating immigration policies which are both fair and palatable.

The Importance of Being Fair

The following article appeared on a New Zealand news website. It involves a number of American investors who nearly lost their investment. However, thanks to the actions of the United States government, they will be receiving their investment back. Bear in mind that these investors were lured in by the promise of up to 700% return on their investment - a ridiculous claim which, if true, would almost certainly mean the investment was ethically questionable at best. However, their government, at little or no cost to them was able to secure the return of their funds. (How nice. But all that does is spread the cost out over all taxpayers - insurance policies you didn't even know you were buying with others as the beneficiaries.)

Duped Investors Get Millions Back

American investors who were duped out of more than $23 million are getting their money back after three years of court action in New Zealand. About half the money has already been refunded and most of the rest is expected to be repaid over the coming months.

The investors - high net-worth individuals as well as funds representing hundreds of small savers - were victims of a multi-million-dollar banking scam. They were dazzled by promises of returns of up to 700% advertised on the internet.

It was claimed that the unrealistically high interest rates were backed by solid, blue-chip banks. Meaningless but impressive-sounding jargon was used to con the unwary investors into handing over their money - expressions such as prime bank guarantees, global mid-term investment notes, 106% bank guarantees and a 46 week bank year.

Because the investors were told that secrecy was essential, they did not seek sound financial advice.

The fraud was allegedly masterminded by ageing Californian William Stanley, who used a company calling itself Paramount Insurance Co Ltd in Auckland as one of the vehicles for his money-making venture.

When US authorities closed down his operations early in 1998, they discovered that $23 million had been deposited with the ANZ in New Zealand. They immediately applied to the New Zealand courts to have the funds frozen to prevent their being spirited overseas and disappearing.

Since then lawyers representing the investors have been working through the High Court in Auckland trying to establish their claims. Ross Burns, of the Auckland law firm Meredith Connell, representing the United States Government, said today that, with the exception of a relatively small amount of $US100,000 ($237,000), the investors had been able to satisfy the US Department of Justice as to the legitimacy of their claims.

Source: stuff.co.nz National News Thursday 31 May 2001

Well. It's nice to see that some misled investors are able to recoup their losses. But even without full recovery, please don't get the idea that trusting/helping others is a big mistake. The mistake would be to think that unethically earned money brings the recipient anything more positive than - well - unethically earned money. I still feel there ARE things money can't buy.

Perhaps it would pay off for New Zealand if the government got a bit more involved in righting wrongs (like the US government seems to?), particularly when it comes to wrongs involving immigrants trying to secure residency status (my own bias) - even if it means allocating a bit more money to investigatory groups like the Serious Fraud Office. What do you think?

Woman Accuses MP in Row over Residency

by Helen Bain

A Japanese woman says she invested her life savings in a retirement village owned by a National MP in the hope of gaining residency, but had to return penniless to Japan. Foreign Affairs Minister Winston Peters has asked the foreign affairs and trade secretary to investigate the allegations, which also involve a current Ministry of Foreign Affairs and Trade employee.

The allegations involve National's Wairarapa MP John Hayes, but the inquiry Peters wants cannot include him as he no longer works for the ministry. Kyoko Arai says she invested $600,000 - saved during her 25-year career as an editor at Mitsubishi - with Hayes in 2002, when he was head of the foreign affairs ministry's South Pacific division. She said she had tried to get her money back without success.

Hayes said he absolutely rejected Arai's allegation that he pressured her to invest, and said she had refused his repeated offers to buy back her shares in the development. Arai said she was told by senior ministry officials that if she invested her money in Hayes' retirement village, The Totaras, at Greytown, she could get residency. Arai, whose English is poor, says she could not understand the contract she signed in December 2002, so Hayes' colleague checked it for her and told her it was fine.

Her acquaintances checked Hayes and found that he held a high ranking at the ministry, so she believed it would be okay and thought investing in Hayes' project was the only way she could stay in New Zealand. Hayes said he knew Arai was seeking residency, and supported her doing so, but he made no promises that the investment would secure residency, and he did not pressure her to invest. "I went overboard to make sure I did not give any undertaking at all... I was really, really careful to play this exactly with a straight bat. I made it absolutely clear to her that because I was a public servant there was nothing I could do to influence any outcomes at all. I explained to her that there was no corruption in this country."

