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Due Diligence for Income Earning Opportunities
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FTC Settlements Bar Deceptive Online Marketing
Posted on November 19, 2009Image via WikipediaFrom the FTC Press Release on Commerce Planet's deceptive negative option plan.An online marketer of purportedly "free" Internet auction kits, which automatically charged...
Schoemaker and Yu Make Up
Posted on November 19, 2009Image via WikipediaMr. Schoemaker and Mr. Dennis Yu have been making up stories about each other. Mr. Schoemaker accuses Mr. Yu of being a confidence criminal."A...
What is the Con Here?
Posted on November 17, 2009Image by Getty Images via DaylifeI will walk you through how these online scams work on Facebook and other social networks - the mechanics of how the...
The Con and the Professor
Posted on November 08, 2009"In a new series of blog posts over the next few months, [Sam Antar] will document why Sarbanes-Oxley should be strengthened with added reforms to...
MoneyGram Scam and Gate Keeper Liability
Posted on November 03, 2009MoneyGram International, Inc., the second-largest money transfer service in the United States, will pay $18 million in consumer redress to settle FTC charges that...
Avoid Responsibility and Live Better
Posted on November 02, 2009"When you can blame someone else (or the gods of spite, chance and bad luck) it's emotionally safer than it is to acknowledge you made...
The Franchise Wars: Apple v Windows
Posted on October 22, 2009Image via WikipediaIn the franchise war between Apple and Windows, I am a Mac fan. I wasn't always a Mac guy, I used a PC...
Be Your Own Boss
Posted on October 20, 2009I had posted this before, but I wanted to included some testimony from Jim Vitale, the swarthy looking con criminal in this FTC video....
BlogMasterMind, Testimonials and Seller Assisted Marketing Plans
Posted on October 19, 2009Image via WikipediaThis is a post designed to show the interactions between a) an internet marketing program, b) the FTC new rule on testimonials, and...
The Russian Criminal System
Posted on October 12, 2009I know very little about the Russian version of capitalism. But I am willing to bet that Robert Amsterdam does. Here is a decent overview...
Testimonials and Disclaimers
Posted on October 09, 2009Megan McArdle clearly doesn't understand the FTC's position on testimonials. She is not alone, neither does Jack Shafer writing for Slate, who thinks that the FTC...
OPINION OF ADVOCATE GENERAL POIARES MADURO delivered on 22 September 2009 (1)
Posted on October 02, 2009I have put this very important ruling abut Google Adwords and bidding on trademarks up in full, since the commentary that I have seen does...
The MX Factors - 100 Years of Jail Time
Posted on October 01, 2009Image via WikipediaFrom the FBI Press Release about MX FactorsIn what is believed to be the longest sentence ever handed down in a white-collar case...
Renting Reputational Authority
Posted on September 30, 2009Image via WikipediaIn the Yellow Kid's biography, Conman : A Master Swindler's Own Story (Library of Larceny) he describes a letter of credit scam that...
Bluestein Ponzi
Posted on September 28, 2009Image via WikipediaThe Securities and Exchange Commission today charged Detroit-area stock broker Frank Bluestein with fraud, alleging that he lured elderly investors into refinancing the...
How Bizop.Ca Out Ranks the US Government
Posted on September 25, 2009United StatesPostal Inspection ServiceFederal Bureau of InvestigationInternet Crime Complaint CenterNational White Collar Crime CenterMonster Worldwide, Inc.Microsoft CorporationNational Cyber-Forensicsand Training AllianceTarget CorporationThe Spamhaus ProjectMerchant Risk CouncilCareer...
Special - Dragon Dictate
Posted on September 23, 2009This is terrific software, and for some attorneys it is a godsend. I just got an email from Tiger Direct saying they have discounted...
Court to Con Artist: Give Up Your House or Face Jail Time
Posted on September 22, 2009Image via WikipediaFrom the FTC Press Release on Neiswonger, convicted biz op criminal.At the request of the Federal Trade Commission, the operator of a business...
Absence of Evidence Is Evidence of Absence.
Posted on September 22, 2009Image via WikipediaYou are probably familiar with the claim that absence of proof is not proof of absence. Logically, this is correct. If P implies...
Are Franchisees Happier than Everyone?
Posted on September 21, 2009Image via WikipediaDonald Cranford, writing at a franchise portal, claims:As if you need another reason to purchase a franchising, how about this very simple one:...
ATM Ponzi Scheme
Posted on September 21, 2009Image via WikipediaMANHATTAN U.S. ATTORNEY CHARGES TWO DEFENDANTS IN $80 MILLION PONZI SCHEME:PREET BHARARA, the United States Attorney for theSouthern District of New York, and JOSEPH...
$1.1 Billion Dollar Judgments Against Affiliate Marketers - More To Come
Posted on September 17, 2009Image via WikipediaDennis Yu, writing at Zac Johnson's blog talks about affiliate marketing and the FTC."You may have been reading how the Attorney Generals of...
The Money Tree Scam
Posted on September 17, 2009Seldom have I seen a graph the more clearly delineates a fraud than this one: the graph between Kevins Money Tree and the FTC, in...
Mass hysteria, crazes and panics
Posted on September 17, 2009Image via WikipediaDr Vaughan Bell writes one of the more interesting blogs, Mind Hacks: Tips & Tricks for Using Your Brain - which is also the...
Why Can't We have Better Reporting about Ponzi Schemes?
Posted on September 16, 2009Here is the lead to the CBC news story about the Calgary ponzi scheme:A Calgary couple who lost a "good portion" of their life savings...
The Regulator Fallacy
Posted on September 16, 2009Image via WikipediaI am critical of regulators who blame victims of fraud, by cautioning them that "if it sounds too good to be true, then...
Mounties charge man in $100M alleged Ponzi scheme
Posted on September 15, 2009Image via WikipediaFrom Toronto Star, the regulator is puzzled as to why people do not do easy due diligence, which would helped avoid this ponzi...
ACFN Franchise - Scam or No Scam?
Posted on September 15, 2009Image via WikipediaI cringe whenever I read things about how when the economy is down, it is good time to buy a franchise.A down economy...
The Family that Cons together
Posted on September 14, 2009Image via WikipediaFrom the Hall of Infamy blog:"When a con artist builds and tends a Ponzi scheme, he must sometimes long for a partner in...
Gut Feelings, Deception and Action
Posted on September 12, 2009Image by Andres Rueda via FlickrThe Baltimore News reports on a foreclosure scam:A Baltimore woman who tried to save her home from foreclosure by answering...
Ask Your Teachers for a Rebate
Posted on September 11, 2009Image via WikipediaIan Ayres, a law professor at Yale, has found a novel way to beat the high cost of text books""He handed out more than...
Senate Hearing on Madoff's Ponzi Scheme
Posted on September 11, 2009Image by Getty Images via DaylifeHere is the Senate Hearing on Bernie Madoff's ponzi scheme. From Harry Markopolos testimony on the Madoff ponzi. "The current situation...
Coffee is for Closers, Only.
Posted on September 10, 2009This video was up at False Profits, Robert FitzPatrick's blog about the illusion of profits in multi-level marketing. Robert wrote in an email to me:...
I am Dumb, but Dummies Lie
Posted on September 10, 2009Image via Wikipedia One of the most interesting and challenging logical phenomena discovered in the 20th century was the rigorous study of the relationship, for...
How Much Money Can You Make with Arbonne?
Posted on September 03, 2009Everyone asks, "how much money can I make investing in this franchise, distributorship or network marketing opportunity?" Sometimes, as in the case of the...
David A. Souza Ponzi Scheme
Posted on September 01, 2009Image via WikipediaThis is from the SEC Press Release on the David Souza Ponzi scheme."The Securities and Exchange Commission on Friday charged David A. Souza...
Why Smart People do Stupid Things.
Posted on August 30, 2009Image via WikipediaOver the years I have counselled many franchises and business opportunities distributors, I have been struck by the number of smart and successful...
American Casino - Film at 11
Posted on August 30, 2009American Casino movie trailer from Leslie and Andrew Cockburn on Vimeo.If buying credit default swaps was gambling, then how come these debts were legally enforceable?...
Rawman or Raw deal?
Posted on August 27, 2009Image via WikipediaAround the end of May, 2006, I was conned. By a franchisor named Robert Morgan, now going by the name of Rawman or...
How Much Can I Make?
Posted on August 25, 2009Image by inju via FlickrForbes wrote an article about their Top 20 Low Cost Franchise systems, but then noted, that: "Potential profitability is another, but...
Trade Mark Owners Fight Back Against Deceptive Testimonials
Posted on August 21, 2009Image via WikipediaDick Smillie, writing at Forbes, had a nice article in June, 2009 about the deceptive marketing practices of anti-aging shills for resveratrol and...
Why are Regulators Idiots?
Posted on August 21, 2009From the FBI Press Release about the recent construction ponzi scheme."WENDELL RAY SPELL, 50, of Gainesville, Georgia, was sentenced today by United States District Judge...
Affiliate Marketing and the FTC
Posted on August 20, 2009Image by affiliatesummit via FlickrI am surprised how little the affiliate marketing crowd understands or is aware of the FTC's agenda on deceptive advertising, especially...
Duncan Group Real Estate Ponzi
Posted on August 17, 2009Image via WikipediaFrom the FBI Press Release:Aaron Duncan, the former CEO and owner of The Duncan Group, was indicted on multiple charges involving a multi-million...
Strategic Responses to Disclosure Information
Posted on August 14, 2009Image via WikipediaOne of the oddities about franchise disclosure laws is this: more disclosure law produces less actual due diligence. This is not the intended...
Google Profit Kit - Not
Posted on August 12, 2009Image via WikipediaThe FTC regulates the "buy a job" schemes in two ways: under Section 5 of the FTC Act which regulates misleading advertising. The...
Are You a Critical Thinker?
Posted on August 11, 2009Julian Baggini of the Philosophers Magazine interviewed Nigel Warburton in 2001 about his book Thinking From A to Z...
Don't Pitch to the Bitch
Posted on August 11, 2009Image via WikipediaKaren Blumenthal, writing at the WSJ, has a nice article entitled "Fraud Doesn't Always Happen to Someone Else.""Scammers are very good at zeroing...
AOB Commerce Ponzi
Posted on July 27, 2009Image via WikipediaFrom the SEC Press Release on the AOB Commerce Ponzi:The Securities and Exchange Commission today filed a civil injunctive action against Darryl Lamonth...
How to Get Rid of Your Money Problems Once and For All
Posted on July 25, 2009Image via WikipediaHow to get rid of your money problems? Lose your entire investment in business opportunities scams as outlined in the FTC's Project False...
Can Kindle Replace Text Books?
Posted on July 24, 2009Image via WikipediaIs the Kindle DX: Amazon's 9.7" Wireless Reading Device (Latest Generation) a disruptive device for the textbook market?A technology which displaces conventional methods...
Criminal Charges in Castaldi Ponzi
Posted on July 22, 2009Image via WikipediaFrom the FBI Press release about the Castaldi Ponzi scheme:A suburban businessman who offered and sold purported investments to hundreds of investors was...
The Psychology of Scams
Posted on July 21, 2009Image via WikipediaIn February, 2009, the FTC stated that they were going to try to recreate in the laboratory conditions which enabled consumer fraud, specifically...
$18.9 Million Ponzi Scheme
Posted on July 17, 2009Image via WikipediaFrom the FTC Press Release on the Internet Kiosk ponzi scheme:At the request of the Federal Trade Commission, a federal court has imposed...
How to Tell Whether GWT is Real?
Posted on July 17, 2009Image via WikipediaThere are several network marketing schemes which sell jewellery, and Global Wealth Trader, GWT, is one of them.From the Global Wealth Trade's description...
Surplus Goods Business Opportunity Scam
Posted on July 16, 2009Image by AlaskanLibrarian via FlickrFrom the FTC Press Release on the World Traders Biz Op Scam:, my emphasis in bold."Scammers who duped consumers into paying...
Mr. Cigar Inc Franchisor - Ten Years Later
Posted on July 15, 2009Image via WikipediaThe great thing about the internet is how it makes the past present. What was previously long forgotten becomes accessible for those doing...
Tennesse Titan Ponzi
Posted on July 14, 2009Image via WikipediaFrom the FBI Los Angeles Press Release:A former player with the Tennessee Titans pleaded guilty this afternoon to federal fraud charges related to...
FTC to Study Fraud Empirically - Finally!
Posted on July 14, 2009Image via WikipediaThe FTC has finally decided to start studying fraud and not simply rely upon the discredited notion of disclosure for prevention. The FTC...
Kindle Price Drop
Posted on July 09, 2009As an abstract fan, as they are not available in Canda, of the Kindle, this looks pretty neat.Amazon is excited to announce that Kindle:...
Google Begins Banning Google AdWords Scams
Posted on July 09, 2009Image via WikipediaOn July 1st, 2009, the FTC brought an action under Section 5 of the FTC Act, which bans Misleading Advertising, against Google Money...
Provident Royalties Ponzi
Posted on July 07, 2009Image via WikipediaFrom the SEC Press Release on the Provident Royalties PonziOn July 2, 2009, the Securities and Exchange Commission obtained a temporary restraining order...
Illusion of Control
Posted on July 07, 2009"Why did so many people take their car instead of the plane after 9/11? The simple explanation is that, behind the wheel of your...
FTC to Empirically Study Fraud - Finally!
Posted on July 03, 2009Image via WikipediaThe FTC has finally decided to start studying fraud and not simply rely upon the discredited notion of disclosure for prevention. The FTC...
FTC on Business Opportunity Fraud
Posted on July 02, 2009The FTC has produced a very good video about business opportunity fraud, the buying of a job with unrealistic earnings claims, with Jim Vitale...
Easy Google Profit Scam
Posted on July 02, 2009One of my simple tests for fraud is this: when a website offering a business opportunity gets more attention than the FTC's site, the...
The Michael Jackson Tributes
Posted on June 28, 2009Image via WikipediaStanton Peele has a good take on the Michael Jackson tributes:"Some people, although revered in some respects, are more inconvenient alive. For example,...
Is ACN a Pyramid Scam?
Posted on June 25, 2009Image via WikipediaAt the scam.com forum, there is considerable debate about whether ACN is a pyramid scam.One poster cites, in support of his theory that...
Advanced Money Management Ponzi
Posted on June 24, 2009From the SEC Press Release on Advanced Money Management Ponzi scheme:The Securities and Exchange Commission today charged a Chula Vista, California resident and two entities...
Regan Ponzi
Posted on June 24, 2009From the SEC Press Release on the Regan Ponzi scheme.The Securities and Exchange Commission today charged Michael C. Regan (Regan) and his firm, Regan &...
Expecting the Wrong things From Regulators
Posted on June 22, 2009"How did alleged con man "Sir" Allen Stanford go from being a failed Texas fitness-club owner to becoming Antigua's in-your-face answer to Bernard Madoff?And...
Freedom Foreclosure Busted
Posted on June 22, 2009Image by Getty Images via DaylifeFrom the FTC Press Release about a bogus mortgage foreclosure scheme:"At the request of the Federal Trade Commission, a federal...
The 7 Habits of Highly Suspicious Funds
Posted on June 22, 2009Image by Getty Images via DaylifeRick Bookstaber has very interesting checklist for determining the riskiness of a hedge fund.You've heard this story before: A trader...
Churches Cheated
Posted on June 19, 2009Image via WikipediaFTC Consumer Alert on Churches being cheated by con criminals.There's no cost to your church. It may even make money to use for...
Stanford International Bank Ponzi
Posted on June 19, 2009Image via WikipediaFrom the SEC Press Release on the Stanford Ponzi scheme.On June 19, 2009, the Securities and Exchange Commission charged two accountants who produced...
All States ATM Fraud
Posted on June 18, 2009Image via WikipediaFrom the US Attorney General (San Diego) press release about the the All States ATM Ponzi fraud.United States Attorney Karen P. Hewitt announced...
How To Identify Good Turnkey Business Opportunities
Posted on June 17, 2009Image via WikipediaGovernments go to a great deal of trouble drafting and enacting laws to protect people who are "buying a job".But if you are...
Changes at The BizOp News
Posted on June 16, 2009Over the next couple of months, we are going to change the BizOp News, and diversify into three distinct areas.First, the BizOp News will continue...
Morgan European Holdings Prime Bank Fraud
Posted on June 12, 2009Image via WikipediaThe Securities and Exchange Commission announced that, on June 11, 2009, it filed a civil action in the United States District Court for the Middle District of Florida against Morgan European Holdings ApS, a/k/a Money Talks, Inc. ApS ("MEH"), John Morgan, Marian Morgan, Bowman Marketing Group, Inc...
What is Risk?
Posted on June 11, 2009Peter Bernstein was one of the great thinkers about risk; he should be read with Ian Hacking on understanding one of the great intellectual turning points in our history. The move from stories to data and information. From mumbo jumbo to calculation and responsibility...
Franchise Advertising in the 21st Century
Posted on June 11, 2009At the recent American Association of Franchisees and Dealers, Don Sniegowski gave a talk on how an Independent Franchisee Association could use the social media tools to establish its presence, and introduced a number of business models. The premise behind our talk was that franchise networks, especially in the QSR and Hotel industry, had ridden the wave of four large network effects starting in the 1950's: national highways, national free radio and TV broadcasts, national advertising, and newspapers as aggregrators...
Gathering Evidence in a Story World
Posted on June 10, 2009Image via WikipediaThe NPR has a useful introduction to behavorial economics, and I want to focus on Kahneman and "the pure visceral power of his own certainty. He eventually coined a phrase for it: "illusion of validity."BACKGROUND- FIND THE RIGHT STUFFKahneman's primary job was to try to figure out which of his fellow soldiers might make good officers...
The Death of Capitalism
Posted on June 10, 2009Professor Sidney Winter, Deloitte and Touche Professor of Management , Emeritus at the Wharton School of the University of Pennsylvania has a number of good observations about the death of capitalism, bailouts, and limited liability companies.Related articles by ZemantaWhy Advertising Is Failing On The Internet (Eric Clemons/TechCrunch) (techmeme...
Shop to Earn Scam
Posted on June 10, 2009Image by Chandra Marsono via FlickrThere are a number of people interested in Shop to Earn.Shop to Earn is essentially an affiliate program - you purchase a web...
Winner's Curse? Seth Godin on Auctions
Posted on June 09, 2009Image via WikipediaSeth Godin has wondered if the the winner of auctions usually bid irrationally high or too much. "The only thing worse than losing a big-time auction is winning one. If you win, you feel like a chump because everyone else in the world dropped out before you...
Why Oprah Tolerates Quacks
Posted on June 09, 2009Image by Getty Images via DaylifeWeston Kosova and Pat Wingert wrote an interesting piece in Newsweek about Oprah Winfrey and the frauds that appear on her show. Winfrey's inability to detect nonsense or bullshit is a bit of a mystery."Some of what Oprah promotes isn't good, and a lot of the advice her guests dispense on the show is just bad...
When Magical Thinking Works - It's Not a Secret
Posted on June 09, 2009In 1959, Evon Z. Vogt and Ray Hyman wrote "Water Witching". It was a fascinating and objective review of the practice of water witching...
Richard Posner versus Erving Goffman
Posted on June 08, 2009Image via WikipediaRichard Posner has a blog at The Atlantic Monthly, in which he updates, responds to, and refines his ideas about the current financial crisis. The blog is a continuing update to the ideas he wrote about in his book A Failure of Capitalism: The Crisis of '08 and the Descent into Depression Posner believes that the US regulators are deserving of more criticism, and I disagreed with his anaylsis -stemming from a different view about the proper role of the regulator of financial products...
Great New Slide Share Option
Posted on June 07, 2009| View | Upload your own This is going to make a lot of those orphan slide shows disappear - either add your voice or you won't be heard.
Is Home Staging a Guaranteed Lucrative Field of Opportunity?
Posted on June 05, 2009Image via WikipediaZac Bissonette wonders about Haverhill Home Staging and its guaranteed placement for people who complete their training course."Haverhill Home Staging says it's "North America's largest and fastest growing Home Staging Company." The point is debatable, but Haverhill is certainly North America's most prominent cable advertiser in home-staging: the art and science of sprucing homes to prepare them for sale...
A Voice from the Past
Posted on June 05, 2009Image via WikipediaOver 2 years ago, Greg Newton, sadly deceased, was already following Mozilo and his antics at Countrywide Financial.Angelo Mozilo, chairman and chief executive officer of Countrywide Financial Corp. (CFC), showed up on BuffoonVision yesterday, talking about unnecessary liquidity crises and otherwise desperately spinning the need for an urgent Fed rate cut...
AdSurfDaily RICO Case
Posted on June 04, 2009Image via WikipediaPatrick Petty, blogging here, has done an excellent job of following the AdSense Ponzi case through the court documents.'In a flurry of activity in the racketeering lawsuit against ASD President Andy Bowdoin, ASD attorney Robert Garner and Golden Panda Ad Builder President Clarence Busby, the plaintiffs in the case have formally added two attorneys and filed a motion for more time to respond to Garner's motion to be dismissed as a defendant...
