Allen Stanford gets kicked around, but Bernie Madoff can clearly throw down some serious smack. While the former's being moved from one facility to another because he's lost some ground on the cell block, Madoff just earned himself some props.

The engineer of the largest (known) Ponzi scheme in history apparently got into an argument with another geriatric inmate at the Butner, North Carolina federal prison. Of course, it was over the stock market. Does it really make sense to outmaneuver a guy who never needed to know what the market was doing to deliver double-digit returns?

Well, push came to shove, as they say, with the "attacker" stumbling and looking up at a mean, mean Madoff. He got up and ran off.

Continue reading Madoff fights to win, gets some cred

Madoff fights to win, gets some cred originally appeared on BloggingStocks on Tue, 13 Oct 2009 16:15:00 EST. Please see our terms for use of feeds.

Hedge fund manager Michael Regan has pleaded guilty to running a Ponzi scheme. Manager of the Massachusetts-based River Stream Fund, he admitted to defrauding around 70 investors. The fund held just shy of $20 million in assets ... despite the relatively meager $101,600 sitting in its accounts. The fund purported to return 20 percent a year since 2001, paying out $9 million in "profits" and returned capital.

Continue reading Ponzi manager pleads guilty and settles civil charges

Ponzi manager pleads guilty and settles civil charges originally appeared on BloggingStocks on Fri, 26 Jun 2009 15:00:00 EST. Please see our terms for use of feeds.

Continue reading There are thousands of Madoffs waiting to be discovered

There are thousands of Madoffs waiting to be discovered originally appeared on BloggingStocks on Thu, 08 Jan 2009 13:34:00 EST. Please see our terms for use of feeds.

USANA Health Sciences (NASDAQ: USNA) just can't seem to wake up from its PR nightmare.

After the close of the market yesterday, San Diego class-action lawyer Alexander M. Schack said he filed a lawsuit in California state court on behalf of hundreds of low-level distributors in the state. The suit is also seeking an injunction preventing the multi-level marketing company from recruiting in the state.

Needless to say, California is a huge market for USANA and, at the very least, the publicity could hurt the company's recruiting efforts there.

According to Robert FitzPatrick of Pyramid Scheme Alert, "The essence of the Usana scheme is the chain letter. Participants pay up to $1,000 to participate in the "binary compensation" plan. They buy the bogus "business centers" (pyramid positions). They then must continue to buy over $100 of goods (priced in some cases 20 times more than comparable products sold in retail stores) every month. Of each dollar that the participant pays in, 40% goes to the upline recruiters. Of that amount, 70% goes to the top 3% of the pyramid chain. Virtually no one
retails the products at retail price. The prime consumers of Usana are just the "Associates" (pyramid participants.) Thus $28 of each hundred spent by the new recruits goes directly to schemers at the top of the pyramid. The bottom 97% are a continuously churning group. 2/3rds of them quit within a year. None makes a profit unless they can climb into the 3% by recruiting other victims."

USANA responded by saying that the suit was without merit and "relies on false claims made by a stock fraud felon who stands to profit from a decline in USANA's stock price."

If USANA wants to stop the bleeding, it will need to come up with a better defense. Barry Minkow, who the company's statement refers to, has earned a strong reputation for uncovering fraud and deception and was mentioned in Newsday a few days ago for his work in shutting down a $16 million ponzi scheme in New York.

Authorities have commended Minkow because he has a track record of providing facts that can be used to shut down financial crimes in progress. If USANA wants people to believe it is something other than that, it will need to provide a rebuttal to the allegations, something that is hasn't done so far.

California distributors file lawsuit against USANA originally appeared on BloggingStocks on Fri, 22 Jun 2007 12:30:00 EST. Please see our terms for use of feeds.

Marketwatch columnist Chuck Jaffe has an excellent piece about the frequently fraudulent high yield investment programs (HYIP's) that litter the internet. Known for promising outrageous returns (10%+ per week in some cases) and given only vague details about how they earn their returns, these "investments" are most often Ponzi schemes.

I recently interviewd convicted felon Barry Minkow, who is now founder of the Fraud Discovery Institute, working tirelessly to protect investors from scams. In his new 3-part DVD series about protecting yourself from fraud (look for it on his website when it is avaialable) the DVD featured sections on investment fraud, elder fraud, and affinity fraud, and is both informative and entertaining. In talking about investment frauds (such as HYIP's), Minkow urged investors to think of it this way: Warren Buffett is considered arguably the greatest investor of all time, and he compounded money at a rate of about 23% per year.

Anytime someone offers you better returns, ask yourself: are they better than Warren Buffett?

The dangers of high yield investment programs originally appeared on BloggingStocks on Fri, 26 Jan 2007 15:09:00 EST. Please see our terms for use of feeds.