Dear Clients and Friends:
As always, there are two ways of learning in life. You can either be taught how to do something the right way or learn from the consequences of doing it the wrong way. This concept is especially relevant in the world of investments where it is advantageous and less costly to learn from others’ mistakes.
As many may recall back in November of 2015, two San Fernando Valley men were sentenced to multiple years in prison for running what prosecutors have called “one of the largest Ponzi schemes ever seen in the Southland” (Fred Shuster, Los Angeles Daily News). The $134 million Ponzi scheme lasted a duration of 13 years, hurting many people along the way.
According to prosecutors, hundreds of millions of dollars were lost by more than 1,300 investors who were falsely told that their money would be used to purchase ATMs that would generate annual profits of at least 20 percent. In other words, the two con men told investors that each would pay a flat amount to buy a specific ATM that was to be installed at a specific location and that they, in turn, would pay the investors 50 cents per transaction performed at their particular ATM while guaranteeing annual returns of at least 20 percent on each ATM. The con men were the owner-operators of Calabasas-based Nationwide Automated Systems Inc. (NASI), which guaranteed to place, operate, and maintain the ATMs. Read more