Are Stupid Franchisor Marketers Made or Born?
Posted on June 04, 2009Funny video, hat tip to the Copywriting Maven, and B2B Macro Mind for this video on marketing.
How We Justify Foolish Acts and Bad Decisions
Posted on June 03, 2009Cover via AmazonAll of us would like to make less errors, learn from the past, and reduce mistakes. But, we have a built in problem - when things go wrong, we blame ourselves only as a last resort.Patri Friedman makes the point:Errors are valuable training instances, and our bias against accepting blame reduces the number available...
What can IndFA's Learn from Harvard?
Posted on June 02, 2009We have all heard the term "win win", but what does it really mean? Bob Mnookin talks about the Program on Negotiation, an executive training program at Harvard. "When you're mired in a dispute, it's natural to focus on differences. But negotiation experts at Harvard University suggest looking for hidden similarities instead...
Thinking Economists
Posted on June 02, 2009Greg Mankiw, an economist at Harvard, answers the following question from David Brooks:"I was having dinner with a journalist last night and he mentioned that he was finding that many of his best sources on the crisis teach at B schools, not Econ Departments...
Glamourizing Economic Predators
Posted on May 27, 2009Sam Antar makes an excellent point - "Don't glamorize economic predators". We tend to glamorize crimes of confidence and those criminals who committed them. This is one of the more difficult problems in white collar crime, we treat the victims worse than the victims of physical crimes...
Who are the United Vendors of Canada? Loonie Vend? Vendgourmet?
Posted on May 27, 2009Image via WikipediaHere is an interesting observation about United Vendors, and a number of companies it has used marketing it's vending business opportunity.I purchased U-turn machines from United Vendors of Canada, that used to be located at www.loonievend...
Negotiations over Legal Fees
Posted on May 27, 2009Thanks to the Copy Writing Maven for this humorous take on negotiation. While, the Maven saw vendor relations, I saw lawyer to client relations. Very funny, especially the final scene.
CRE Capital Ponzi
Posted on May 27, 2009Image via WikipediaFrom the FBI Press Release on the CRE Capital Ponzi scheme.James Ossie 48, of Atlanta, pleaded guilty today in federal district court to a wire fraud scheme involving the operations of his foreign exchange trading firm, CRE Capital...
Threats in an Abundant World
Posted on May 21, 2009Our national gloom is real enough, but it isn't a matter of insufficient funds. It's a matter of insufficient certainty. Americans have been perfectly happy with far less wealth than most of us have now, and we could quickly become those Americans again -- if only we knew we had to...
WARNING TO ONTARIO LAWYERS
Posted on May 13, 2009Image via WikipediaLawPro wants Ontario lawyers to be aware of what is essentially an advance fee scam in disguise."Last week LAWPRO e-blasted 20,000 Ontario lawyers in private practice with a warning about a bad cheque fraud scam targeting lawyer trust accounts...
Are You Financially Aware?
Posted on May 13, 2009Image via WikipediaHow much fraud can we expect to deter with increased financial literacy?I am skeptical that literacy is the root problem, and so was pleased to see that Sandra F. Braunstein, Director, Division of Consumer and Community Affairs, of the Federal Reserve agrees with me...
Children's Orchard Website
Posted on May 13, 2009Image by Getty Images via DaylifeI have written before about Children's Orchard, a franchise system with decidedly mixed success.Now, Unhappy Franchisee reports that"Children's Orchard is a chain of franchised resale shops that buy and sell children's clothing, furniture, and toys...
When Can You Rescind Your Ontario Franchise Agreement?
Posted on May 12, 2009Image via WikipediaOne vexing question for franchisees is when they can rescind their franchise agreement, under the Arthur Wishart Act 2009 ONCA 385 (CanLII) (Franchise Disclosure), 2000, S.O. 2000, c. 3 ("the Act"). The question calls for an interpretation of sections 6(1) and 6(2) of the Act...
Entrust Capital Management Fraud
Posted on May 11, 2009Image by Renegade98 via FlickrOn September 28th, 2006 a Shrewsbury investment adviser was charged with fraud today by a federal Grand Jury in connection with a scheme that bilked 15 investors of approximately $13 million."One year after he was convicted of 20 counts of mail and wire fraud, a former high-flying investment adviser is finally scheduled to be sentenced this afternoon in federal court, from a storyabout the Entrust Fraud by Jay Whearely in the Telegram...
Ponzi Schemes and the Business Cycle
Posted on May 11, 2009Why do we investigate Ponzi schemes? Simon Johnson, writing at Baseline Scenario, has a conjecture that I am very sympathetic with - if we lack the ability to control Ponzi schemes, do we lack the ability to control the business cycle? For reasons that follow, I think that the answer is "yes", the examination of the growth and demise of Ponzi schemes are essential to understanding the business cycle...
What are Philosophers Good For?
Posted on May 11, 2009Twenty years ago, I attended Stanford University on a post-doctoral award. John Perry was in the Philosophy department, then. Both a bright and nice guy. Best line in this talk: "the very brightest philosophers get assigned the worst ideas to defend"...
How You Can Get Smarter
Posted on May 10, 2009Image via WikipediaSteven Pearlstein, writing in the Washington Post, has an interesting story about Aplia and textbooks.When I was teaching, it annoyed me that a) I required the entire class to buy a text book that 80% only want to rent, and b) the other 20% overpaid for information that was never updated...
Why People Just Like You Buy From Snake Oil Salesmen
Posted on May 08, 2009Image via WikipediaJ.R. Yellow Kid Weil - Con Man the noted con criminal, had this observation about confidence crimes."This desire to get something for nothing has been very costly to many people who have dealt with me and other con men. But I have found this is the way it works...
PLAY N TRADE's Franchise Registration Suspended
Posted on May 05, 2009Watch Play N Trade's Founder, Ron Simpson on The Big Idea with from Play N Trade on Vimeo. The internet allows fact checking to become social - more people can respond and provide clues as to the big picture in franchising. For example, consider Play N Trade and this video, dated around August 2008...
Direct Selling and Tough Economy
Posted on May 05, 2009Image by DCD Sweetie via FlickrHere is an ill thought out story, about the viability of direct selling in a tough economy."As businesses shut down and workers are laid off, a certain type of selling is making a comeback. Across the country, direct sales companies are seeing a jump in independent workers...
Get a Date with Paul Henderson
Posted on April 23, 2009Image via WikipediaOn a very sad day for the Habs fans in Ontario, Les Stewart brings a cheery thought - for a mere $75 you, and as many friends who also have $75, can hear the legendary Paul Henderson speak, this Friday, April 24th.Paul Henderson is going to be speaking at the David Busby Street Center in Barrie, on April 25th at 6:00pm...
How to Close Barn Doors - Part 1, After the Horse has Left
Posted on April 23, 2009Image via WikipediaThe USA Today has a little snippet from Federal Reserve Chairman Ben Bernake, who demonstrates Bernake's deep ignorance of fraud."Americans need to sharpen their financial know-how to help them best use their money, especially during the current economic crisis, Federal Reserve Chairman Ben Bernanke said Monday...
Shop to Earn Controversy Continues
Posted on April 21, 2009Image via WikipediaA reader writes:"Against my better judgement I joined Shop To Earn and I am sorry I did.I was NEVER given disclosures of any kind. 1. Finding them on the website is like trying to find the needle in the haystack. 2. There are a number of unethical things that have been said at some 'meetings' I have attended...
Economic Loss Rule For Franchising- US and Canada
Posted on April 20, 2009Image via WikipediaBackgroundAlthough the geographic landscape in southern Ontario is similar to much of the North East and United States, there are subtle traps for the franchisor who ventures northward expecting the franchise laws to be substantially the same...
Why You Have to Pay to Discover the Franchisor's Truths
Posted on April 13, 2009Image via WikipediaRobin Hanson, writing at Overcoming Biases, has a provocative claim. Those interested in truth telling should pay others to uncover the truth in their area of claimed expertise. I like this idea a lot."What if you wanted to convince others that you were actually devoted primarily to truth about some topic, and to an unusual degree? Perhaps the clearest signal would be to show that you are buying truth, not selling it or making it, especially if you use some sort of auction to show you buy truth from the least cost provider...
Robert P. Copeland Ponzi
Posted on April 10, 2009Image via WikipediaFrom the SEC Press Release on the Copeland Ponzi SchemeOn April 9, 2009, the Securities and Exchange Commission ("Commission") filed a Complaint for Injunctive and Other Relief ("Complaint") in the United States District Court for the Northern District of Georgia against Robert P...
Independent Sales Businesses Marks
Posted on April 10, 2009Image via WikipediaKelly Spors, writing at the Wall Street Journal, writes about the attraction in these difficult times to a multi-level marketing opportunities."A family member who sells Mary Kay cosmetics recently invited me to a product demonstration hosted by another sales rep...
What Trial Lawyers can Learn from Poker Players?
Posted on April 10, 2009Image via WikipediaOver at Marginal Revolution, there is a ongoing discussion about Tim Harford's new book "The Logic of Life" and Chapter 2 on Poker, Game Theory and the Logic of Life. I thought that the Harford and the commentators might profit from Steve Lubet's book on Poker and Lawyers...
Greg Newton - Fraud and Hypocrisy Exposed Here
Posted on April 09, 2009Image via WikipediaGreg Newton, the author of the Naked Shorts Blog, who wrote about fraud and hypocrisy in the hedge fund world, died at the begining of this month.Felix Salmon wrote: "Greg single-handedly disproved the notion that bloggers couldn't be aggressive reporters...
Market Street Advisors Ponzi
Posted on April 08, 2009Image via WikipediaFrom the SEC Press Relese on the Market Street Advisor Ponzi scheme.The Securities and Exchange Commission ("Commission") charged Shawn R. Merriman of Aurora, Colorado, and his firm, Market Street Advisors, for conducting a multi-million dollar Ponzi scheme through the sale of interests in at least four investment funds...
More on the Business in Motion Story
Posted on April 08, 2009Image via WikipediaTwo readers write about Business in Motion:"Thanks for helping to expose this crook. We have just written an article on our site entitled "Does CEO = Crooked Evil Opportunist?" http://togethertothetop.com/?p=1855 Thanks for your comments which we've posted there...
Castaldi Info Wanted
Posted on April 08, 2009Image via WikipediaA reader writes: "First, Frank Castaldi filed 8 tax objection complaints with the Circuit Court on 3-6-2009. They are all regarding his property on Cumberland. From what I have read a tax objection complaint is filed when you are disputing your tax bill...
Why We Need Spam
Posted on April 06, 2009Aaron Wall, of SeoBook, has this amusing video about why Google allows spam, he follows up with a good post about Google encouraging copyright violations, and Henry Porter, writing at UK Guardian, as a similar theme about Google and copyright.Related articles by Zemanta Google is just an amoral menace (tsurch...
System Fraud and the Economic Crisis
Posted on April 06, 2009Image via WikipediaThese days a very popular thread about fraud and the economic crisis is William K. Black's interview by Bill Moyers."BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we're going through, this economic and financial meltdown is driven by fraud...
Oversea Chinese Fund Limited Partnership Ponzi
Posted on April 06, 2009Image via WikipediaFrom the SEC Press Release on the Oversea Chinese Lund Limited Partnership Ponzi.On April 3, 2009, the Commission filed an emergency action in the United States District Court for the Northern District of Texas to halt an on-going multi-million dollar Ponzi scheme and affinity fraud involving investments in Oversea Chinese Fund Limited Partnership, a hedge fund based in Toronto, Ontario, Canada...
Why We need to have the American Big Banks Fail
Posted on April 05, 2009Do we really want the US Treasury to continue to lie to us about the real state of the Big Banks? William K. Black says no.Related articles by ZemantaFeds: 650 Fifth Ave. 40% Owned by Terrorist Shell Company (gothamist.com)Facebook COO Sandberg Joins Starbucks Board Of Directors (techcrunch...
How to Really Understand Economic Crises and Fraud
Posted on April 05, 2009Image via WikipediaWilliam K. Black has good examination of the interplay between deceit and our economic crisis."The most relevant economic works for understanding these crises are by Akerlof and Romer, Galbraith, and Minsky. Akerlof and Romer explain why "looting" (control fraud) can occur and the fraudulent steps looters take to optimize short-term accounting profits (which destroy the firm)...
Why You Close Companies Making Record Profits
Posted on April 05, 2009William K. Black explains why you want to investigate and shut down financial institutions who are making boat loads of money.Related articles by ZemantaRegulators Close 4 Banks, 2 Are Absorbed By TARP Recipient Companies (huffingtonpost.com) Making banking boring (bbc...
Calculated Dishonesty
Posted on April 05, 2009William K. Black explains how the modern compensation system in finance is used by corrupt CEO's to get around accounting controls.
California Ponzi Fraud
Posted on April 03, 2009Image by Getty Images via DaylifeFrom the FBI Press Release on the Luminous Wealth Ponzi fraud. A Glendale man pleaded guilty this morning to federal fraud charges, admitting that he orchestrated a Ponzi scheme that took in more than $14 million from victim-investors...
Franchise Purchase Myth No. 1
Posted on April 03, 2009Image via WikipediaThe Financial Post has a story on new Dairy Queen franchises, which contains one of the standard franchise myths."Head office is a friend Even before you decide to buy a franchise, the head office of a reputable franchisor can be a valuable resource that can help you determine whether an investment on your part is viable, Shelley says...
Seth Godin Endorses MLM
Posted on April 02, 2009Image via WikipediaAccording to Seth Godin, the new marketing secret, is something all multi level marketers knew about years ago. So is Seth endorsing MLM for these hard economic times? Not an April's Fool's joke."This, in two words, is the secret of the new marketing...
Free Books on Kindle
Posted on April 02, 2009I am a patsy when it comes to buying books: Amazon 1-click was invented specifically separate me from my money.So, I fell hard for Kindle Best Current Deals.But, what sort of signal is created by this? We are giving away only cheap romance novels?Related articles by ZemantaKindle Competitors to get Wireless Connectivity (jkontherun...
Help with Castaldi Ponzi Requested
Posted on April 01, 2009Image of Ponzi Vineyards via SnoothA loyal readers writes:The person who found these [Castaldi Ponzi] web sites to go I need more information on how to the documents you are reading in order to help you. I am just as interested in finding out whats going on...
Holding Back Water or Simplifying Financial Innovations?
Posted on March 31, 2009Nobody understands complex credit derivatives, they cause problems, and we have to eliminate them from the system. So says, Taleb.Related articles by ZemantaU.S. Government Default? (gregmankiw.blogspot.com)Collateral Damage in the AIG Inquisition (leatherpenguin...
Why We Fail in Persuading Others
Posted on March 31, 2009Negotiating to WinView more presentations from Victoria Pynchon. Victoria Pynchon's presentation about the cognitive barriers to creating value is compelling reading, particularly the slides on reactive devaluation. Victoria points out that negotiators fail to ask diagnostic questions, which prevent either side from creating value...
Miller Ponzi Scheme
Posted on March 31, 2009From the Los Angeles FBI Press Release on the the Miller Ponzi Fraud.An Orange County man pleaded guilty today to federal fraud charges related to a long-running Ponzi scheme in which he collected more than $15 million from investors with bogus promises of annual returns as high as 18 percent...
Min and Dime Ponzi Alleged
Posted on March 31, 2009Image via WikipediaFrom the SEC's Press Release on the Min and Dime Ponzi scheme.The Securities and Exchange Commission today charged John H. Min of Tacoma, Wash., and his company Dime Financial Group LLC for raising more than $6 million in a fraudulent investment scheme that targeted churches, church members and senior citizens...
How Many Ponzi Schemes Are There?
Posted on March 30, 2009Image via WikipediaOver at the White Collar Crime Prof Blog, they ask whether there are more Ponzi Schemes these days? (Regular readers of The BizOp News can simply go to our category Ponzi, and count.)"Does it seem like more and more ponzi schemes are coming to light these days? Perhaps in part this is because people are scrutinizing their investments, and are realizing that what they thought was a wonderful return for their investment, but not in fact be the case...
Sunday Fraud News
Posted on March 29, 2009On the 30th of September 2007, Richard Dawkins, Daniel Dennett, Sam Harris and Christopher Hitchens sat down for a first-of-its-kind, unmoderated 2-hour discussion, convened by RDFRS and filmed by Josh Timonen. All four authors have recently received a large amount of media attention for their writings against religion - some positive, and some negative...
Blogs Helping Franchisees
Posted on March 27, 2009Image via WikipediaRichard Gibson, writing at the WSJ, provides a list of franchisee specific blogs.But, I believe that Gibson has missed the main point. Consider what he says."Would-be franchisees searching for investment ideas can find a bevy of information on franchising blogs...
The Short Con - Something for Nothing
Posted on March 27, 2009Nice video of the short con, the pigeon drop. But, the analysis, necessarily short for the video, doesn't convince me. At what point do you think a) red flags were waving, but b) the mark drove them anyways?Related articles by ZemantaHaving a Buiness Plan is important (spiderfood911...
Stanford Receiver Busy
Posted on March 27, 2009Image via WikipediaAs reported by Tom Fowler, in the Houston Chronicle, the receiver in the Stanford ponzi scheme has been busy."A federal judge approved a motion by Stanford Financial Group's court-appointed receiver to set aside a $10 million fund for future expenses...
Tulips and Promissory Notes
Posted on March 26, 2009Collateral calls from Marketplace on Vimeo. Nice discussion about collateral calls and credit default swaps. Think about tulip futures contracts, promissory notes written in a bar, combined with margin calls on the promissory note. How did the Tulip bubble end? With the Dutch Parliament not allowing either party of the futures contract or promissory notes access to the Courts to enforce their agreements on the grounds that these were gambling debts...
Should Bankers go to Jail?
Posted on March 26, 2009Image by Getty Images via DaylifeAaron Wall, writing at his Seobook.com, is mad about bankers. "I am not sure what will come of today, but if this country actually had any sense of justice then there would be at least a half dozen bankers serving a few decades in jail...
Millennium Bank Ponzi Halted
Posted on March 26, 2009Image by liangjinjian via FlickrFrom the SEC Press release on the Millennium Bank ponzi scheme.On March 25, 2009, the Commission filed an emergency action in the United States District Court for the Northern District of Texas to halt an on-going $68 million Ponzi scheme involving the sale of bogus certificates of deposit ("CDs")...
Why Not - Creative Problem Solving
Posted on March 25, 2009Great instructional video - idea generation for problem solving, coming up with great ideas effortlessly with neat tools.
Red Flags for Bad Investments
Posted on March 25, 2009Image by elycefeliz via FlickrTracy Coenen's has a new book out, about investigating fraud."All the talk about Bernie Madoff and others has everyone thinking about Ponzi schemes. Have you invested in a potential Ponzi? It's only natural to be worried, and in my opinion, investors haven't been skeptical enough...
More on Frank Castaldi from his Victims
Posted on March 25, 2009Image via WikipediaFrom a reader, and I encourage others to express themselves. Because this is real life and the pain con criminals inflict."Frank Castaldi: How was your week, want to hear about mine? Well I didn't hear of anyone killing themselves last week...
Fraud News You Can Use
Posted on March 25, 2009Image via WikipediaEd Dickson, writing at his blog Fraud, Phishing and Financial Misdeed, discovers gambling in a casino."A story of an undercover investigation by the BBC shows how dishonest employees at call centers -- who collect plastic payment card details on clients -- might be making a little extra pocket change by selling them...
Construction Ponzi
Posted on March 25, 2009Image by Getty Images via DaylifeFrom the FBI Press Release on Wendell Spell's construction ponzi scheme. WENDELL RAY SPELL, 50, of Gainesville, Georgia, pleaded guilty today in federal district court to charges arising out of a scheme to defraud investors out of more than $60 million...
6 Dangerous Myths about Franchising
Posted on March 24, 2009Image by Raymond Yee via FlickrIn my litigation practice, I routinely hear very sad, sobering and terrible stories from people who have bought into the Franchise Fraud. Let me be clear, I think franchising when done properly can be a terrific method of distribution which rewards the franchisor and franchisee...
Miami Man Gets 17 Years for Ponzi Scheme
Posted on March 23, 2009Image via WikipediaFrom the FBI Press Release on sentencing in the Bottom Line Ponzi.R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced that defendant Andres Leonel Pimstein, of Miami, FL, was sentenced today by U...
Consumers Warned About Açai Scams
Posted on March 23, 2009Image via WikipediaFrom the Center For Science in the Public Interest about website fraud:"The Center for Science in the Public Interest is warning consumers not to enroll online in supposedly free trials of diet products made with the trendy Brazilian berry açai (pronounced a-sigh-EE)...
The Discovery of a Fraud or Scam After the Fact
Posted on March 23, 2009Image via WikipediaThe history of failed Ponzi schemes is similar to the failure of business opportunities frauds. After the fraud is discovered, or there is an announcement of an official nvestigation, investors all of a sudden become super slueths in their due diligence...