Arai said that in January 2003, Hayes' colleague took her to an immigration consultant, who told her the law had changed and she did not qualify for a visa. But if she paid $30,000 she could get a "talent visa". She did not have any money left, so did not apply. Arai claims she made repeated attempts to get Hayes to return the money. But Hayes said he offered many times to buy Arai's shares back, but she did not take up that offer. Price was not discussed, he said.

"Since the business partnership turned, shall we say, unsatisfactory, sour, I have been saying it is not in your interests or mine to stay in the partnership, but she has constantly refused. "I am caught in the situation where a business partner has spat the dummy, and now I am involved in politics she is holding me to ransom."

Hayes gave the Sunday Star-Times copies of email correspondence in which he invited Arai to sell her shares. Hayes said he couldn't understand why Arai did not "move on", and he just wanted her out of his life. "I wish to hell I had never met her."

Arai and Hayes are listed by the Companies Office as jointly holding the 100,000 shares in The Totaras; Hayes is sole director. Hayes said he held two-thirds of the shares and Arai the remaining third. Arai returned to Japan in January last year. She said she was unable to find well-paid work and was sleeping in a friend's spare room and borrowing money from her elderly parents.

Hayes, a former high commissioner to Papua New Guinea and ambassador to Iran, bought the 7 hectare former Tasman Orchard in West Street, Greytown, in 1997, and is managing director of the luxury retirement villas built on the site. Three units in The Totaras have been sold, one is on the market for $265,000, and construction of a further four has begun.

The property was valued at $1.23 million in 2003, and has two mortgages on it. Hayes won the Wairarapa seat for National this year, and is the party's associate foreign affairs spokesman. He said he raised the Totaras situation with the party when he sought nomination. "I mentioned my Japanese business partner, and that I was trying to encourage her to move on." Hayes said he received an anonymous phone call after his candidacy was announced, implying that his political career would be threatened by his dealings with Arai, and that allegations against him had been "swirling around" in Wairarapa.

Edwin Perry, who contested the seat for NZ First, said he became aware of the allegations during the campaign and reported them to the National Party. Perry said an inquiry should be held to get to the bottom of the allegations and determine whether it had been appropriate for Hayes to seek investment in his private business while holding his foreign affairs ministry position. A spokesman for National leader Don Brash said Hayes rejected the allegations and he accepted that assurance.

Winston Peters said the allegations were potentially serious and Hayes "must answer for them". Although Hayes was no longer employed by the ministry, he had asked the secretary of foreign affairs and trade to investigate whether there was any basis to the claims about the involvement of a current employee, and whether it raised issues under the ministry's code of conduct. Peters said the ministry knew of Hayes' interest in The Totaras but learned of the allegations only on Friday.

Source: stuff.co.nz 20 November 2005

Delamere Not Interested in Immigration

Former Immigration Minister Tuariki John Delamere was only interested in money transfers and not real immigration issues, a court was told today. Delamere's former Chinese business partner, whose name is suppressed, was giving evidence at a depositions hearing of 10 fraud and forgery charges against the former MP. A witness said through a Chinese interpreter his signature was forged on several documents involving deposits of $1 million or more on 3-year investments. Those documents were to be used in applications for permanent residence visas from the Immigration Service.

Delamere faces 7 charges of intending to defraud by using a document for pecuniary advantage and three charges of forgery, all laid by the Serious Fraud Office (SFO). The SFO alleges Delamere falsely told the Immigration Service 7 of his clients had invested $1 million of their own money in New Zealand which would qualify them for residency under a business migration category, which he had introduced as minister. The SFO said Delamere had attempted to mislead the Immigration Service by saying his clients had deposited the money and that the funds worth $7 million existed. The SFO said the money did not come from the clients but from a Chinese man and was used 7 times for 7 different applications. The Chinese man and Delamere were alleged to have shared the commission from the clients.

Delamere said he had not broken the law and it was a matter of legal interpretation.

The hearing was expected to last for the rest of this week for two Justices of the Peace to decide if a prima facie case existed and the matter would go to trial.

Source: stuff.co.nz 15 November 2005