Franchises are Consumers in South Africa
Posted on March 20, 2009Image via WikipediaNixon Peabody LLP has an overview of the new proposed franchise legislation in South Africa."Under the bill, franchisees are explicitly included as "consumers." They are also given a number of consumer rights, including the right to equality, privacy, choice, information, disclosure, fair and responsible marketing, honest dealing, fair agreements, fair value, good quality, safety, and supplier accountability...
Shubik's Dollar Auction Game - Not Rational to Play?
Posted on March 19, 2009In 1992, William Poundstone wrote a series of essays on game theory aimed at an introductory audience. The essays are worth reading, as he is constantly developing upon the theme how these strategic problems occupy real world considerations.One of his expositions was on Martin Shubik's Dollar Auction game,Much like Thaler's winner's curse, this appears to be another auction not worth playing...
Aiding and Abetting Madoff
Posted on March 19, 2009Image via WikipediaFrom the SEC Press Releas on the charging the auditors of Madoff's Ponzi scheme.The Securities and Exchange Commission today charged the auditors of Bernard Madoff's broker-dealer firm with committing securities fraud by falsely representing that they had conducted legitimate audits, when in fact they had not...
Fraud News You Can Use: Identity Theft, Rational Thinking, and Free Stuff
Posted on March 19, 2009Image via WikipediaEd Dickson, writing at his blog Fraud, Phishing and Financial Misdeeds has a nice post about identity theft. Here is the beginning, but you should read the whole article on identify theft."Identity theft is a serious subject, and according to recent reports, it's a growing problem...
Buying a Franchise as Partners
Posted on March 19, 2009Image via WikipediaSeth Godin has some useful advice for potential partners who want to buy a franchise or some other business, but I would change one aspect of his advice."My best advice is to say, "Today, right now, your contribution is worth 5% of the company and my creation of the company is worth 5%...
What Content would you Pay for?
Posted on March 19, 2009Some interesting thoughts the evolution of newspapers by John Temple, about seven minutes long. The modern newspaper will see itself more of a curator than an originator off all news. "I think the involving and bringing people in will be a very important part of whatever anything looks like, that this...
Regulators are not your Advisors
Posted on March 18, 2009Image via WikipediaGeoff Kirbyson, writing at the Winnipeg Free Press, about a fraud conference held in Winnipeg writes:"Garry Schmidt, associate manager of special investigations at Great-West Life Assurance, agreed. He said the public often considers fraud as a victimless crime because nobody was shot, stabbed or suffered a bodily injury when their assets were taken...
Horse Racing Fixes, Faxes and Frauds
Posted on March 18, 2009Madoff, Stanford, and the AIG implosion have all brought fraud to the public's attention. We do well to understand the current outbreak by reviewing our past. The Yellow Kid was reputed to be one of the master con criminals between 1900-1950, who allegedly masterminded criminal confidence games which raked in millions of dollars...
Jay Leno Heartless?
Posted on March 17, 2009Image via WikipediaGreg Maniw, writing at his Economics blog, wonders if Jay Leno is heartless.As reported by the Detroit Free Press, the story is "Tonight Show" host Jay Leno has something to say about how people are trying to sell tickets to his free shows in Michigan over the Internet...
Victims of Madoff Deserved It
Posted on March 16, 2009Image via WikipediaJoe Nocera, writing at the the New York Times, exhibits the typical frustration when confronted with the Madoff fraud; how couldn't people see through Bernie?"Did the S.E.C. foul up? You bet. But that doesn't mean the investors themselves are off the hook...
Hal Varian Explains Google Adwords Auction
Posted on March 16, 2009I found this a worthwhile explanation of the Google auction.Related articles by ZemantaHow To Display Your Latest Twitter Tweet Work Around For WP.com (teckline.wordpress.com)Spread the word about your site (amazus.org)The Basic Guide To Blogging (johnchow...
Cramer Whacked by Stewart
Posted on March 16, 2009"Jon Stewart hammered Jim Cramer and his network, CNBC, in their anticipated face-off on "The Daily Show," repeatedly chastising the "Mad Money" host for putting entertainment above journalism."http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/#clip147737This was a mildly entertaining rant by Stewart about how the ranting Cramer had materially mislead his viewers...
Equity Investment Management and Trading Ponzi
Posted on March 12, 2009Image via WikipediaFrom the SEC Press Release on the Equity Investment Management and Trading Ponzi scheme."The Securities and Exchange Commission today charged Northern California residents Anthony Vassallo and Kenneth Kenitzer for orchestrating a multi-million dollar investment fraud...
Smart Ponzi Halted
Posted on March 12, 2009Image via WikipediaFrom the SEC Press Release on the Brian Smart Ponzi:On March 11, 2009, the Securities and Exchange Commission obtained an order temporarily restraining Brian J. Smart and a private entity controlled by him, Smart Assets, LLC, from continuing to engage in the fraudulent offer and sale of securities...
Sound Advice from Nick Bibby on Buying A Franchise
Posted on March 12, 2009Nick Bibby has a nice website on franchising, thanks to Blue Mau Mau for the tip on how to avoid the hype.Related articles by ZemantaHow To Display Your Latest Twitter Tweet Work Around For WP.com (teckline.wordpress.com)The Basic Guide To Blogging (johnchow...
How to Deal with One Important Barrier to Effective Mediation
Posted on March 12, 2009Victoria Pynchon, at the Settle It Now Blog, reviews some well known cognitive biases to effective problem solving for mediators and negotiators. But, one of the things that does surprise me is how little relevant game theoretic illusions have made their way into the mainstream literature...
Dinosaur Brains
Posted on March 12, 2009Image via WikipediaGene Weingartner, writing in the Washington Post, has a terrific article about how stress effects the higher cognitive functions and leaves the dinosaur part of our brain to work. (The entire article is on awful subject, however.)"Diamond is a professor of molecular physiology at the University of South Florida and a consultant to the veterans hospital in Tampa...
Authority and Adsense
Posted on March 11, 2009Image by Netweb via FlickrRichard Gibson, who writes on Franchising and Small Business at the WSJ, asked me the other day why there were Adsense advertisments on The BizOp News?"Didn't I think that there was some conflict of interest in writing about due diligence and allowing adsense on the The BizOp News?", asked Richard...
Criminal Business Opportunity Fraud
Posted on March 11, 2009Image by ClintJCL via FlickrFrom the US Attorney Southern District of Florida Press Release on a criminal business opportunity fraudA British citizen was charged in connection with the operation of a series of fraudulent business opportunities on March 10, 2009, by a Miami federal grand jury, the Justice Department and the U...
Backtracking from an Uncertain Past
Posted on March 11, 2009Image via WikipediaIn relation to several posts I have written about Charlie Munger's use of inversion and preparing for highly unlikely events, a reader writes:"As an engineer/applied mathematician trained in control theory, I think I see where you are coming from...
How Not to Guess About the Uncertain Future
Posted on March 10, 2009Image via WikipediaCharlie Munger often talks about solving predictions about real life by the technique of inversion."The way complex adaptive systems work and the way mental constructs work is that problems frequently get easier, I'd even say usually are easier to solve if you turn them around in reverse...
Interest Based Mediation and Managing Franchise Relations
Posted on March 08, 2009I had the pleasure of conducting an interview with Nancy Connelly of MWI, a nationally recognized dispute resolution services and training firm specializing in resolving difficult business, commercial and organizational disputes. In particular, mediation as an alternative to a trial recently came in for a rough ride from one the American's top civil attorneys...
Castaldi Lawsuit
Posted on March 07, 2009Image via WikipediaA reader asks me:"Do you have any idea why no other subpeonas have been issued for other people involved? I would think at least his dad George would have been arrested. I believe maybe Frank is cooperating to get his dad off. His did is like 92 years old...
Thousand Dollar Profits
Posted on March 07, 2009/* There was an adsense ad that showed up on my site, and I plotted its traffic against the regulator, FTC. Ty Coughlin is just skirting under the level of interest usually need for an FTC investigation.Related articles by ZemantaFeds demand Obama scam ads crackdown (theregister...
When does A cause B?
Posted on March 06, 2009Thanks to Greg Mankiw for pointing out the source of this cartoon.Related articles by ZemantaGet Useful Tips About Top 5 tips on how to create a home budget (helpwithdebtnow.com)Financial Health - It's Emotional! (ladydelaluna.com)FT results: FT.com paid-for subscriptions up 9% (blogs...
Franchisee Purchasing Coops
Posted on March 06, 2009Image via WikipediaCoke and Pepsi display promeniently the Nutrasweet swirl on their diet drink cans. Monsanto's patent for Nutrasweet in Europe expired in 1987, which allowed a rival Holland Sweenter to context Monsanto for the European market.Holland Sweenter prevailed, and then decided to challenge Monsanto in the US...
Mac Investments Biz Op Fraud
Posted on March 06, 2009Image via WikipediaFrom the FBI Press Release about the Mac Investments Biz Op Fraud.A federal grand jury returned a 90-count indictment against operators of Mac Investments, Inc. (MAC.) The recently unsealed indictment charges Jeff Teitelbaum, 41, of Mesa, Ariz...
Shelby Dean Martin Ponzi Alleged
Posted on March 06, 2009Image by liangjinjian via FlickrFrom the SEC Press release on the Shelby Dean Martin ponzi scheme The Securities and Exchange Commission ("Commission") announced that on March 6, 2009, it filed a Complaint in the United States District Court for the Western District of North Carolina to halt an ongoing Ponzi scheme...
Will Franchisees Pay for Competent Pre Investment Advice?
Posted on February 26, 2009Image by Getty Images via DaylifeOne of the ongoing debates, a head scratching problem, is why prospective franchisees don't pay for and act upon the advice given by skilled or specialized franchise attorneys.Richard Solomon, writing at Blue Mau Mau, argues:"Franchise investors still don't avail themselves of competent pre investment due diligece resources...
The Myth of Franchise Protection
Posted on February 26, 2009Image via WikipediaThis talk by Professor Omri Ben-Shahar is about the three myths fo Consumer Protection, but at least two of these myths are relevant to Franchisee Protection.Professor Omri Ben-Shahar spoke on the "Myths of Consumer Protection" at this year's annual Ronald H...
Skepticism about Neuroscience
Posted on February 26, 2009Image via WikipediaThe Law and Magic blog points out a paper skeptical about the explanatory power of neuroscience."According to a wide variety of scholars, scientists, and policymakers, neuroscience promises to transform law. Many neurolegalists - those championing the power of neuroscience for law - proceed from problematic premises regarding the relationship of mind to brain...
Reed Gold Ponzi Scheme
Posted on February 25, 2009Image via WikipediaFrom the FBI Press release, on the Reed Gold Ponzi scheme:In March 2001 REED founded OSGold, which held itself out as an on-line "bank" that could provide its customers withInternet banking services purportedly backed in part by gold bullion reserves stored in an off-shore vault...
WG Trading Investors Investment Fraud
Posted on February 25, 2009Image via WikipediaFrom the SEC Press Release regarding the WG Trading fraud:The Securities and Exchange Commission today took emergency action and obtained an asset freeze against two New York residents and their three affiliated entities, who orchestrated a brazen investment fraud involving the misappropriation of as much as $554 million in investor assets...
Westgate Capital Management Mini Madoff
Posted on February 25, 2009Image via Wikipediahttp://www.sec.gov/litigation/litreleases/2009/lr20911.htmThe Securities and Exchange Commission today charged a Pearl River, N.Y., investment management firm and its principal for operating a large-scale scheme that defrauded hundreds of investors of millions of dollars by providing them with misleading marketing materials that significantly overstated investment returns and by misrepresenting the value of the assets under management...
Forty Years Ago Today, The Band Began to Play
Posted on February 24, 2009Cover via AmazonAlmost forty years ago, George Soros wrote a memo about mortgage trusts, reprinted on pages 61-63 of his book the Alchemy of Finance. You should get a copy of it and read the entire 3 pages, do your own calculations to demonstrate his point...
Can Tim Horton's Conquer the US?
Posted on February 24, 2009Image via WikipediaLast year at this time, Tim Horton's looked to expand southwards. "Fourth-quarter profit at Tim Hortons rose 11.5 percent, the coffee and doughnut chain said on Wednesday, as new locations and higher prices more than offset rising costs...
Franchising - It is All About the Money
Posted on February 24, 2009Big Dan T explains the modern theory behind franchising: it is all about the money. Thanks to Sean Kelly from Franchise Pick for this video.
A Victim of the Cruelest Man
Posted on February 23, 2009Image via WikipediaA reader writes, about the Castaldi Ponzi scheme,"I HAVE CONTACTED EVERY NEWS STATION THEIR IS I WANT HIM AND HIS FAMILY EXPOSED FOR WHAT HE HAS DONE TO ALL THE PEOPLE I KNOW AND FOR MY FAMILY TOO, HE TOOK FROM EVERYONE OF US. THIS IS WHAT I SENT TO THE NEWS STATION AND I HAVE COMMENTED ON EVERY PLACE THAT HAS A WEB SITE...
To Terminate or Not to Terminate
Posted on February 23, 2009Image via WikipediaIn Ontario, the equivalent of the FTC Rule, the Arthur Wishart (Franchise Disclosure) Act, created a private cause of action. The enforcement of the Franchise Disclosure Act is done by means of a civil suit. If a franchisee doesn't get a disclosure document, they may elect to rescind the contract, before 2 years, and the franchisor has 60 days to repay the franchise fee, repurchase inventory and supplies at the cost sold to the franchisee, and also make good any losses...
Why You Don't Get Rich Quick
Posted on February 22, 2009Image via WikipediaSeth Godin makes a mistake. He identifies business opportunites as things like: "raising ostriches, or timing the market or investing in tulips--there's a long history here." Ideas that appear absurd on their face.But he follows this mistake up, with a very good insight about why people buy business opportunities, when the underlying business has little or no value...
Alan Kippax on BIM
Posted on February 22, 2009Mr. Kippax, the marketing genius behind the Treasure Trader pyramid scheme, has some unkind words for CBC's Marketplace show on his latest scheme, Business in Motion. Mr. Kippax's odd diatribe should give the lie to the claim that con criminals are charming because no one can feel any other than disgust and distaste listening to this bully rant and rave...
Do You Understand the Credit Crisis?
Posted on February 22, 2009The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo. I don't, but Jarvis thinks he does. What do you think?Related articles by ZemantaThe Crisis of Credit Visualized (marketing.fm)The Credit Crisis video (yihongs-research.blogspot.com)Crisis of Credit (urbanplanningblog...
Taylor Bond growing the Children's Orchard Franchise?
Posted on February 22, 2009Image via WikipediaThe best thing about the internet is that the past is much more nearer than before. Look at this statement from the CEO of Children's Orchard and his expectations of growth in franchise units."Since assuming his position with Children's Orchard in January 2004, Bond, whose previous experiences in franchising include high-level positions at Domino's Pizza and Computer Renaissance, is bringing renewed growth to Children's Orchard...
Unified Wealth Solutions and the FTC
Posted on February 21, 2009/* My favourite types of graphs: the pursued versus the regulator.
Billion Coupons Ponzi
Posted on February 21, 2009From SEC Press Release on the Cooper Ponzi Scheme.On February 18, 2009, the Securities and Exchange Commission obtained a court order halting an alleged $4 million Ponzi scheme perpetrated by Hawaii-based Billion Coupons, Inc. ("BCI") and its CEO Marvin R...
The Business of Justifying Bribes
Posted on February 20, 2009Image via WikipediaEconomists should find bribery fascinating. Bribes perform a neat trick: they make expensive goods more in demand, or what economists call goods with high income elasticity. Characterisically of that profession, the only goods economists identify they call "luxury goods"...
Ponzi Schemes and Gatekeepers
Posted on February 20, 2009Image by Getty Images via DaylifeAttorneys are often called gatekeepers. "Classical gatekeeping theory introduced by Prof. Reinier Kraakman in his seminal article (Gatekeepers: Anatomy of a Third Party Enforcement Strategy, 2 J.L. Econ. & Org. 53 (1986))...
Government and Network Effects
Posted on February 19, 2009Interesting omission by Milton Friedman, who makes a series of reasonable points, but a ghastly omission when talking about Henry Ford. Friedman claims that no good has ever come from government planning, and then gives the example of Henry Ford. Very good, but who built the roads for the cars to travel on? Be nice to see a little bit of historical understanding of the role of central planning and the creation of network effects...
Something for Nothing
Posted on February 19, 2009"A few individuals would hurry to his office immediately to collect their money. But others would take their time, convinced by the mere fact that they had a one cent postcard that they had made a 50% return on their investment." Charles Ponz.Related articles by Zemantapostcard literature (russelldavies...
William L. Walters charged by SEC for running Ponzi scheme
Posted on February 18, 2009Image via WikipediaFrom the SEC Press Release on the Walters Ponzi.The United States Securities and Exchange Commission announced that it has filed securities fraud and other charges against former registered representative, William L. Walters, formerly of Lone Tree, Colorado for operating a Ponzi scheme promising annual returns ranging from 20% to 40%...
Franchisee Voice Now Online
Posted on February 18, 2009Image via WikipediaThe American Association of Franchisees and Dealers recently announced its newsletter, The Franchisee Voice, will now be published exclusively online at http://www.thefranchiseevoice.com. The publication had previously been a quarterly, hard copy newsletter mailed out to AAFD members...
How to Choose a Franchise Broker
Posted on February 18, 2009Image via WikipediaMark Kaplan, writing at Bestfranchiseinformation.com, has an article about the good, the bad and the downright ugly about franchise brokers."If you're looking into Franchising, surely you've tripped over the countless Franchise Broker Companies that are in business to match you with a Franchise...
Medifast a Madoff?
Posted on February 18, 2009Image via WikipediaThe Maryland Daily Record reports that the shares of Medifast took a nose dive after Barry Minkow issued a 29 page fraud report complied by Robert L. FitzPatrick."A report out Tuesday alleging the fastest-growing segment of diet food maker Medifast Inc...
Killer Pre Investment Due Diligence
Posted on February 18, 2009Image via WikipediaRichard Solomon, writing at his website, Franchise Remedies, has a useful article about some of the problems with pre purchase investigation for prospective franchisees."The hoards of potential investors with access to over $ 500,000, coming out of downsizing companies and merger resulting reductions of work forces, have brought sharp practitioners to the small business opportunities field...
Is Sbarro Struggling?
Posted on February 17, 2009Image via WikipediaSbarro was picked as one of Yahoo's 15 Companies that might not survive, and a there is this follow up in QSR about Sbarro."Under normal circumstances, Sbarro's heavy emphasis on mall locations makes perfect sense. "They're really well-situated to be in a mall," says Robert Welcher, president and CEO of Restaurant Consultants Inc...
Why Money Sitting is the Sidelines
Posted on February 17, 2009Image via WikipediaLike most intellectuals, my understanding of the economists' concept of hoarding and recession is predicated by Paul Krugman's discussion of the Washington D.C. baby co-op, the Sweeney's co-op, that issued scrip to its babysitters for payment, and then ran into some problems...
Another Life Destroyed by Castaldi
Posted on February 17, 2009Image via WikipediaFrom a commentator:First of all, I want to say that I am a VICTIM of this lying, cheating, manipulative man, Frank Castaldi. I personally know a dozen people who are also victims. My life is now destoyed because of him and I wish nothing but horrible things to happen to him...
The Proliferation of Ponzi and Pyramid Schemes - Don't Miss this Talk
Posted on February 17, 2009Image via WikipediaLook for this talk tomorrow at Voice America, with Robert L. FitzPatrick discussing Ponzi and Pyramid schemes.Voice America, the world's premiere web radio network, announces the appearance of international fraud expert Robert L. Fitzpatrick, exclusively on the highly acclaimed ZenBiz Radio Show on Wednesday Feb...
P&G's Mr Clean Carwash Franchise
Posted on February 17, 2009Image via WikipediaLance Winslow has an excellent article on the Protcer and Gamble incursion into franchising. The concept doesn't impress him, for reason that have nothing to do with the involvement of Jim Amos.Here is the beginning of his article...
SEC Charges Stanford Financial
Posted on February 17, 2009Image via WikipediaFrom the SEC Press Release on the Stanford Ponzi scheme.The Securities and Exchange Commission today charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program...
Who is Gptmodel.com?
Posted on February 16, 2009/* I keep google adsense on this blog because I like to chart either the SEC or FTC against some websites using Alexa. Yes, I know that Alex has its serious problems, but I generally find that if a website is getting more traffic than the regulator, either the SEC or FTC, it is a sign of fraud...
Free Products and Services from Intuit
Posted on February 16, 2009This seemed an interesting article, I haven't checked it out, but Intuit claims to be offering free services and products to small business."We often hear how small business drives the American economy, that it creates 90 percent of new jobs in the U...
FTC wants more control over interactive ads
Posted on February 16, 2009Image via Wikipedia"Since the 1990's, the Federal Trade Commission and its staff have engaged in investigations, law enforcement, studies, and other policy developments to protect consumer privacy in the online environment.The FTC's work in this area is part of its broader, longstanding program to address privacy concerns in both the online and offline markets...
How Disruptive an Innovation is Kindle?
Posted on February 16, 2009Image via CrunchBaseBob Sutton writing at his website wonders about how disruptive the Kindle technology is. Here are his thoughts, after seeing more of his associate sales on Amazon be Kindle books."The new forthcoming version of the Amazon Kindle has got pretty good reviews...
Madoff and Ponzi
Posted on February 13, 2009Image via WikipediaHere is an interesting discussion between Michelle Singletary and Martin Zuckoff, who wrote an biography of Charles Ponzi."To help readers better understand the Bernard L. Madoff case, and to keep others from falling victim, Michelle wrote that she chose this book because "Zuckoff doesn't glorify or crucify Ponzi...
15 Amazing Scam Artists' Tricks
Posted on February 13, 2009Image via WikipediaJack Payne, the previous editor of Business Opportunities Digest, which undoubtedly exposed him to a great deal of fraud, has a great 15 step con trick essay, and I want to highlight two of his observations:"1. Shoot for only a small, initial amount of up-front money...
Felix Salmon on Stanford
Posted on February 13, 2009Image via WikipediaFelix Salmon, at Portfolio, has been busy blasting away at Alan Stanford and his alleged misdeeds, talking about a recent magazine cover."The interview is well worth reading, especially the bits where Stanford congratulates himself on his investment philosophy...
Is Killer Due Diligence Affordable for Franchisees?
Posted on February 12, 2009Image via WikipediaFascinating story developing over at Blue Mau Mau about the price and effectiveness at what is called "killer due diligence" for prospective franchisees. One claim is that effective due diligence costs too much for the ordinary bloke - only the rich can afford the luxury...
Amos Lawsuits
Posted on February 12, 2009http___pacer.uspciuscourtsgov_download_mw1930-154940.pdf US Federal lawsuits for Jim Amos.
Are You a Trade Show Activist?
Posted on February 12, 2009Image via WikipediaThe Canadian Franchise Association is holding one of their franchise trade shows. Les Stewart is looking for someone to join him, attend the show and1. Slip a digital camera in their jacket, record a few clips, use free edit software,and create and post YouTube video (I've already reserved a FranchiseFool channel, btw) 2...
Why Cannot We have Better Franchise Reporters?
Posted on February 12, 2009Image by NatalieMaynor via FlickrHere is just a poorly researched story, about Jim Amos and his litigation history, written over at Car Wash, by the editor Kate Carr."According to the Feb. 5 article in the Blue Mau Mau, Amos has a "history of litigation" with I Can't Believe It's Yogurt and Sona Medspa and his name "creates numerous strong reactions from self-declared franchise owners on the franchise blogosphere...
Tricky Franchisor Lawyer Clauses
Posted on February 11, 2009Image by &_yo via FlickrVery interesting thread at Blue Mau Mau about the relationship between due diligence and renewal rights of a franchisee."While in the abstract the notion that a franchuisee who was able to pony up hundreds of thousands of dollars to buy into a franchise should not need consumer contract protections may sound pausible, this is typically not what happens to many people...
Proctor & Gamble Succeed in Car Washing Franchising?
Posted on February 11, 2009Image via WikipediaMichael Garner, writing at Blue Mau Mau, wonders about P&G's entry in franchising.As reported in the WSJ, to jump-start plans for a nationwide chain of Mr. Clean Car Wash franchises, P&G in December acquired the franchise assets of Atlanta-based Carnett's Car Wash, which has 14 locations...
Cohmad Madoff Feeder Fund may be De-Registered
Posted on February 11, 2009Image by Getty Images via DaylifeReuters reports on the Cohmad feed fund to Madoff, and Massachusetts Secretary of State William Galvin's novel and aggressive approach to scrutinize the middlemen more closely, in particular Cohmad and Robert Jaffe, and others...
Affinity Fraud: Pastors Must Stop Bringing Wolves
Posted on February 11, 2009Cover via AmazonRichard O. Jones, writing at Black Voices News, has some good advice about affinity fraud."Affinity fraud includes investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups...
A Statement You Must Read
Posted on February 10, 2009Image by Renegade98 via FlickrA reader writes to me about the pain being a victim of the Frank Castaldi Ponzi scheme. Read this throughly to understand what it means to be the victim of a confidence criminal.I know someone will tell you about this. Just in case you thought that we are "getting use to" what you have done to us let me assure you that we ARE NOT! Because of you we have lost everything, our cars, ours homes, our security, our lives, our souls...
Bernard L. Madoff Settles with SEC
Posted on February 10, 2009Image via WikipediaFrom the SEC Press Release on the Madoff SettlementThe United States Securities and Exchange Commission announced that on February 9, 2009, it submitted to the Honorable Judge Louis L. Stanton, a federal judge in the Southern District of New York, the consent of Bernard L...
10 Con Artist Tricks to build the New Bull Market
Posted on February 10, 2009Image by Getty Images via DaylifePaul Farrell, writing at MarketWatch, has a nice skeptical view about whose ox is going to get gored."Wall Street wants a new bull more than you do. Why? Bulls breed megapayoffs. Yes, Wall Street's running a handicap race on a bad playing field, a rotten economy...
Tim Hortons Jumping the Shark?
Posted on February 10, 2009Image via WikipediaBloomberg News reports on Tim Hortons and Cold Stone Creamery"Tim Hortons Inc., Canada's largest restaurant company, and ice-cream chain Cold Stone Creamery will create 100 co-branded stores in the U.S. to expand sales throughout the day...
Craig T. Jolly and Quest Holdings Ponzi
Posted on February 09, 2009Image via WikipediaFrom the SEC Press Release on the Jolly and Quest Holding Ponzi scheme.The Securities and Exchange Commission today filed securities fraud and other charges against Quest Holdings, Inc. and its principal, Craig T. Jolly, of Spokane, Washington, for operating an internet-based Ponzi scheme promising monthly returns of up to 19...
13 Services Your Independent Franchisee Association Blog Must Contain?
Posted on February 09, 2009Image via WikipediaLes Stewart has 13 functions that an Independent Franchisee Association's blog should contain. Here are the first five ideas."[The IndFA's Blog] will:offer apprenticeship positions for candidate investors (assume training function),post anonymously, if they like,never ban anyone (for any reason),list each executive's name and rate them,arrange and profit from their own financial suppliers, ...
Dr. Doom and the Black Swan Give Advice
Posted on February 09, 2009Image by Getty Images via DaylifeDr. Doom & the Black Swan, Nouriel Roubini, RGE Monitor and Nassim Taleb, discuss what we need to do to get out of our financial crisis.Interesting to see how the talking heads at CNN have simply no clue what Taleb's foundational point about risk taking...
Adsense and Affliate Scams
Posted on February 09, 2009Image via WikipediaJeremey Shoemaker puts his finger on one of the problems with having a consumer site running Google Adsense.Shoemoney's site is a commercial site, with some useful tips on affliate marketing - the role of selling other people's stuff by internet promotion...
The Truth about Frank Castaldi
Posted on February 07, 2009Image by Getty Images via DaylifeA reader comments about Frank Castaldi and his ponzi scheme. This is important enough to be on the front page."THE TRUTH ABOUT FRANK CASTALDI AND HIS VICTIMS You can call us stupid, DO NOT call us greedy. Let me tell you about the people who have been affected by this horrible, evil monster, the REAL story...
CBC Marketplace Investigates Business In Motion
Posted on February 06, 2009Image via WikipediaCBC Marketplace had a nice piece on BIM (Business in Motion)"Marketplace investigates a company called BIM (Business in Motion) that claims big returns once you buy in. BIM's main product is the UltraLife Club, a travel package that promises vacation deals...
The Miracle Ponzi
Posted on February 06, 2009Image via WikipediaFrom the FBI Press Release about the Robert Miracle ponziA grand jury in Seattle, Washington, has indicted ROBERT MIRACLE, MUKHTAR KECHIK, and FAHIMI FISAL in a twenty-three count Indictment charging Conspiracy, Mail Fraud, Wire Fraud, Money Laundering, and Tax Evasion...
Hanson on Mind as Control versus Cheerleading
Posted on February 06, 2009Image by Getty Images via DaylifeOne of the views I try to stress here is how easy it is for a fraud to mimic truth, reputation, or credibility signals. The fraud's ability to mimic these signals, and avoid the usual necessary commitment, confounds the neo-classical theory of rationality which sees the mind/market as deliberative mechanism...
Worldwide Equity Corporation Prime Bank Fraud
Posted on February 06, 2009Image via WikipediaFrom the SEC Press Release on a Prime Bank FraudThe Securities and Exchange Commission ("Commission") charged Brian V. Prendergast of Castle Rock, Colorado, and his entity Enterprises, LLC, a Colorado limited liability company, with conducting a fraudulent prime bank offering scheme in coordination with Donald R...
Fighting Fat and Fraud
Posted on February 05, 2009How is obesity similar to being defrauded? Well, just as nobody deliberates that their food or drink is so good that they want to weigh a 265 lbs to accommodate their taste buds, so nobody deliberately writes a cheque to a fraud criminal.But in both cases, the prevention of obesity and the prevention of fraud, rely upon an appeal to the deliberative process - dieting and due diligence respectively...
How to Get Money from AdSurf
Posted on February 05, 2009Image by _Blaster_ via FlickrA number of people have asked about how to contact the US District Attorney for return of money invested in AdSurfDaily/ASDCashgenerator/Golden Panda.Here is the link to a form to fill out for recovery of fund invested with any of the AdSurfDaily/ASDCashgenerator/Golden Panda (ASD) programs...
Rate Search Ponzi
Posted on February 05, 2009Image via WikipediaFrom the FBI Press Release on the Rate Search PonziSt. Louis, MO: Scott Luster, President of Rate Search, Inc., pled guilty to fraud and tax charges involving his scheme to divert customer funds, United States Attorney Catherine L. Hanaway announced today...
Markopolos Testimony
Posted on February 04, 2009Markopolos Says He Will Turn In A Mini-Madoff from AlleyInsider on Vimeo.
Markopolos on SEC Oversight
Posted on February 04, 2009Image via WikipediaFelix Salmon, writing at Portfolio, is impressed with Markopolos' testimony and accepts it as evidence that the SEC failed because of the Madoff fraud.(Mark Cuban, writing at his blog the blogmaverick, has similar praise for Harry Markopolos...
SEC Stops Catholic Affinity Fraud
Posted on February 04, 2009Image via WikipediaFrom the SEC Press Release about the Gen-See ponzi scheme.On January 28, 2009, the Honorable William M. Skretny, United States District Judge for the Western District of New York, entered an order granting the Securities and Exchange Commission's motion for preliminary injunction and other relief against defendants, Gen-See Capital Corporation a/k/a Gen Unlimited ("Gen-See") and its owner and president, Richard S...
FTC Obtains $250,000 Settlement?
Posted on February 04, 2009Image via WikipediaFrom the FTC Press Release about a Vending fraud.The Federal Trade Commission obtained a $250,000 settlement against a participant in a vending machine scheme, concluding its case against the defendants in this operation, all of whom were charged in 2002 as part of the Project Busted Opportunity law enforcement sweep...
What does a 18th Century Philosopher have to Offer the 21st?
Posted on February 03, 2009Image via WikipediaIt is common to believe that our generation, has a monopoly of all the wisdom that is worth acquiring. But one of the great advances in social networking is the potential for rapid delivery of wisdom lost, from previous generations...
Franchising as a Corporate Form
Posted on February 03, 2009Image via WikipediaOne of the interesting facets of franchising, generally not recognized, is its value as a different corporate form.Consider the recent problems that Deloitte Touche is having because of the Parmalat fraud.From the Judicial Opinion, which refused summary judgment, is some background on the Parmalat lawsuit...
Agape Merchant Advance Ponzi Alleged
Posted on February 03, 2009Image via WikipediaFrom the FBI Press Release about the Agape ponzi scheme.Nicholas Cosmo, the owner and president of Agape World, Inc. ("Agape") and Agape Merchant Advance, LLC ("AMA"), was arrested last night pursuant to a federal complaint charging him with mail fraud...
New Money for Fraud Investigations
Posted on February 03, 2009Image by Still Burning via FlickrThe US Senate has approved new money for fraud investigations."In recent months, amid the financial crisis that has roiled the U.S. economy, a rising number of securities and accounting fraud cases have surfaced, accounting for billions of dollars in losses for investors...
Franchise Non Disparagement Clauses
Posted on February 02, 2009Image by MotherPie via FlickrOne of the odder clauses that franchisors demand in a settlement agreement is the non disparagement clause - that the franchisee agree not to disparage, discredit, defame, or say mean things about the franchisor.I have never understood the content of such a clause - I get defamation, but you don't have to demand that someone not defame you in advance...
Business's Evil Twin : The Ponzi
Posted on February 02, 2009Image by Renegade98 via FlickrRobert FitzPatrick, of Pyramid Scam Alert, has a nice observation about the relationship between ordinary business and ponzi schemes, in the Times.The US, though, is the centre of the Ponzi renaissance. "These schemes by definition survive by bringing in new money...
SEC Officials Grilled on Madoff Shortcomings
Posted on February 02, 2009Image via WikipediaWhat can we reasonably expect from our regulators? Cristina McEachern, writing at Advanced Trading, writes about the recent Senate hearings about the Madoff fraud."While the risk assessment process is a key area to deter and catch potential fraud, following up on tips and complaints received by the Commission was also a big topic seeing as many complaints were filed with the SEC regarding Madoff's operations...
Ex-Merrill Executives Got Burned by Madoff
Posted on February 02, 2009Image via WikipediaYet another example of why rich people need the same protection against fraud as anyone else."Former Merrill chief executives Daniel Tully and David Komansky, along with former Merrill investment-banking chief Barry Friedberg, personally invested in hedge funds with Madoff exposure run by former Merrill brokerage chief John "Launny" Steffens, according to people familiar with the matter...
A mere $43 million Ponzi
Posted on January 30, 2009Image via WikipediaFrom the FBI Press Release on the Roberts PonziUnited States Attorney Jane Duke, and Tom Brown, Special Agent-In-Charge, Federal Bureau of Investigation (FBI), announced that James Blackman Roberts 71, of Heber Springs, Arkansas, was sentenced Friday, January 23, 2009, to serve 180 months in federal prison for wire fraud...
Christian Affinity Fraud
Posted on January 30, 2009Image via WikipediaFrom the FBI Press Release on Jeffrey McLainMARIETTA, GA - JEFFREY W. McLAIN, 52, of Marietta, Georgia, has been indicted by a federal grand jury on charges of mail fraud and wire fraud. McLAIN is expected to appear before a United States Magistrate Judge late this week or early next week...
What is an Illegal MLM or an Illegal Pyramid in Canada?
Posted on January 30, 2009Image via WikipediaFrom the Competition Bureau's website:"A multi-level marketing company sought an opinion in April 2003 as to whether a proposed plan to sell memberships would raise concerns under the Competition Act.Under the plan, a membership costing $2,995 before taxes would give members the services and benefits of a traditional hotel concierge at preferred rates, from various vendors or suppliers...
Perfect4u Scam
Posted on January 30, 2009Image via WikipediaFrom the UK's This Money on Perfect4u:Question: Have you come across a cashback scheme operated by a firm called Perfect4u? It appears to be connected to some big-name banks such as Alliance & Leicester and HSBC, but as it costs nothing to join I am wondering whether there is a catch? Answer: Well spotted...
How to Regain Confidence
Posted on January 29, 2009Image via WikipediaDean Baker, who wrote Plunder and Blunder, has a couple of good ideas which ought to reduce fear and increase overall confidence."Many of the solutions are obvious, but the deciders are no more willing now to step outside the conventional wisdom and think for themselves than when they were busy ignoring an $8 trillion housing bubble two years ago...
Cialdini Interview on The Wisdom of the Crowd
Posted on January 29, 2009Image via WikipediaInteresting interview with Cialdini on persuasion techniques."In our hotel experiment, we considered the finding that the majority of hotel guests who encounter the towel reuse signs do actually recycle their towels at least some time during their stay...
Asset Recovery and Management Trust Prime Bank Fraud
Posted on January 29, 2009Image via WikipediaFrom the SEC Press Release on Asset Recovery and Management TrustThe Securities and Exchange Commission announced today that it recently obtained judgments against three defendants in a previously filed case alleging that the defendants operated a prime bank fraud under the name Asset Recovery and Management Trust ("Armtrust") that defrauded hundreds of investors of more than $1...
Gordon B. Grigg and ProTrust Management TARP Fraud
Posted on January 29, 2009Image via WikipediaFrom the SEC Press Release on ProTrust ManagementOn January 28, 2009, the Securities and Exchange Commission ("Commission") filed a Complaint for Emergency Injunctive and Other Relief ("Complaint") in the United States District Court for the Middle District of Tennessee, Nashville Division, against Gordon B...
White Collar Criminals are Criminals
Posted on January 28, 2009Image via WikipediaDo you feel sorry for criminals that have used compliance techniques instead of force to you rob you?Are con criminals somehow less dangerous, not deserving of jail time?Well the famous author John Grisham apparently thinks that con criminals are not deserving of jail time...
Three Card Monte and the Banks
Posted on January 28, 2009Image via WikipediaOne of theoretical stances this blog takes is to analyze ordinary decision making behaviour by understanding how clearly fraudulent schemes work by identifying which compliance tricks are in play. When we can see the mechanisms at work in a deliberate fraud, identify the parts, and are confident about the psychology of compliance tools, we are better prepared to understand frauds cloaked in the forms of normality and social convention...
Judge bans Allphones from threatening Franchisees?
Posted on January 28, 2009Image by lexell via FlickrWe need better reporting about legal issues as they relate to franchises. Here is a story from Australia, apparently about a Franchisor threatening its franchisees."ALLPHONES has been banned from telling franchisees they will be given preferential treatment if they enter into a new agreement with the company...
Selling Franchises to the Recently Laid Off
Posted on January 27, 2009Image via WikipediaSeveral weeks ago, I was interviewed at the prestigious franchise news site, Blue Mau Mau about fraud. One of my concerns in this economic environment was with how the newly laid off would react, what they would do, and how they would make decisions...
Thank-you to our readers - we are number 25!
Posted on January 27, 2009Image via CrunchBaseFrom the Avolaw Blog, who ranks lawyers."Ever wonder what exactly goes into those top legal blog (blawg) lists floating around? We have, so in line with Avvo's commitment to transparency, we threw together this auto-updating list of over 300 legal blogs ordered by their Alexa traffic ranking...
Dale Graybill sentenced for Ponzi Fraud
Posted on January 27, 2009Image via WikipediaFrom the Connecticut FBI Press Release on Dale Graybill:Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that DALE L. GRAYBILL, 64, of North Haven, was sentenced today by Senior United States District Judge Peter C...
Satyam auditors arrested and PWC denies wrong doing.
Posted on January 26, 2009Image via WikipediaThis just in from the department of highly unusual news. PWC, the auditor of Satyam, who allowed the company to mislay over a $1 Billion in cash is:"under intense pressure since Mr Raju admitted in a statement to the Bombay Stock Exchange earlier this month that the company's accounts had been inflated over several years...
How Expensive is Proper Franchise Due Diligence?
Posted on January 26, 2009Image via WikipediaRichard A. Solomon, Paul Steinberg, and I have often talked about getting proper pre purchase advice before buying a franchise, over at the Blue Mau Mau site for franchise news. We note it generally should cost between $3,000 - $5,000 and between four to six months learn about a franchise...
Castaldi Ponzi Scheme Alleged
Posted on January 26, 2009Image via Wikipedia From the US Illinois FBI Press Release: A suburban businessman who promised hundreds of investors between 10 and 15 percent annual interest rates on promissory notes he sold them was charged today with operating a so-called "Ponzi" scheme for more than 20 years, resulting in losses estimated in tens of millions of dollars...
Fraudsters Abusing do-not-call list - What a Surprise!
Posted on January 26, 2009Image via WikipediaThe story that the Canadian do-not-call registry is being sold to scam artists should be a non story. The Consumers' Association of Canada says it has been inundated with complaints from people who have been called by scam artists after placing their telephone numbers on the registry, which went into effect last September...
Brixon Group Ponzi Guilty Plea
Posted on January 22, 2009Image via WikipediaFrom the FBI Press Release about the Brixon Group ponzi.United States Attorney Karen P. Hewitt announced that Donald Manning pled guilty today to conspiracy and wire fraud charges in U.S. District Court in San Diego before the Honorable Barry Ted Moskowitz...
Scoop Capital Fraud
Posted on January 22, 2009Image via WikipediaFrom the SEC Press Release on the aptly named "Scoop Capital" fraud:The Securities and Exchange Commission today filed a civil injunctive action in the United States District Court for the Middle District of Florida charging Arthur Nadel with fraud in connection with six hedge funds (the "Funds") for which he acted as the principal investment advisor...
Assigning Blame after Magic Fails
Posted on January 22, 2009Vikas Bajaj writing at the New York Times has a story about something for nothing."Like so many investments that Wall Street concocted in recent years, Gemstone was fashioned from subprime dross. The M&T Bank Corporation, which got the sales talk and subsequently bought into the investment, lost $80 million...
Organised Crime Risk
Posted on January 21, 2009Image via WikipediaInteresting story about fraud out of Scotland, which has things backwards."Detective Chief Superintendent Alan Moffat, of the Scottish Crime and Drug Enforcement Agency, told the Sunday Herald that the financial services sector in particular was "coming under greater threat" than before, not least because the lack of easily available credit made businesses more likely to turn to organised criminals for funding to tide them over through difficult periods...
Mediation Trainer Training
Posted on January 21, 2009Image via WikipediaThought I would just past this along, from Diane Levin's Mediation Blog.If you're an experienced mediator who wants to master the essentials of effective mediation training, please join me in Boston for the Mediation Works Incorporated Train the Trainer Institute, on Thursday, February 26 and Friday, February 27, 2009...
Killer Due Diligence for Prospective Franchisees
Posted on January 21, 2009Image via WikipediaRichard Solomon has an instructive view about franchising history, and concludes:"There is only one way to avoid investing in this kind of abusive franchise system. Pre investment killer due diligence by experienced franchise lawyers who are not afraid to vet the deal from a business as well as a legal perspective is simply indispensible...
How Did Madoff Calculate?
Posted on January 21, 2009Mark Cuban takes an inspired guess about Madoff generated his counterfeit statements of his firms "trades""I'm taking a flyer here, but if they were to put me on the case, the first people I would talk to are the software developers. Somewhere along the line there was a software program written or modified that allowed Madoff to enter the numbers he made up, who they were paying out cash to and would print the checks and statements...
Franchising in India
Posted on January 20, 2009Image by avlxyz via FlickrHere is a scary post about franchising from India."Taking up a franchise gets you, a recognized format, brand name and a system to generate sales. Instead of working on strengthening the products or services, you simply focus on increasing sales, as you work on the business and not in the business...
Irish Eyes and President O'Bama
Posted on January 20, 2009This is an amusing song, seems like everyone wants to claim the new President as their own!Related articles by ZemantaHistory of InaugurationHow to Follow Obama's Presidential Inauguration OnlineU2 Rock Obama ConcertObama Inauguration Countdown Widget: Get It Here
Is Barry Minkow Aiming Low?
Posted on January 20, 2009Image via WikipediaMichael Hitzik, writing at the LA Times, questions Barry Minkow's methodology,who has targeted USANA, then Herbalife and lately Lennar."The most curious aspect of Minkow's style as a fraud investigator is his selection of targets. He goes after investment scams almost too small to register on the radar...
Tulips, Tea or Housing?
Posted on January 20, 2009Image by Getty Images via DaylifeAndrew Jacob, writing in the New York Times, has an interesting story about a commodity bubble in tea."Over the past decade, as the nation went wild for the region's brand of tea, known as Pu'er, farmers bought minivans, manufacturers became millionaires and Chinese citizens plowed their savings into black bricks of compacted Pu'er...
Bait and Switch from Obama
Posted on January 19, 2009Image via WikipediaCanadians are used to pomp and ceremony as we have a Queen for the head of state. Lots of stype points, but no management of parliment.Sam Antar warns that Obama may be sailing into a fraud storm, starting with his high priced inaguration...
Why Are We Duped so Easily?
Posted on January 19, 2009Image by darksong via Flickr Robin Hanson, writing at Overcoming Bias, discusses Paul Maliszewski's new book, Fakes, and has a new observation about confirmation bias. "In news, social science, and fiction consumers mainly want more vivid impressive detail to support pre-existing abstract conclusions...
Spare a Billion Dollars?
Posted on January 19, 2009Image via WikipediaOn the Saytam fraud in India, Nirmalya Kumar writes:"How could the cash and deposits have been manipulated? PwC made the situation worse by saying "The audits were conducted by Pricewaterhouse in accordance with applicable auditing standards and were supported by appropriate audit evidence...
Franchise Sales Registration
Posted on January 19, 2009Image via WikipediaRubert Barkoff, one of the Legal Deans of Franchising in the United States, writes:"I would encourage the NASAA Franchise and Business Opportunities Project Group to keep close watch on this problem in the following months, and to encourage practitioners to submit to them situations where they perceive that examiners have become unnecessarily strict or have simply missed the mark, so that the Projects Group can have a better feel for the types and extent of these problems, and take corrective measures...
Apologies To Robin Hanson
Posted on January 16, 2009Image via WikipediaI used to frequent Robin Hanson's blog Overcoming Bias. Then, I disengaged partly because I could not understand the practical import of his view about common knowledge and rational disagreement, like this."But this does seem a handy opportunity to repeat that while disagreement isn't hate, it is disrespect...
Wealth Builders Jailed
Posted on January 16, 2009Image via WikipediaFrom a San Diego FBI PRess release: United States Attorney Karen P. Hewitt announced that today United States District Court Judge Thomas J. Whelan sentenced Ricky D. Sluder to serve 188 months in federal prison and ordered him to pay $44,872,152...
Criminal Charges laid against Fake Franchisors
Posted on January 15, 2009Image by lumierefl via FlickrThe news that five individuals working for the business opportunity seller Global Resources, originally charged with violating Florida's business opportuity disclosure laws, are now facing a criminal indictment is welcome news...
Global Resources Criminal Indictment - Facing 20 Years
Posted on January 15, 2009Image via WikipediaFrom the US Department of Justice, Southern FLorida, Press Release on the Global Resources fraud.Five people have been indicted by a federal grand jury in Miami relating to the individuals' participation in a fraudulent business opportunity sales operation, the Justice Department and the U...
James G. Ossie and CRE Capital: Ponzi Allleged
Posted on January 15, 2009Image via WikipediaFrom the SEC Press release about the CRE Capital Ponzi scheme:On January 15, 2009, the Securities and Exchange Commission ("Commission") filed a Complaint For Injunctive and Other Relief ("Complaint") in the United States District Court for the Northern District of Georgia against CRE Capital Corporation ("CRE") and James G...
Strategic Responses to Disclosure Information
Posted on January 15, 2009Image via WikipediaOne of the oddities about franchise disclosure laws is this: more disclosure law produces less actual due diligence. This is not the intended consequence. First, let's review the case against the current disclosure laws regarding the sale of franchises, business opportunities and income earning opportunities...
NakedShorts: Ripped from the headlines
Posted on January 14, 2009Image by Getty Images via DaylifeGreg Newton, writing as the Naked Short, has rare praise for a new book entitled Dear Mr. Buffett, written by Janet Tavakoli."Chicago derivatives consultant Janet Tavakoli is a rare jewel in the financial markets. Arguably best known for weighty textbooks with such alluring titles as 'Structured Finance & Collateralized Debt Obligations,' she has a nice sideline in delivering uniquely pungent commentary on credit-related conundra in venues including her own website, US Securities and Exchange Commission comment filings, and on-the-record in the allegedly grown-up media where "people familiar with the matter" usually lurk...
Beyond Fear and Greed in the MarketPlace
Posted on January 14, 2009Image via WikipediaAnthony Pratkanis testified to the US Senate's special committee on aging, answering in part a question about how fraud is possible."We find that con criminals profile their victim's psychological and other characteristics to find their Achilles' heel (and we all probably have one) to construct the exact pitch that is likely to be most effective with each victim...
What is the difference between and a game theory model and reality?
Posted on January 13, 2009Game Theory is an exercise in modeling strategic interaction between intentions. Strategic interaction is familiar to transactional lawyers, who must make contingency plans based upon what they think the other parties might do, and implement those plans into contractual language...
American Investors Network Ponzi Judgment
Posted on January 13, 2009Image via WikipediaFrom the SEC Press release on the Innovative Projects Ponzi scheme.On Jan. 8, 2009, the Honorable Robert E. Blackburn, United States District Court for the District of Colorado, entered a final judgment against defendants Jarrod W. McMillin and Innovative Projects, Inc...
Paul Wilmott's on Economic Theory
Posted on January 13, 2009Image via WikipediaPaul Wilmott has an amusing rant about financial economists, which is cruel but fair."My failure led me to think about economists, as opposed to economics, and they're much easier to figure out. This is how it works. An economist starts with a few axioms, ones that bear a vague similarity to a small part of the human condition under restricted situations and in an idealized world...
Inside Franchisors Salaries
Posted on January 13, 2009Image via WikipediaThe Wall Street Journal had an interesting article about franchising."FranData found that franchisers with more than 500 units have the highest base pay. By specialty, the highest-paid managers were those running legal departments or overseeing site selection for a franchise's outlets...
Dubai gives new meaning to "Cooling out the Marks"
Posted on January 12, 2009Image by Getty Images via DaylifeGreg Newton, of the always reliable, Naked Shorts claims Dubai is a ponzi scheme."Speaking of rapidly unspooling Ponzi schemes, let's head, hotfoot, to Dubai, the crane-enveloped entrepôt and money-launderer to a world with rather less money than it thought...
Tales of Puffery and Trickery
Posted on January 12, 2009Image by gcarricks via FlickrHow would you like to earn $90,000 for two months of work? How? Publish some puffery about some desirable vacation hotspot, suggest that there is a real estate development project, hint that the project is exclusive, fail to publish prices and then ...
How to Avoid a Strategic Illusion and Other Mistakes
Posted on January 12, 2009Image via WikipediaI want to make an observation about a strategic inference that we often overlook, sometimes paying a heavy penalty. The inference is easy to state: when considering if A is consistent with B, no matter how convincing the story ends up being, always check whether (not A) is also consistent with B...
When Not to Trust Your Gut.
Posted on January 08, 2009Image via WikipediaOne of the major themes on this site has been to trust your gut when it comes to business opportunity due diligence. The mind can too easily be swayed by con criminals waving the phantom dream which becomes even more solid than the actual coin of the realm...
Gen-See Capital Corp. and Richard S. Piccoli Ponzi Halted
Posted on January 08, 2009Image via WikipediaFrom the SEC Press Release on the Gen-See Ponzi scheme:The Securities and Exchange Commission announced today that it has filed an emergency civil enforcement action to halt an ongoing affinity fraud and Ponzi scheme orchestrated by Buffalo-based Gen-See Capital Corporation a/k/a Gen Unlimited ("Gen-See") and its owner and president, Richard S...
Tyler Cowen: Don't Trust Your Gut?
Posted on January 08, 2009Image via WikipediaI was somewhat taken aback by Tyler Cowen's claim at money.cnn that you cannot trust your gut in uncertain times, especially if the uncertainty is due to market fraud.I strongly believe that this claim is wrong: gut trumps brains for detecting fraud, and I have written on why before...
When Magical Thinking Works - It's Not a Secret
Posted on January 08, 2009Image via Wikipedia In 1959, Evon Z. Vogt and Ray Hyman wrote "Water Witching". It was a fascinating objective review of the practice of water witching -using a forked stick to find or indicate an underground source of water. The book was reprinted in 1979 and 2000, and despite our technological advances, it appears that dowsing is still with us...
Simple Advice to Avoid a Madoff?
Posted on January 07, 2009Image via WikipediaStephen Greenspans's essay on Gullibility, over at Skeptic, is an examination of gullibility and an examination of the Madoff Fraud. Stephen concludes his lenghty piece with saying"I think it would be too easy to say that a skeptical person would and should have avoided investing in a Madoff fund...
Joel Steinger and Mutual Benefits Viatical Ponzi
Posted on January 07, 2009Image via WikipediaFrom the SEC Press Release on the the Mutual Benefits Viatical Ponzi Scheme "On January 5, 2009, the United States Attorney for the Southern District of Florida announced the Indictment of Joel Steinger, Steven Steiner, Michael McNerney and Anthony Livoti, Jr...
How the SEC Missed the Madoff Fraud - Not!
Posted on January 07, 2009Image via WikipediaMore on single issue explanations for the Madoff fraud, this time from the NY Post, blaming the SEC investigator who headed up the Madoff investigation."Markopolos gave the investigators a long memo that flatly said that "Madoff Securities is the world's largest Ponzi scheme...
The End of Newspapers - Hard to Predict?
Posted on January 07, 2009Image via WikipediaThere has been a great deal of discussion about whether the financial crisis was foreseeable or not,how probable or not. This strikes me as the wrong question. The right point of view, prior to say the subprime crash, would be to start from the fact that the subprime mortgage market had crashed and then ask what must have been the case for this to have happened...
Long Live Smart Regulation.
Posted on January 06, 2009Image via WikipediaDavid Sloan Wilson thinks that our current economic situation is a reflection of our bankrupt economic thinking."The collapse of our economy for lack of regulation was preceded by the collapse of rational choice theory. It became clear that the single minimalistic principle of self-interest could not explain the length and breadth of human behavior...
Anthony A. James: Ponzi
Posted on January 06, 2009Image via WikipediaFrom the SEC Press Release on the James Asset Ponzi schemeOn December 23, 2008, the United States Attorney for the Eastern District of Michigan filed criminal charges against Anthony A. James, a South Florida investment adviser. The indictment charges James with two counts of mail fraud in connection with a multi-million dollar misappropriation and Ponzi scheme...
The Regulator Fallacy
Posted on January 06, 2009Image via WikipediaI am critical of regulators who blame victims of fraud, by cautioning them that "if it sounds too good to be true, then it probably is." This "advice" makes the victim of a con criminal feel that there was some simple check by which they could have avoided the con criminal...
The Regulator as the "Cooler in the Blowoff"
Posted on January 05, 2009Image by Getty Images via DaylifeThe Madoff Fraud, which may supplant or overthrow Charles Ponzi as the name of current robbing the future to pay the present scheme, has brought ot the fore examination of the appropriate role of the Regulator. Many commentators wrongly believe that the role of the Regulator is to only to prevent fraud, somewhat like a superhero who spots ongoing frauds, swoops in and makes everything right...
Taleb Mad at Economists
Posted on January 05, 2009I have been mildly critical of Taleb Nassim in the past for not making it clear exactly what he was arguing for, as opposed to what he is against. But, in this video Nassim is passionate about exposing a fatal conceit he believes that financial economists have engaged in: phony rigour in their risk management theories...
The Second Madoff Fraud
Posted on January 05, 2009Image via WikipediaAs reported on Bloomberg, bad news for Madoff investors thinking that the official receiver is there to help them"Seeking money from investors who say they were defrauded can result in protracted litigation. In the Bayou case, which is being appealed, $20 million of the $33 million recovered from redeeming investors went to pay legal fees, Neville said...
What Do Franchisors Have to Tell a Prospective Franchisee About Their Business Model
Posted on January 04, 2009Image via Wikipedia"On May 9, 2006, over two hundred franchisees, principals and guarantors of "The UPS Store" filed this action against various Mail Boxes Etc., Inc. ("MBE") and United Parcel Service, Inc. entities ("UPS"). Plaintiffs allege they were duped into investing in The UPS Store franchises, which are (allegedly) economically unviable...
Dr. David Sinclair Quits Shaklee Board
Posted on December 30, 2008Image via WikipediaRachel writing at her blog OP Tree writes about the latest news from Shaklee:"David Sinclair, a Harvard Medical School professor who had been working with Shaklee as a member of their scientific advisory board, has quit. Sinclair's exit from the company is not entirely shocking as he has been questioned lately regarding his involvement and endorsement of Shaklee's latest revolutionary product, and anti-aging serum called Vivix which has been touted as the "world's best anti-aging supplement...
Creative Capital Consortium Ponzi
Posted on December 30, 2008Image via WikipediaFrom the SEC Press Release:The United States Securities and Exchange Commission announced that on December 29, 2008, it filed an emergency action to halt a Ponzi scheme and affinity fraud conducted by Creative Capital Consortium, LLC and A Creative Capital Concept$, LLC (collectively, Creative Capital), and its principal, George L...
Con Criminal Myths
Posted on December 30, 2008Image by Getty Images via DaylifeNice story by Anthony Gottlieb, former editor of the Economist.com, about his meeting with Madoff."Mr Madoff gave no hint of any weariness with or hostility towards the burden of regulatory oversight. Perhaps this is because, as we now know, it was in fact too ineffective to cramp his style...
Trust no Substitute for Thought
Posted on December 29, 2008Image by Getty Images via DaylifeRoss Kerber and Hinda Mandel, reporting in the Boston Globe, reporting on the effect of the Madoff Fraud on charities, write:"Dall Forsythe, who teaches nonprofit financial management at New York University's Wagner School of Public Service, said it's hard to judge whether the nonprofits that hired Madoff neglected the conventional wisdom to diversify their investments, since he may have been telling them their money was being spread adequately...
Madoff Exploited the Jews. Really, how odd?
Posted on December 19, 2008Image via WikipediaAs I predicted earlier, one of the features of the Madoff fraud would be the affinity fraud angle. The WSJ reports about the Madoff ponzi that"Steven Spielberg. Elie Wiesel. Mort Zuckerman. Frank Lautenberg. Yeshiva University. As I read the list of people and enterprises reportedly bilked to the tune of $50 billion by Bernard Madoff, I recalled a childhood in which my father received bad news by asking first, "Was it a Jew?" My father coupled sensitivity to anti-Semitism with special sympathy for other Jews...
Why the Madoff Ponzi Matters
Posted on December 19, 2008Image via WikipediaCNN is just wrong in arguing that the Madoff fraud doesn't matter."Granted, it's only been a week since Madoff's arrest, and we may find out more details about the alleged Ponzi scheme that could wind up causing more market volatility...
Advance Fee Scam - Economic TV Report
Posted on December 19, 2008Image via WikipediaShoemoney reports a neat fraud."A couple weeks ago we got a call from this lady saying she was a assistant producer to the Economic Report TV show. She went on to talk about how the show is syndicated on CNN, /MSNBC, FOX News, and other major cable news outlets...
Blowing off the Marks
Posted on December 19, 2008Image via WikipediaOne of the most important parts of the successful scam is the blowing off of the mark.Some have queried how Madoff thought he could end the ponzi scheme."I have never understood why someone would ever start a Ponzi scheme when, by definition, there's no way to end it...
Pyramid Scheme Alert
Posted on December 18, 2008Image via WikipediaRobert FitzPatrick writes about a disturbing trend in regulation."Pyramid Scheme Alert, the only consumer group in the world focused directly on pyramid/Ponzi scheme fraud, charges that the Bernard Madoff Ponzi Scheme is the tip of a far wider pattern of pyramids and Ponzis...
How Ponzi Sold Shares in his Securities Exchange
Posted on December 18, 2008Image via WikipediaEver wonder how Charles Ponzi was able to recruit his first salesman? Remember that Charles Ponzi had failed at every business he had tried, legal and illegal. How does such a failure, at the age of 35, attract and keep a saleman? First, Ponzi primed the pump...
The Regulators We Deserve
Posted on December 18, 2008Image by Getty Images via DaylifePaul Wilmott has the best take on the larger picture in the Madoff ponzi and the role of regulation."There is no disincentive for dishonest behaviour in investment banking at the moment, in fact the opposite. If someone wants to invest with a manager they think might be dishonest but successful then they will ignore the dishonesty...
Biz Op Scammer Arrested in Costa Rica
Posted on December 17, 2008Image via WikipediaFrom a US Department of Justice Press ReleaseA U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested yesterday in Costa Rica following his indictment by a Miami federal grand jury on Nov...
How did Madoff get Away with it?
Posted on December 17, 2008Image by Getty Images via DaylifeMegan Mcardle writing at the Atlantic, asks "How Did Madoff get Away with It? "The preferred explanation of many of my interlocutors, that this was somehow a result of Bush's deregulatory mania, won't do, and not just because there's not really all that much evidence of Bush's financial deregulatory mania...
Operation Tele-PHONEY
Posted on December 17, 2008Image via WikipediaFrom the FTC Press Release about a Telemarketing FraudThe Federal Trade Commission has successfully settled the second of 13 complaints brought as part of the multi-agency "Operation Tele-PHONEY" law enforcement sweep in May 2008 against deceptive telemarketers and the companies they operated throughout the United States...
Offensive Google AdSense
Posted on December 17, 2008Image via CrunchBase, source unknownFrom the SEO Round Table blog on adsense fraud"A WebmasterWorld forum member who runs Google AdSense on his travel site was a bit appalled when he saw that the ads being run are of nude Asian women. He has no idea how those ads got there and is extremely disgusted that the ad was placed on his site which now makes him guilty by association...
Why aren't there more Lawsuits in the Meal Assembly franchise?
Posted on December 16, 2008Image by &_yo via FlickrTuckerbox, who writes a good focussed blog on the meal assembly franchise industry has a good post about lawsuits."As I've been looking over the events of the last year, I really have to wonder why there aren't more lawsuits being filed...
Economics and Fairness
Posted on December 16, 2008Cover of A Theory of JusticeI have been engaged reading Gavin Kennedy's blog defending Adam Smith from a variety of 20th and 21st century misunderstandings, in particular the notion that Adam Smith was the intellectual father of the concept of the "invisible hand"...
Fraud Expert Says Those Wanting to "Be Own Boss" Easily Scammed
Posted on December 16, 2008Image via WikipediaNice interview by the important internet franchisor newspaper , Blue Mau Mau. (Blue mau mau are small fish which swim together as a group to protect themselves against predators.)"An expert says that buyers of small businesses who do so solely to have control of their career are easy marks...
Can You Avoid Ponzi Schemes?
Posted on December 16, 2008Image by Getty Images via DaylifeAfter the Madoff Ponzi, we can expect a number of checklists that explain how to "avoid" Ponzi schemes.These checklists will look reasonable, be put forth by well meaning people, and are utterly useless. They will fail to address the psychological factors which dispose an individual to act against their own self interest...
From Department of the Obvious
Posted on December 16, 2008With apologies to Greg Newton, who is always on top of mastery of the obvious, the WSJ breathlessly reports on Madoff's Ponzi:There is a set of books that don't accurately reflect the assets held by the firm, and investigators are going through books showing what Mr...
Real Dollar Auction Game
Posted on December 15, 2008Image via WikipediaHere is a real life dollar auction game."I was fascinated to discover the auction hybrid site swoopo.com (previously known as telebid.com). It's a strange combination of eBay, woot, and slot machine. Here's how it works: You purchase bids in pre-packaged blocks of at least 30...
And So it Goes ...
Posted on December 15, 2008Image via WikipediaMore Ponzi schemesMitchell Goldberg, 44, of Pembroke Pines, FL, pled guilty today to a three count Information charging him with fraudulent schemes totaling more than $11 million. At sentencing, which is set for February 20, 2009 before U...
Unreal Returns and Risk
Posted on December 15, 2008Image via WikipediaFrom Madoff's Investment Securities website:"Bernard L. Madoff Investment Securities LLC is a leading international market maker. The firm has been providing quality executions for broker-dealers, banks, and financial institutions since its inception in 1960...
It was red when I drove through it
Posted on December 15, 2008Image via WikipediaI thought it might be valuable to reflect on Cialdini's principles of persuasion in the context of the Madoff scandal. Cialdini posits that there are six principles of persuasion: consistency and commitment, reciprocity, liking, authority, scarcity, and and social proof...
The Madoff Risk
Posted on December 12, 2008Image via WikipediaGreg Newton, writing at his blog Naked Shorts, has a number of important background documents to the Madoff Ponzi.This is going to a fascinating story, as it unfolds. There are a number of elements which enabled the fraud, which are so clear in a business opportunity fraud, but may get hidden in the noise...
Dunkin's new CEO in a Christmas Mood?
Posted on December 11, 2008Image via WikipediaFrom the Boston Globe, about the new CEO of Dunkin Donuts;Jim Coen, the acting president of the Dunkin' Donuts Independent Franchise Owners Group, said many of the franchisees were surprised by the appointment and had expected Will Kussell, the president and chief brand officer of Dunkin' Donuts Worldwide, to take the helm after Luther...
Bernard Madoff Charged: Admits Running a Massive Ponzi
Posted on December 11, 2008Image via WikipediaFrom the Wall Street Journal, massive Ponzi scheme allegations."Bernard L. Madoff, the founder of Bernard L. Madoff Investment Securities and a fixture of the Wall Street trading world for decades, was arrested Thursday morning by Federal Bureau of Investigation agents and charged with criminal securities fraud by federal prosecutors in Manhattan...
The Risks of Risk management
Posted on December 11, 2008Image via WikipediaPaul Wilmott has an instructive piece on why risk can mean much more than statistical risk."We have learned the hard way how important it is to measure and manage risk. Despite the thousands of mathematics and science PhDs working in risk management nowadays we seem to be at greater financial and economic risk than ever before...
When is Purified Water Really Tap Water?
Posted on December 10, 2008Image by Getty Images via Daylife Consumer advertising laws are designed to inform consumers, but sometimes the results are very odd. Consider this interpretation about what "bottled water" is, from a recent class action against Pepsi's Aquafina"The plaintiff class alleged that graphics of a red and orange sun rising over snow-capped mountains and the slogan "Pure Water -- Perfect Taste" implied that the source of Aquafina was a mountain spring, rather than a municipal water tap...
Amway to invest in China
Posted on December 10, 2008Image via WikipediaFrom China Daily about Amway's expansion:American direct selling giant Amway Corporation plans to expand its business in China next year, company head Douglas L. Devos said in Guangzhou on Monday. It will invest $15 million in the southern Guangdong Province, Amway's China headquarters, for the development of household products such as air and water purifiers, and kitchen appliances among others...
New Way to Communicate with the Franchised?
Posted on December 10, 2008Image via CrunchBase, source unknownFrom Google BlogScoped:"Change.gov, website for US president-to-be Barack Obama's transition team, has added a way to ask questions and vote on questions... using the Google Moderator tool released to the public earlier this year (change...
USA Beverages Biz Op Fraud
Posted on December 10, 2008Image via WikipediaFrom the Justice Department Press Release on the latest crackdown on business opportunity fraudsA U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities was arrested yesterday in Costa Rica following his indictment by a Miami federal grand jury on Nov...
Odd News about the Franchised Car Dealers and Bailout
Posted on December 09, 2008Image by Getty Images via DaylifeHere is some odd news concerning the forthcoming Big 3 Bailout, and the dealer franchisees."That's why an "Oversight Board" isn't enough. What's needed, under the aegis of the board, is a federal restructuring trustee who can lead car companies through a bankruptcy-type process if they opt for federal loans -- which Ford, alone among the Detroit Three, says it might not have to do...
Tim Horton's Class Action
Posted on December 09, 2008Image by *annette* via FlickrInteresting problem in a franchisee class action against the franchisor Tim Hortons."The substance of the action is the erosion of franchisees' margins. The plaintiffs allege breaches of license agreements with the defendants ("TDL") as a result of the conversion from a scratch bake system to an Always Fresh system in or around 2002 and/or as a result of the introduction of an expanded lunch menu...
Are Groups of Franchisees Pathetic?
Posted on December 09, 2008Image via WikipediaThe always stimulating Les Stewart has an interesting view on why independent franchisee associations are few and far between."The story coming out of Blue MauMau is that franchisees are the authors of their own misfortune in several dimensions...
What Can You Expect out of A Franchise System?
Posted on December 08, 2008Image by &_yo via FlickrFuwa, the pseudonym of a well respected business consultant, writing over at Blue Mau Mau, provides some much needed perspective on business format franchise systems and the "proven system" myth."People need to stop entertaining these fantasies that the sweeping vast majority of franchises offer them something that is worth the risk ensued - period...
Franchising and Proven Systems
Posted on December 08, 2008Image by &_yo via FlickrThe franchisor trade association, the IFA, has an unintentionally ironic story on business format franchising."WHAT IS "BUSINESS FORMAT" FRANCHISING? In business format franchising, the franchisor prescribes for the franchisee a complete plan, or format, for managing and operating the establishment...
Marc S. Dreier Arrested for Fraud
Posted on December 08, 2008Image via WikipediaFrom the SEC Press Release:On December 8, 2008, the Securities and Exchange Commission filed a civil injunctive action in United States District Court for the Southern District of New York alleging that New York attorney Marc S. Dreier engaged in an elaborate scheme, that violated the antifraud provisions of the federal securities laws and raised at least $113 million from the sale of bogus promissory notes...
Mystery Shopper Scam
Posted on December 05, 2008Image via WikipediaFrom the FTC Press Release about Mystery Shopper ScamAn operation that lured consumers with promises that they could earn big money as trained and certified "mystery shoppers " has agreed to pay $850,000 to settle charges of deceptive marketing and contempt...
Sam Antar on Fraud
Posted on December 05, 2008Image via WikipediaI happy to report that the Journal of Accountancy has recommend Sam Antar's blog on white collar fraud."Who knows fraud better than a fraudster? Sam E. Antar, former Crazy Eddie Inc. CFO and convicted felon, shares his views and advice on white collar crime, securities fraud, internal controls, Sarbanes-Oxley and more on his blog...
Obtaining Financial History
Posted on December 05, 2008Image via WikipediaHeather, writing at franchise-chat, asks the all important question for franchise prospectives."Has anyone had issues with getting necessary financial info when looking into different franchises? One example was Subway. Someone just called me from there after I submitted a request...
How to Detect Nonsense
Posted on December 05, 2008Bob Sutton, who I urge you to read, has a great and simple display of words that signal "bullshit". Ignore idiots who use these terms.Their use of this language betrays lack of thought, insight, and wisdom.
Nudging and Franchise Regulation
Posted on December 03, 2008Image via WikipediaIt is very disappointing that Cass Sunstein's new book, Nudge, has nothing to add to the disclosure debate - whether more information about a franchise opportunity makes people more rational."They advocate the use of "choice architecture" by businesses or governments to influence choices in ways that encourage choosers to make decisions in their best interest...
Australian Franchising Code goes after Bullies
Posted on December 03, 2008Image via WikipediaThe Australian Parilament heard but did not act upon some suggestions about how to regulate franchise relations."Bullies and rogues in the franchising industry have been targeted by changes in the Franchising Code of Conduct this week, but critics brand some of the recommendations as ''superficial...
IFA Opposes New Card Check Law
Posted on December 03, 2008Image via WikipediaIn what is sure to be a controversial law, the IFA urged Congress to oppose the Card Check legislation."This legislation is not labor reform," David French, IFA vice president of Government Relations said in letters to every member of the House and Senate...
Franchise Fraud - The Myth of the Proven System
Posted on December 01, 2008Image via WikipediaIn a typical misrepresententation about the franchise industry, the Canadian Franchise Association claims that franchises are replicating proven systems: The Canadian Franchising Association (CFA) has taken its show on the road. On Nov...
Important to Read Notes in a Franchisor's Financial Statements
Posted on December 01, 2008Image via WikipediaRichard Solomon makes an excellent point about about how to figure if a franchisor is selling but not but not building out franchises."The AICPA accounting rules for franchisors call for segregation of revenue from initial franchise fees until the store is up and running...
What is Good Faith in Franchising?
Posted on December 01, 2008Image via WikipediaPaul Steinberg over at at BMM asks about good faith in franchising:"Webster/Buchan/Spencer: when they speak of "good faith" they are dealing with a different concept than we are used to in the US.Here in the US "good faith" is a gap-filler and generally not an independent cause of action...
What is in a National Gift Card Program?
Posted on December 01, 2008Image via WikipediaQSR reports about a new gift card program"Rocky Mountain Chocolate Factory (RMCF) is now implementing a national gift card program with optional credit/debit processing from integrated payments processor, Mercury Payment Systems. Mercury's recent technology integration to Retail Anywhere POS allowed RMCF franchisees to process card payments directly through their POS system, eliminating the need for third-party processing software and support...
Who am I?
Posted on November 29, 2008Image via WikipediaSo who am I?"We think http://bizop.ca is written by a man (70%), who writes at the high school level and is the logical and analytical type.Who is "especialy attuned to difficult creative and intellectual challenges and always look for something more complex to dig into...
Inside AdSense?
Posted on November 28, 2008Interesting comment on the AdSense Blog:"AdSense has had a VERY negative impact on my advertising lately. Yes on Prop 8 ads have been showing up for our California readers - our largest audience. We are a gay and lesbian blog so an ad advocating for discrimination against gays and lesbians is obviously not going over well...
Thanksgiving Day: The Day After
Posted on November 28, 2008Image via WikipediaJanet Sparks reminds us of a real American Hero, at Thanksgiving."Today marks the second anniversary of Bhupinder "Bob" Baber's tragic death, the day he walked into a Quiznos restaurant in California and shot himself three times. His desperate plea written in his suicide note was meant to be read by his family, the franchise community, the media and others, in hopes that the government would conduct an investigation into what he called "the systematic deceitful business practices of this franchisor...
Coaching Group a Franchise?
Posted on November 28, 2008Image via WikipediaGood observation about the impact of the new Biz Op Rule."Sometime in the next 12 months, we expect the FTC will pass a totally new Business Opportunity Rule that will address business systems like we have been discussing that are not franchises...
The Simpsons and Franchising
Posted on November 28, 2008Image via WikipediaLes Stewart, in an uncharacteristically upbeat mood, found a brilliant script from the Simpson's about franchising.Host [Discovery Day]: Now, folks, I don't wanna alarm ya, but scientists say forty percent of America's pictures... are hanging crooked...
Happy Thanksgiving - to All my American Readers
Posted on November 27, 2008This was a kind gift from Victoria Pynchon, at www.settlenow.com. Related articles by ZemantaProposed Meeting of Law Bloggers at the California State Bar ConventionAre You a Virgin?
Sad Canadian
Posted on November 26, 2008Image by Getty Images via DaylifeCanadians play hockey - a game which rewards guts. Canadians play the Grey Cup in November, in outdoor stadiums. (I have sat through the Grey Cup in Edmonton - beer frozen in under 2 minute.) Canadians send tough lads to Afghanistan in small jeeps...
Why are you buying that?
Posted on November 26, 2008Image by wallyg via FlickrLes Stewart has very important observation relevant to purchasing franchise due diligence from attorneys:"Credence goods relationships are commercial exchanges that have the following characteristics:the buyer cannot tell really well if he has a problem (can't diagnose),the buyer does not know how much of the good or service he needs to fix a problem (can't assign appropriate resources to solve problem),the buyer cannot judge the quality of the service they need or have received (even after paying for it) andthe person providing the service knows your vulnerability and tends therefore (even sometimes unintentionally) to and persuade you what is in their (as opposed to your) best interests (see Credence Goods attracts Experts who Cheat)...
Are Franchisee Prospects both Lazy and Stupid?
Posted on November 26, 2008Image via WikipediaRichard Solomon, over at BMM, has a provocative post in which he argues that franchisees prospects who fail to perform due diligence are both lazy and stupid:"There is a level of activity in which you cannot excuse incompetence with the "it's my first time" foolishness...
Franchise Fraud
Posted on November 26, 2008Robert Purvin's Franchise Fraud Get your own at Scribd or explore others: Law Bob Purvin wrote a fantastic book about Franchise Fraud, lies all of us in the franchise industry tell ourselves. Purvin makes explicit the dirty laundry that every franchise prospect needs to hear...
The End of the Pigeon King
Posted on November 25, 2008Image via WikipediaThe CTV's W5 had a good story on the end of the Pigeon King Ponzi.The Pigeon King Ponzi is a story that I wrote about extensively, analyzing the compliance tricks played by the Pigeon King."On a hot August night in Shakespeare, Ont...
How Magicians "Trick" the Mind
Posted on November 25, 2008Image via WikipediaCan we learn about fraud from magicians?"Magicians are, first and foremost, artists of attention and awareness. They manipulate the focus and intensity of human attention, controlling, at any given instant, what we are aware of and what we are not...
Direct Sellers Happy to Toe the "Party" Line
Posted on November 25, 2008Image via WikipediaI had the opportunity today to have a wonderful conversation with Robert FitzPatrick, who writes at False Profits, who was in Toronto over the weekend. We discussed biz op fraud and mlm fraud. Generally, we concluded that the mlm companies who were members of the Direct Sellers Association were primarily in the "selling the dream" business...
Ripoff Artists Target Grandparents
Posted on November 25, 2008Image via WikipediaFrom the FTC Press Release: A scammer calls posing as a grandchild in distress, and tries to put the squeeze on the grandparent to wire money for repairing a car, paying a fine, or getting out of trouble in a foreign country. The Federal Trade Commission, the nation's consumer protection agency, has some advice to avoid being taken in by a supposed "family" member or a fake emergency: Check out the facts before you send money to anyone, anywhere - especially when wire transfers are involved...
Real Business Risk
Posted on November 24, 2008Image via WikipediaCataloguing the States' and FTC's lawsuits against business opportunity scammers could be depressing - the very same fraud works time and time again.The simplicity of the fraud - the sale of distributorships of over priced machines (candy vending, payphones, dvd vending, etc...
False Profits and Dr. Luzes
Posted on November 24, 2008Image via WikipediaRobert FitzPatrick has an amazing story:"Many have asked if the extraordinary shift in power in America - with the election of Barack Obama and a large Democratic majority in Congress and in many states - will affect regulation and law enforcement of pyramid schemes and multi-level marketing (MLM)...
The Mary Kay truths you find out later
Posted on November 24, 2008Image via WikipediaFrom the Pink Truth:"Mary Kay-isms" abound in every Unit, everywhere, USA. The problem is, since they are repeated without analysis or corroboration, these little gems are the backbone of the fraud that keeps recruits coming in and "kaybots" from getting out...
FTC on Testimonials and Endorsements
Posted on November 24, 2008Image via WikipediaFrom the FTC Press Release:"The Federal Trade Commission today announced it has approved publication of a Federal Register notice seeking public comments on proposed revisions to the Guides Concerning the Use of Endorsements and Testimonials in Advertising...
Do You Sincerely Want to be Rich?
Posted on November 21, 2008Image via Wikipedia10 Reasons Why You Aren't Rich. Frauds and Scams are not too good to be true. It is bad advice to admonish individuals that they should have "known" that it was too good to be true. Nothing is good to be true until it turns out that way...
No Relief for AdSurf Ponzi
Posted on November 21, 2008AdSurf Ponzi Get your own at Scribd or explore others: Law Opinions adsurf ponzi This is the end of the line for this particular incarnation of ad surfing money laundering schemes. I did like this from the Judge about Gerald Merha: "Mr...
Business Opportunity Solutions Scam
Posted on November 21, 2008Image by hfabulous via FlickrThe Toronto Star reports about a standard biz op fraud.A Toronto man has been arrested for defrauding GTA and Vancouver residents of about $800,000 through a digital photo developing machine scam. Police say the suspect was operating the company Business Opportunity Solutions and posted advertisements in local Asian and East Indian newspapers...
Mark Cuban's Defence
Posted on November 20, 2008Image by Getty Images via DaylifeFrom the Bloomberg news on Mark Cuban"Billionaire Mark Cuban, the owner of the Dallas Mavericks basketball team, was sued by U.S. regulators over claims he made illegal insider trades four years ago in shares of Internet search company Mamma...
Changes to BizOp News
Posted on November 20, 2008Over the weekend, we will be changing the format of the BizOp News.The change should be seamless, but won't be because technology throws up surprises.The new BizOp News will have the following features:a) replies to comments, a sophisticated threading system which allows you to respond to commentators...
Franchise Arbitration: US versus Ontario Law
Posted on November 19, 2008Image via WikipediaHow much can Canadian franchise law learn from US law? Most of our franchise specific law is less than 5 years old, while US franchise specific law is much richer. One place Ontario franchise law could look to, as something to avoid, is the excessive cost of determining whether a franchise dispute should be decided by an arbitrator or by the Courts...
Felon's Advice about Combating White Collar Crime
Posted on November 19, 2008Image via WikipediaSam Antar has a good long post about reforming the capital markets."To President-Elect Barack Obama: While our capital markets require reform, no amount of regulation or oversight can be effective unless those persons charged with carrying it out, have the proper amount experience, knowledge, competence, and professional skepticism to successfully perform their respective jobs and responsibilities...
7-Eleven Converting Corporate Stores
Posted on November 19, 2008Image by annamatic3000 via FlickrWonder how this corporate downloading might work out?"7-Eleven, Inc., the world's largest convenience retailer and ranked among U.S. top franchisors, is continuing its plan to convert the vast majority of its company-operated stores into franchised operations in the U...
Don't be a victim of home-based business scams!
Posted on November 19, 2008Image by Getty Images via DaylifeSamantha Maziarz Christmann, writing at the Buffalo News, has an accurate assessment of who is at risk right now from biz op scammers, "As the economy swirls down the drain and consumer anxiety peaks, work-at-home offers become not just more prevalent, but more enticing, according to local experts...
Don't get Fooled
Posted on November 18, 2008Image by MikeSchinkel via FlickrThis is twice in the last week that I have linked to some good due diligence advice from Seth Godin - proving once again that first class and ethical marketers have the right stuff to detect and deflect the persuasion techniques of the con criminal...
Woman Loses $400,000 to Nigerian E-Mail Scam
Posted on November 18, 2008Image by mflx-one via FlickrFoxnews has an interesting story about the woman who sent $400k to Nigerian scam artists, it is revealing about the psychology of the mark.An Oregon woman who is out $400,000 after falling for a well-known Internet scam says she wasn't a sucker or an easy mark...
Gold Star Vending Table Top Shooters Biz Op Scam
Posted on November 18, 2008Image by Getty Images via DaylifeFrom the United States AG, South Florida, press release about the arrest of several biz op scammers. Two individuals charged in connection with the operation of a fraudulent business opportunity scheme were arrested today following their indictment by a Miami federal grand jury on Oct...
Online matchmaker's ads deceptive
Posted on November 18, 2008Image by frankdasilva via FlickrMyLuvCrush is being accused of sending fake romances ads.MyLuvCrush couldn't sell you love, but it did rent the unfulfilled promise of romance for $10 a month. That came to an end Monday, when the online horoscope service's parent company, Seattle-based Tatto Media, Inc...
Minkow Exposes Corporate Scoundrels
Posted on November 17, 2008Image via WikipediaSam Antar has nice piece on Minkow's new services "My dear friend and mentor convicted felon turned fraud fighter Barry Minkow has a message for deceitful directors and officers of public companies: If you lie about your resume, past experience, and qualifications for your present job and such lies show up in SEC filings, he will find out about it and expose you to investors and regulators...
The Overnight Millionaire Scam
Posted on November 17, 2008Image via WikipediaSeth Godin has some invaluable advice, which I am going to pass on."You probably don't need to read this, but I bet you know people who do. Please feel free to repost or forward: Times are tough, and many say they are going to be tougher...
Candy Bouquet Trademark Issues
Posted on November 17, 2008Image via WikipediaWhen you sign a franchise agreement, you are not buying a business. Instead, you are renting a trademark or nationally recognized symbol for a specific time, accepting oversight of your business practices, and contributing to a national advertising program, which is presumably designed to enhance the systems' trademarkWell recognized trademarks are valuable because consumers make their decision about where to shop by relying upon these trademarks...
Smart Heuristics
Posted on November 17, 2008Image by Getty Images via DaylifeGood interview on some sophisticated thinking about risk, uncertainty and decision making."Isn't more information always better?" asks Gerd Gigerenzer. "Why else would bestsellers on how to make good decisions tell us to consider all pieces of information, weigh them carefully, and compute the optimal choice, preferably with the aid of a fancy statistical software package? In economics, Nobel prizes are regularly awarded for work that assumes that people make decisions as if they had perfect information and could compute the optimal solution for the problem at hand...
Vending Fraud in Canada
Posted on November 13, 2008Image via WikipediaFrom the Mississauga News, there is story about a business opportunity fraud A 41-year-old Toronto man has been charged with defrauding Mississauga and other GTA residents of more than $800,000. York Regional Police say at least three Vancouver residents were swindled by the scam, which ran from the summer of 2007 to the spring of 2008...
Franchise Fraud Loans
Posted on November 13, 2008Image via Wikipedia A man was sentenced to 10 years in prison Thursday for the worst single case of loan fraud at the U.S. Small Business Administration, a scheme to provide federally guaranteed financing to buyers of gas stations, convenience stores and restaurants...
Internet Payday Lenders Charged by FTC
Posted on November 13, 2008Image via WikipediaFrom the FTC Press Release on Internet Payday LendersThe Federal Trade Commission and the State of Nevada have charged 10 related Internet payday lenders and their principals, based mainly in the United Kingdom, with violating federal and state law by not disclosing key loan terms to U...
The Road from Foolishness to Fraud - Pascal's Wager
Posted on November 12, 2008Robert L. Park's book on Voodoo science has a great deal of wisdom to offer to the prospective franchisee or distributor and their investigations about the income generating opportunity. In Science, the "no free lunch rule" from the social world is recast as "conservation of energy", or "you cannot get something for nothing"...
Free Incorporation - One Day Only
Posted on November 11, 2008MyCorporation, an Inuit Company, is offering a free incorporation package for today only.This $149.00 expires at 6:00 p.m. Pacific Time, or 9:00 p.m. Eastern Free For a Day: complete an LLC or Inc filing for FREE at MyCorporation - $149 value! Coupon FREEBIZ-149D...
The End of Wall Street's Boom
Posted on November 11, 2008Image via WikipediaOne of the viewpoints I have urged at this blog is to analyze wide departures from rationality as if the actors were engaged in systemic fraud. The basic stance is taken from two different sciences. First, from the heuristic decision theory crowd, I take the general observation that there are a number of shortcuts we use to manage uncertainty...
Mary Kay's House of Cards
Posted on November 11, 2008Image via WikipediaOver at Pink Truth, there is an excellent post detailing with emotional accuracy the perils of what economists refer to as the sunk cost fallacy - that the expected gain of a future action depends upon what you have already put into the pot...
Businessman had perfect Pitch
Posted on November 11, 2008Image via WikipediaStory out of Tucson about a con criminal, which illustrates an important point about how con criminals see themselves. In Tucson, Trujillo engaged in elaborate currency-exchange and real-estate schemes, the prosecutor alleged in court documents...
10 Top Irritating Phrases - Oxford
Posted on November 11, 2008http://www.telegraph.co.uk/news/newstopics/debates/3394545/Oxford-compiles-l ist-of-top-ten-irritating-phrases.htmlMr Butterfield said: "We grow tired of anything that is repeated too often - an anecdote, a joke, a mannerism - and the same seems to happen with some language...
Shop to Earn Lacks a Real Business Model
Posted on November 10, 2008Image by Alex Osterwalder via FlickrTracy Coenen has posted a detailed explanation of what Shop To Earn is recommending to its new business/builder brokers on her fraud site. "A Business Builder / Broker has his/her first 30 days to receive an additional $500 Fast Start Bonus (refer 5 Website Owners in your first 30 days)...
Making Fraud Legal
Posted on November 10, 2008Image via WikipediaRobert FitzPatrick, in a story at Sunday Times, published in Sri Lanka, has an interesting story about the relationship between our current financial crisis and how lobbyist's bring about laws which enable fraud. The big bad word that is normally reserved for illegal pyramid schemes - COLLAPSE - is now referenced daily in discussions about our stock and credit markets...
Is this an Illusion?
Posted on November 10, 2008Image via Wikipedia I like this illusion, party because of the false claim that the way you see the dancer spin, left or right, determines something about whether your are left or right brained. Virtually everyone who looks at this illusion seems to believe that a) their perception is unique, and b) everyone else is nuts...
Telemarketing Offering Low Interest Rate Scam
Posted on November 10, 2008Image via WikipediaEd Dickson, writing at his blog Fraudwar, has a warning about a new telemarketing scam. "Cheap long distance, the ability to spoof caller ID and the credit crisis are being used to facilitate a scam called vishing. Although telephone (telemarketing) scams are nothing new, the term vishing probably came about because advances in telephone technology are being used to depart unsuspecting people of their hard-earned money...
Burger King's Opening Hours
Posted on November 07, 2008Image via WikipediaRyan, writing at the Franchise Pundit, has a good observation about why it is important to have good counsel read a franchise agreement."Three Burger King franchisees in Florida found that every word counts in the franchise agreement...
The Eyes of the Psychopath
Posted on November 07, 2008Image via WikipediaIn the 1941 book the Mask of Sanity, writing about psychopaths, Cleckly "emphasized his subjects' deceptive, predatory nature, writing that the psychopath is capable of "concealing behind a perfect mimicry of normal emotion, fine intelligence, and social responsibility a grossly disabled and irresponsible personality...
Franchisers Passing on Costs to Franchisees
Posted on November 07, 2008Image via WikipediaThe Wall Street Journal reports on the exercise of the franchisor's discretion."Some franchisees say they are being forced to pay for a variety of expenses for the first time -- making difficult economic times even tougher. McDonald's franchisees contend they have to take on some expenses once covered by their franchisers...
Disagreement Debate Status?
Posted on November 06, 2008Image by Getty Images via DaylifeRobin Hanson asks about the very prospect of rational disagreement, a topic of much practical interest to mediators and negotiators. "So what do folks think is the status of the debate on the rationality of disagreement? That is, how reluctant do you think people should typically be to knowingly disagree with one another, and if the arguments I've outlined seem to have some potential to influence this reluctance, what more is needed to see if they can fulfill this potential?" I had promised Victoria Pynchon, who writes a negotiation blog, a better answer to her observations about confirmation bias and Hanson's post is a good place to start...
Federal Reserve Board Advance Fee Scheme
Posted on November 06, 2008From the Federal Reserve Board Press Release.The Federal Reserve Board on Tuesday alerted the public to instances of questionable solicitations directed at consumers. These solicitations promise consumers access to personal loans through a nonexistent Federal Reserve lending program...
Consumer Goods Ponzi Scheme
Posted on November 06, 2008Image via WikipediaFrom the FBI Press ReleaseR. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced today's filing of an Information charging defendant Andres Leonel Pimstein, 48, of Miami-Dade County, with wire fraud in connection with the operation of a multi-million dollar "Ponzi" scheme, in violation of Title 18, United States Code, Section 1343...
Optical Ilusions and Framing Problems
Posted on November 06, 2008Interesting illusion by Dan Ariely. Optical illusions are used by many behavioral economists as demonstrations of our cognitive limitations. While this illusion is neat, it doesn't explain or demonstrate any known framing effects. I like Ariely's new book, but I am increasingly doubtful about the value of optical illusions as an explanatory model for framing effects...
Congratulations to President Elect Obama
Posted on November 05, 2008Our Southern neighbors have elected Barak Obama in something of a national rout of the Republican party. Be interesting to see if the audacity of hope can beat the international debt collector which will showing up soon.
The Cause of This Bubble?
Posted on November 03, 2008Image via CrunchBaseIf Mark Cuban is right in his diagnosis, the current credit fiasco should have no permanent damage."Let me get this straight. In 2008, funds trying to squeeze out another basis point or two thought they were being conservative buying insurance on heavily leveraged portfolios of sub prime loans and other debt...
Fraud News You Can Use
Posted on November 03, 2008Book cover via AmazonNassim Taleb has a fond farewell to the statistician David Freedman. From Berekely news:"Throughout his career, Freedman made major contributions to the theory and teaching of statistics. But he also had a broad impact on the application of statistics to important medical, social, legal and public policy issues, including clinical drug trials, epidemiologic studies, economic models, interpretation of scientific experiments, statistical evidence in the courtroom and adjustments to the census...
The Behavioral Revolution?
Posted on November 03, 2008Image via WikipediaDavid Brooks writing in the New York Times discusses the popular view of behavioral economists."Economists and psychologists have been exploring our perceptual biases for four decades now, with the work of Amos Tversky and Daniel Kahneman, and also with work by people like Richard Thaler, Robert Shiller, John Bargh and Dan Ariely...
Reforming Franchise Regulation
Posted on November 03, 2008Rupert Barkoff, a well known franchisor lawyer, writes about franchise regulation:"I am not totally convinced that a complete elimination of franchise disclosure document review would be good. However, presently the system has erred on the side of too much review...
Florida Ponzi Scheme
Posted on October 30, 2008Image via WikipediaR. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced today's filing of an Information charging defendant Andres Leonel Pimstein, 48, of Miami-Dade County, with wire fraud in connection with the operation of a multi-million dollar "Ponzi" scheme, in violation of Title 18, United States Code, Section 1343...
A Big Banker Speaks Out
Posted on October 30, 2008Image by swisscan via FlickrHere is lead about banking skills., from Joe Nocera's column."I've been a lender for most of those years and I've been appalled at the changes in the industry.The government has already done plenty for the big banks. It needs to stop worrying about them now...
Fighting Manipulative Ads
Posted on October 30, 2008Image via WikipediaNoah Goldstein has a neat observation about how to deal with manipulative ads, something that the FTC should pay attention to."Several years prior to the cigarette ban, the Federal Communications Commission had enacted the "fairness doctrine," which ordered radio stations and television networks that broadcasted controversial messages of public importance to also provide free air time to those with opposing views...
Pantheon Holdings: Biz Op Scammer Sentenced
Posted on October 30, 2008Image via WikipediaA Miami woman was sentenced today to 78 months in prison, followed by a three-year term of supervised release, in connection with fraudulent business opportunity sales at a Miami firm, the Justice Department and the U.S. Postal Inspection Service announced...
How [Not] to protect yourself against consumer fraud
Posted on October 28, 2008Image by AlaskanLibrarian via FlickrDemonstrating why the large accountant firms couldn't spot fraud if you spotted them the "f, r, a, and u", here is list of useless advice about fraud."There are many different types of crimes involved, including tax refund scams, fraudulent weight-loss programs, phony lottery or prize schemes, and bogus work-at-home scams...
Is That Business Opportunity Legitimate?
Posted on October 28, 2008Image via WikipediaJohn Tozzi, writing at Businessweek, has a neat article on home-based business opportunities:"The Internet is littered with offers for home-based business opportunities that promise big profits for easy work. But many of these offers, which range from envelope stuffing to medical billing, are really scams that prey on people's aspirations to work for themselves...
Animals Who Hoard
Posted on October 28, 2008Image via WikipediaInteresting story about the psychology of hoarding."Over 600 animals were found in the home of a Los Angeles woman, arrested on suspicion of animal cruelty. Some of the animals were already dead and some so ill they had to be euthanized by Animal Services...
Auto Surf Living Dead
Posted on October 28, 2008Image via WikipediaInteresting revival of the AdSurf Daily scheme."Do you still remember about Asdcashgenerator and Ad Surf Daily, also known as ASD had closed immediately after the company had been raided and the assets been seized by the Secret Service Agents in early of August...
Fraud News for Monday
Posted on October 27, 2008Image via WikipediaRobert FitzPatrick has a very interesting observation about victims of fraud: "There is a counter-intuitive rule in the world of scams. It is that the easiest person to fleece is someone who has recently been fleeced. Wouldn't the previous loss cause the consumer to be more vigilant, plus experienced now? Sadly, for many, no...
Amazon Kindle Offer
Posted on October 27, 2008I read a great deal, have far too many books in my office/home library. If you are like me, you will be interested in any of new e-book gadgets. But having already dropped, several years ago, $300 on the RocketBook, I was reluctant to jump in again until the market determined a winner...
Iowans attracted to Internet 'Ponzi scheme'
Posted on October 27, 2008Image via WikipediaGunnar Olson, at the Desmoines, writes about the attraction of the AdSurfDaily Ponzi scheme to Iowans. "Some 25,000 Iowans have spent money with the company, according to Ankeny resident Mindy Bales, who described herself as one of the earliest and most successful promoters of AdSurfDaily in Iowa...
Quality scores and Ad auctions
Posted on October 27, 2008Image by Esthr via FlickrHal Varian, Google's Chief Economist, has an explanation about Adsense's quality score that is interesting. "Suppose that two advertisers are bidding on the keyword "jet airplane." Joe's Jets is selling actual jet airplanes, while Moe's Models is selling models of jet airplanes...
Web-Scamming the Lawyers
Posted on October 24, 2008Image via WikipediaSome hubris from the ABA, revealing their ignorance about marks and fraud. If there's one group of professionals that might be regarded as immune from Internet scam artists, it would be lawyers. But attorneys are the marks in a series of scams preying on a lawyer's need for new business and a banker's trust in good customers...
Lies My Economist Told Me
Posted on October 24, 2008Book cover via AmazonNow this is full disclosure. "Lies my economist modeled for me" could be the name of this interesting economic conference. Fyodor Dostoevsky's novella Notes from Underground (1864) is a classic of introspection and confession. The symposium takes its title from Dostoevsky's work...
High Yield Investing Program Clones
Posted on October 24, 2008Image via WikipediaProving that the Ad Surf ponzi schemes are the living dead of the internet, AdSurf Daily has morphed in the SurfExchange. 5. How do you sustain the payouts in the long run? Do you perform any investment to back up SurfExchange? Answer: We trade a substantial amount of money as we receive and also derive revenue from ads that we sell out...
Dream Dinners' Attorneys Sued
Posted on October 23, 2008Image via WikipediaJanet Sparks, writing at Blue Mau Mau, has a very interesting article about a lawsuit in which the franchisor's attorneys were sued in connection with their role in preparing the franchisor's FDD."The lawsuit claims that Bender knew or should have known that prospective franchisees were receiving materially false, incomplete and misleading information regarding the franchise opportunity, and that he was a "person in act of control of the activities" of the franchisor...
Gold Star Vending Biz Op Scam
Posted on October 23, 2008Image via WikipediaFrom the Justice Department Press Release on the Gold Star Vending scam.Two individuals charged in connection with the operation of a fraudulent business opportunity scheme were arrested today following their indictment by a Miami federal grand jury on Oct...
Anne Hathaway's Scam
Posted on October 23, 2008Image via WikipediaAnne Hathaway on being scammed by her conman boyfriend."I broke up with my boyfriend, and two weeks later he was sent to prison for fraud. I mean, we've all been there, right, ladies?" the actress said, before joking that she had recently sent about $100,000 to her new beau, a Nigerian prince who had emailed asking for help and her Social Security number...
Miscalculation and Confidence
Posted on October 23, 2008Image via WikipediaI am convinced that credit crisis will not end until the banking community gains comfort with radically new measures of risk."This financial crisis has shown that history is an unreliable guide for gauging future losses. Banks relying on historical models were fooled when it came to potential mortgage hits...
The Value of Franchisee Associations
Posted on October 22, 2008Image by Angela Radulescu via FlickrLance Winslow has some good points about the value of franchisee associations.What is important about a franchisee association? What is the value of the association to the individual franchisee?"Best of all, you have a peer, someone just like you with the exact same business model as you, with the very same ups and downs as you...
Shop to Earn v FTC
Posted on October 22, 2008/* Webster's Rule: When the Biz Op's Alexa ranking approaches the ranking of the Regulator, in this case the FTC, bad things are about to happen. Related articles by ZemantaAmway - Vulnerable?FTC Could Move To Establish Legal Precedents On Green Ad ClaimsFTC busts 'world's largest spam operation'FTC Shuts Down Canadian Domain Name Scammers
How not to investigate a Franchise.
Posted on October 22, 2008Image via WikipediaI continually see this bad advice about how to investigate a franchise system. "After you have read the offering circular, ask the franchisor for a list of franchisees that you can contact. Current franchisees are a great resource and can give you detailed insight on how the company is really doing, what to consider before and after you get into the business, and other critical information...
Be Your Own Boss! Earn $$$$!
Posted on October 22, 2008Image via WikipediaInteresting observation from an employment counselor about biz op scammers."Ads that offer big bucks and the promise of autonomy never lose their ability to ignite burned-out workers' dreams. I once sent away for free material about a job that involved reading books for profit...
Shop to Earn Disclosure
Posted on October 21, 2008Image by tyger_lyllie via FlickrTracy Coenen posted a very revealing post by a distributor in Shop to Earn. "I am hoping by posting my experiences on here I will help those of you who are thinking of joining and those of you who don't understand how it works...
Amway Funds for Favors?
Posted on October 21, 2008Image via Wikipedia One of the important points that Robert Fitzpatrick raises is the level of influence that MLM supporters have purchased in the United States government. "Most assume that MLM is generally a viable business. One probable reason for this is the seven-year silence that has prevailed in law enforcement on multi-level marketing, giving the business a new aura of legitimacy...
Franchise Regulation Review in Australia
Posted on October 21, 2008Image via WikipediaSome ideas about regulating franchising in Australia.Franchising in Australia is currently regulated by the Franchising Code of Conduct (the Code), which is a mandatory industry code established under section 51AE of the Trade Practices Act 1974 (Trade Practices Act)...
F.B.I. Cannot Handle Financial Fraud Cases?
Posted on October 21, 2008Image via WikipediaERIC LICHTBLAU, DAVID JOHNSTON and RON NIXONreporting at the New York Times, have a very troubling story about the failure to investigate and prosecute white collar fraud."The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country's economic crisis, according to current and former bureau officials...
Making the Gambler's Fallacy Disappear
Posted on October 20, 2008Image via WikipediaHere is an interesting paper about the Gambler's Fallacy - the propensity to find patterns in a series of independent trials."Recent papers have demonstrated that the way people acquire information about a decision problem, by experience or by abstract description, can affect their behavior...
What We Think We Know
Posted on October 20, 2008Image via WikipediaVictoria Pynchon, over at her blog on Negotiation, has an interesting application of confirmation bias. She writes: I watched the debate last night with people who support my candidate. They all also happened to be mediators, so they understand concepts like confirmation bias --the tendency to search for or interpret new information in a way that confirms one's preconceptions and avoids information and interpretations which contradict prior beliefs...
The Truth About Franchise Attorneys and Due Diligence
Posted on October 20, 2008Image via WikipediaBen Hanuka, a well respected Ontario franchise attorney, has an article in the Toronto Star about franchising."Buying a small franchised business in Ontario is becoming more common than ever. This is not surprising given the benefits of franchising, such as brand recognition, access to an established system, initial training and ongoing support, and many other benefits that a franchisee may receive from a reputable franchisor...
Is LifeMax a Franchise?
Posted on October 20, 2008Image via WikipediaOne of the constant themes in at BizOp news is the number of business opportunities that are actually franchises or business opportunity franchises, according to the legal definition of a franchise. Many sellers of business opportunities are actually selling franchises, and do so without providing the purchaser the required information about the opportunity...
Applause Auction
Posted on October 17, 2008Image by MarkWallace via FlickrInteresting little puzzle, as reported by Niranjan Rajadhyaksha at Livemint."Avinash Kamalakar Dixit likes to play a game or two--even as he teaches game theory to his students at Princeton University. There is an old Princeton tradition that Dixit uses to bring to life what can sometimes be an esoteric and math-heavy subject...
Selling fraudulent business opportunities
Posted on October 17, 2008Image via WikipediaThe Arizona AG is warning about biz op scams.Selling fraudulent business opportunities is nothing new. But the scammers have gotten more sophisticated. No longer are you being asked to stuff envelopes or being told just by giving up some money, you'll make more...
MLM Same As Any Other Sales Organization?
Posted on October 17, 2008Image via WikipediaAllisa makes a brave claim about MLM compensation on her website:"Many companies have devised a variety of MLM compensation plans over the decades. They feature two types of distributors - - managers and non - managers - - and three types of pay: Baseshop overrides are overrides( commissions) paid to managers by their subordinate non - managers, collectively called a baseshop...
Three Sentenced in Telemarketing Scam
Posted on October 17, 2008Image via WikipediaHmm, must be Arizona's week for telemarketing scams. As reported in Ktar, "Three men have been sentenced to prison for a telemarketing scheme that sold worthless vacation packages and fraudulent online sales businesses to senior citizens...
Stealing the FTC Name
Posted on October 16, 2008Image via WikipediaFrom the FTC Press Release on a Lottery Fraud:In their latest effort to defraud the public, con artists claiming to work for the Federal Trade Commission are calling consumers and claiming that they have won a lottery or sweepstakes...
Tupperware Problems
Posted on October 16, 2008Image via WikipediaFrom a story at Pink Truth, I learned about this story regarding Tupperware. Tupperware used to be a franchise in the US, but several years ago rebranded as MLM company. Here is the Tupperware story, from the Times Union. The most famous brand is still Tupperware, the plastic kitchenware, storage containers and other household goods...
Do Due Diligence Before Buying a Franchise
Posted on October 16, 2008Image via WikipediaI am going to whack this advice about how to perform pre-purchase due diligence when buying a franchise."Through due diligence, a prospective buyer of a franchise gathers detailed information about the business potential and profitability, financing requirements, operational risks and other factors that must be discovered and analyzed before proceeding with the deal...
Email claiming to be from AdWords?
Posted on October 16, 2008Image by rustybrick via FlickrSome good and timely advice from Google Adwords about a phishing scam.There are reports of phishing emails that falsely appear to be from adwords-noreply@google.com. These fraudulent emails ask users to update their billing information, take action on a disapproved ad, edit their account, or accept new AdWords terms and conditions...
The Logic of Provability
Posted on October 15, 2008Image via WikipediaHoward Raiffa, one of the academic deans of analytic thought about negotiation theory and practice, is fond of saying "When I hear the options are A or B, I think why not both?" (Ironically, the two solution to the two person bargaining game which incorporates this thought, the Kalai solution is different than Raiffa's solution to the two person bargaining game...
Evil Roy Slade and Banks
Posted on October 15, 2008Image via WikipediaOne of the best western movies is Evil Roy Slade which also had a philosophical view about accounting that is relevant to the US bailout of their banking system.Evil Roy Slade is leader of bank robbing gang - and Evil Roy needs to break up the gang...
What "Due Diligence" Means
Posted on October 15, 2008Image by Mike Licht, NotionsCapital.com via FlickrPurchasers of franchises and investments are often told to perform pre-purchase "due diligence". "Due diligence" is essentially a defence avail to the sellers of securities to the public for making materially misleading representations to the public, that is the due diligence defence allows the sellers to avoid liability for lying...
Phone call of the Day
Posted on October 15, 2008Image via WikipediaA great series of thoughts about how to defeat telemarketing fraud, started by Tyler Cowen who noted:"For the past three years, [Bhumika] Chaturvedi has been a top collection agent at her call center, phoning hundreds of Americans a day and politely asking them to pay up...
Jumping to conclusions!
Posted on October 14, 2008Image via WikipediaDiane Levin has a neat post about logical reasoning - and no I won't tell yo my score, although if you know that I favour using a logic, called intuitionistic logic, which does not have (p or not p) as axiom, you can guess my score fairly accurately...
Shiller's Subprime Solution(s)
Posted on October 14, 2008Image via WikipediaThe intellectual value in studying business opportunity fraud is that if we are able to understand these exercises in simple frauds, we might be able to short circuit errors of judgments in investments - in which the underlying purchase is not inherently fraudulent...
Thinking about buying a franchise?
Posted on October 14, 2008Image by wallyg via FlickrMarkus May, writing at The Naperville Sun, has some nice insights about purchasing a franchise.Often we see people who are interested in establishing their own business in order to avoid working for other people. Often a downsized executive is no longer interested in working for someone else and wants to buy a company to provide for the family...
Regulators close YTB Bank
Posted on October 14, 2008Image via WikipediaInteresting story about YTB's primary lender, the Meridian Bank. "Meridian Bank, a primary lender to Wood River travel firm YTB International, was closed today by the Illinois Department of Financial Professional Regulation-Division of Banking...
What is Business Risk?
Posted on October 13, 2008Nassim Taleb has a nice rant about the traditional model of risk: the future will turn out to be much like the past, and risk is a measure which calculates how that path will vary. Taleb objects, I think correctly, to a view of business risk which is built upon the 17th century gaming model...
Congratulations to Paul Krugman
Posted on October 13, 2008Image by Getty Images via DaylifePaul Krugman has won the Nobel Prize in Economics There will be plenty of stories around the blogosphere explaining Krugman's economic accomplishments. However, I am very interested in what Krugman describes as his modeling strategy...
Why Were Warnings Ignored?
Posted on October 13, 2008Image via WikipediaRichard Posner has both an interesting question and outline of an answer to why the financial crisis was a surprise."Why was the crisis not foreseen? An article on the front page of the business section of yesterday's New York Times attributes that blindness to "insanity," more precisely to a psychological inability to give proper weight to past events, so that if there is prosperity currently it is assumed that it will last forever...
Franchise Law Conference
Posted on October 13, 2008Image via WikipediaThe 8th Annual Franchise Law Conference will be of significant interest to both business and litigation lawyers. Given its emphasis on the practical application of legal principles, the program will be informative for business and litigation lawyers involved in franchise, distribution and licensing law, whether in private practice or in-house...
Should Franchisors be Worried about Anti-Trust?
Posted on October 10, 2008Image via WikipediaFranchise systems live in a odd paradox. On one hand, they seek to spread and proselytize their brand to their customers to restrict their choice. Yet, they also seek to avoid any of the legal ramifications of restraint of trade, or anti-trust doctrines...
eBay Rulings Relating to Counterfeiting
Posted on October 10, 2008Image via WikipediaRoger Parloff has put on his website the English translations of the important eBay decisions from Europe."Since a number of people have emailed me seeking English translations of the various international rulings relating to whether eBay (or other online auction houses, of course) can be held liable when visitors sell counterfeit goods on its site, I thought I'd collect and post all the translations I have in one location...
Why Direct Sales is Hard
Posted on October 10, 2008Image by Getty Images via DaylifeKim Klaver has some sensible things to say about direct sales and why network marketing is hard. Three reasons: 1. Most folks coming into the business have never had a business of their own before, or done any commission sales...
Tom Schelling on Fear and Loathing
Posted on October 10, 2008Image via WikipediaWhen Tom Schelling talks, it is worth listening to. Here he is talking about the dynamics of fear and panic."Investors Jim Rogers, Mark Mobius and Laszlo Birinyi and Nobel Laureate Thomas Schelling talk about the dynamics of fear and panic in the global stock market rout...
Invisible Hand and Usury
Posted on October 09, 2008Image via WikipediaRob Kirby has timely and useful reminder about what is wrong with usuryProfits from usury do not arise from any substantial labor or work but from mere avarice, greed, trickery and manipulation. In addition, usury creates a divide between people due to obsession for monetary gain...
Cheating Charities
Posted on October 09, 2008Image by Getty Images via DaylifeOne of the standard tricks of a con criminal is to trade on borrowed authority, real fake. The easiest authority to borrow is from a well respected charity. By sponsoring a charity event, or having some perceived connection to a charity, the con criminal absorbs the authority from the charity...
Experts Warn of Investment Scams
Posted on October 09, 2008Image via WikipediaInteresting story about the free lunch ploy."It was a common ploy, financial experts say -- a smooth-talker in a suit, preying on seniors, holding "free lunch" seminars and promising fail-safe investment opportunities. And in these times of economic turmoil, when many may be worried about how they'll survive retirement, investors looking for a sure bet can find themselves at risk...
Thursday Fraud News
Posted on October 09, 2008Image via WikipediaAlan White writing at Consumer Law and Policy argues that GSE were not responsible for the subprime crisis:"The fact is that subprime lending caused the crisis, and subprime loans were, by definition, loans that Fannie and Freddie (the GSEs) would NOT purchase...
FTC Fraud Forum
Posted on October 08, 2008Image by sha in LA via FlickrFrom the FTC Press Release on FraudThe FTC will host a a fraud forum on Februrary 25 and 26th 2009, in Washington, DC. The Forum will examine how the FTC can more effectively protect consumers from fraudulent schemes. The first day of the Forum will be open to the public and will provide an opportunity for law enforcement, consumer advocates, business representatives and academics to examine, among other things:the extent of fraud in the economy and what survey research indicates about fraud victimization rates;the drivers - economic, sociological, and psychological - that create and sustain fraudulent actors; how new fraudulent actors learn the tools of the trade, and how they target victims;whether some segments of the population are at greater risk of being targeted by fraudulent actors; whether victim surveys adequately identify the magnitude and types of fraud launched against all segments of the population; what techniques law enforcement has employed to reach these segments of the population; andwhich best practices in private industries, such as banking, telecommunications, and online commerce, are best suited to identify fraud and prevent their services from being used by fraudulent actors; which systems adequately track potentially fraudulent activity and whether opportunities exist to use new or improved self-regulatory efforts to combat fraud...
List Brokers Help Telemarketers Defraud Consumers
Posted on October 08, 2008Image via WikipediaOne of the important sources of information for the fraud criminals comes from list brokers. This industry is regulated in part by the FTC. The recent FTC judgment against a list broker is quite illustrative of the problem. "Under the terms of a settlement announced by the Federal Trade Commission today, a list broker, formerly based in Arizona, and the two companies he ran have agreed to a proposed court order barring them from violating the agency's Telemarketing Sales Rule (TSR)...
Is effort a myth?
Posted on October 08, 2008I am not much for self-help blogs, or the like. The just-so stories don't appeal to my nature. I suspect that this is a function the skeptical nature I cultivate.But Seth Godin wrote an intriguing piece on effort and luck."Here's a bootstrapper's/marketer's/entrepreneur's/fast-rising executive's effort diet...
Cuppy's Coffee Interview
Posted on October 07, 2008Image via WikipediaSean Kelly has an interesting conversation with a Cuppy's Coffee Franchisee, which highlights the big mistake prospects make in reviewing a franchise opportunity.UF: How did you first learn about the general concept? What did you find appealing about this type of business? Joshua: Coffee business here in California was booming...
Are Canadian Mary Kay Consultants Telemarketers"
Posted on October 07, 2008Image via WikipediaInteresting observation over at Pink Truth about the Canadian Telemarketing rules:Canada now has a "Do Not Call List", and Mary Kay Inc. is advising consultants that they are subject to it. The way I read MK's explanation, if a consultant in Canada wants to call "referrals," they're going to have to register and pay a fee...
Robert Nozick Explains Credit Crunch?
Posted on October 07, 2008Book cover via AmazonYou know that craziness has set in when Robert Nozick's peculiar libertarian theory is being invoked as an explanation for the current credit crunch.Richard Epstein makes the extraordinary claim in Forbes today:"Now that yesterday's market nosedive shows the disappointing Congressional bailout has not calmed markets, let the post-mortem begin...
Kevin Trudeau Banned from Infomercials
Posted on October 07, 2008Image via WikipediaFrom the FTC Press Release about Kevin Trudeau:A federal judge has banned Kevin Trudeau from infomercials in which he has an interest for three years and ordered him to pay more than $5 million in profits from his book, "The Weight Loss Cure 'They' Don't Want You to Know About...
What Not to Wear
Posted on October 06, 2008Image via WikipediaOn this blog, I have spent a great deal of time talking about confirmation bias, anchoring, and cognitive dissonance and how they relate to franchise due diligence.Experiments, horror stories, and academic papers have all been cited in an attempt to explain what to do...
Bailout Bad Medicine?
Posted on October 06, 2008Image via WikipediaI have no special knowledge about financial theory, special purpose vehicles, or counterparty obligations. So, the technical details of our current credit crunch eludes me. However, I do have a pretty good ear for fraud talk - especially when it is wrapped up in self-deceit, shrouded by technical nonsense, and hidden agendas...
Shop to Earn Scam
Posted on October 06, 2008Image by Chandra Marsono via FlickrTracy Coenen has a long post about Shop to Earn, in which she questions the basic business model."There are still plenty of people searching for "Shop to Earn scam," ShopToEarn fraud, "is Shop to Earn legitimate," Shop To Earth scam, and the like...
Insincere Cheers
Posted on October 06, 2008Image via WikipediaWhat does opera have in common with elections? In the 1820's , the opera claque was formed - organizations which leased themselves to singers and opera companies to provide long sustained applause so that those in attendance would be assured that they had witnessed a brilliant performance...
Mystery Shopping Investigation
Posted on October 04, 2008Image via WikipediaRecently, someone emailed me and asked about whether Gapbusters Worldwide was a fraud or scam Here are the steps I took, which you can easily use for your own investigation on similar businesses. The first thing I am trying to do is eliminate things that look like scams or frauds...
The Way I Figure It.
Posted on October 03, 2008Image via WikipediaFrom the annals of banking history - a conversation with a banker who sold securities paying 50% every six months."Now the way I figure it. I have about 8 million in the banks right now, and I owe 15 million.This run that's started has people bringing in their notes before they're due, so I will save the 50% on every one I get back...
Are Cheap Placebo's Worthless?
Posted on October 03, 2008Image via WikipediaTwo years ago, the FTC was in Federal Court suing the manufacturer of the Q-Ray bracelet. From the FTC press release regarding their legal case against the Q-Ray company"The federal district court in Chicago has ruled for the Federal Trade Commission in its case against the marketers of the Q-Ray ionized bracelet following a bench trial earlier this summer...
Risky Business: When your Franchisor Transforms
Posted on October 03, 2008Image via WikipediaThe average life of a corporation is 12 years. But the death of a corporation doesn't mean it became bankrupt - a number of other ends are possible, change of control, merger, amalgamation, spin-off of divisions. In the WSJ, September 23, 2008, it was written: "About the last thing someone thinks about when buying a franchised business is what happens if the franchiser declares bankruptcy...
Is Direct Selling a Niche?
Posted on October 03, 2008Image via WikipediaDavid Greiman writes about the direct selling industry:"Product demonstrations now take place at parties and workshops in which potential customers become captive audiences as they learn about - and try - everything from kitchen and health items to lines of jewelry and homemade crafts...
How Stupid Are Canadians?
Posted on October 02, 2008Image via WikipediaCanadians are just as silly as Americans. When the CRTC create the do not call system, the system was overwhelmed with people trying to sign up.I have always said that putting your name on a list saying that you are vulnerable is plain silly - someone is going to sell that list to telemarketers...
Jocks and Magical Thinking
Posted on October 02, 2008Image by Getty Images via DaylifeOne of the tough challenges for rational theorists is the prevalence of magical thinking, superstition among apparently reasonable thinking persons. Matt Hudson, writing at the Psychology Blogs:" Wade Boggs ate chicken before every game during his career...
Is a Franchise Right for You?
Posted on October 02, 2008Image via WikipediaKelly Spors, of the Wall Street Journal, has a good insight into some bad decision making - the purchase of a franchise by a naive purchaser."It's a common scenario: Someone walks into a chain restaurant, loves the food and ambiance and suddenly thinks, "I should own one of these...
Being Smart about Greed and Fear
Posted on October 02, 2008Image via WikipediaWarren Buffett summarizes why we will have bubbles for the foreseeable future.This is more complicated than Buffett makes it seems, so pay careful attention."I mean people -- people don't get -- they don't get smarter about things that get as basic as greed and you can't stand to see your neighbor getting rich...
Why Do You Believe the Con Man's Lies?
Posted on October 01, 2008Image via WikipediaInteresting story from the Telegram, UK about a brazen conman and his victims:"Fraudster Mark Wilkinson fabricated outlandish "business opportunities" to cheat £114,000 from his unwitting victims - including pretending he had been gifted a palace and millions of pounds from a generous Arab sheikh...
Canadian Quiznos Franchisee Association
Posted on October 01, 2008Image via WikipediaOne of my standard recommendations when looking for a franchise is to contact the independent franchisee association. However, the formation of independent franchisee associations can be fraught with danger and legal actions. Consider the attempt to form a Canadian Quiznos franchisee association, as reported by the Court of Appeal in Ontario...
Directors Financial Group Prime Bank Fraud
Posted on October 01, 2008Image by Getty Images via DaylifeI am fascinated as to why the Prime Bank scheme continues to work, given the amount of public information out there. From the SEC Press Release on Directors Financial Group Prime Bank fraud: "The Securities and Exchange Commission (the "Commission") announced today that on September 29, 2008, it filed a civil action in the U...
Drinking and the Dollar Auction Game
Posted on October 01, 2008Image via WikipediaPresh Talwalkar writes a very interesting blog, Minding Your Decisions. Recently, he wrote about an interesting application of what game theorists call the "Dollar Auction Game", a lesson about escalation. "Business drinking provides a fun subject for strategic thinking...
Criminals Targetting Seniors Jailed
Posted on September 30, 2008Image via WikipediaFrom the SEC Press Release on a scheme that targeted seniors.The Securities and Exchange Commission announced today that a judge in Riverside County, California, sentenced the last of three men to prison after they were convicted of 522 felony charges in a fraudulent scheme that was the subject of a prior enforcement action brought by the Commission, which raised more than $187 million from over 1,800 victims, mostly senior citizens and the elderly...
Contempt Hearing Ordered for Steven Rodd
Posted on September 30, 2008Image by Getty Images via DaylifeFrom the SEC Press Release, regarding the LinkTel bizop scam;The Securities and Exchange Commission ("Commission") announced today that an application for an order to show cause why defendant Steven B. Rodd ("Rodd") should not be held in civil contempt was filed by the Commission on September 26, 2008, in the United States District Court for the Northern District of Georgia, based on his failure to pay disgorgement and civil penalties, as directed by the Court's August 30, 2007 order...
Before Buying a Franchise, Don't Trust... Verify
Posted on September 30, 2008Image by Getty Images via DaylifeSean Kelly, writing at All Business, has a couple of good ideas about franchise pre-purchase investigations.Someone asked Sean about a concept and claimed that the franchise business model was too good to fail. Here is Sean's response: "There's NO concept that's "too good to fail...
Financial Crisis: A Mirror Image of MLM?
Posted on September 30, 2008Image by Getty Images via DaylifeRobert FitzPatrick has an interesting comparison about our current economic crisis and MLM scams.For those who are asking how our national economy fell into the current financial crisis or how the nation's business leaders could not have seen it coming or how the federal government could have allowed it to happen, a study of multi-level marketing (MLM) - which attracts more than five million Americans each year with its "income opportunity" - can offer answers...
No Love for Bailout?
Posted on September 29, 2008Image via WikipediaFrom CNN, we learn more about what some investment banks think about the failed bailout."People are very seriously concerned that there's no panacea from legislative action," said Daniel Alpert, managing director of Westwood Capital, a New York-based investment bank...
Affordable Franchise Expert Assistance
Posted on September 29, 2008Image by . SantiMB . via FlickrRichard Solomon is offering an interesting day long franchise program.Here is part of his program."We talk about the nature and specifics of different kinds of claims and defenses; potential affirmative defenses and counterclaims that your adversary could be expected to assert; the facts you believe are true and how to prove them, as well as how to obtain possession of admissible evidence not yet in your possession...
YTB: One Person's Extended Perspective
Posted on September 29, 2008Image via WikipediaThis is what I love about the internet. Kevin Horrigan writes about the YTB scandal, from a historical perspective. I am going to republish a great deal of his story, probably overdoing fair use. "There I was, reading Tim Logan's excellent story in Sunday's Post-Dispatch about YTB Internationalwhen a name from the past jumped out at me: J...
Franchise Shills
Posted on September 29, 2008Fakes testimonials works simple because they are testimonials, in the same way that canned laughter provokes more laughter even for unfunny jokes.Consider this 123 Fit Franchisee shill"We are having a blast with our 123 Fit location. And we have now proved you can generate positive cash flow with this system...
What Can We Learn From Paul Newman?
Posted on September 27, 2008Image via WikipediaPaul Newman died last night from cancer. Newman, along with Robert Redford and Robert Shaw, starred in one of the most popular movies about conmen, The Sting, which was based on David Maurer's book,The Big Con: The Story of the Confidence Man Paul Newman's foundation issued this press release, about luck, randomness and equality...
Is There A Market for Franchise Reputations?
Posted on September 26, 2008Image via WikipediaLes Stewart has an interesting post about how to regulate the quality of franchise offerings, but using the marketplace.Governments have a legitimate role in regulating the quality of market transactions as the unfolding worldwide depression will prove (again)...
Correcting Errors?
Posted on September 26, 2008Image by Marcio Eugenio via FlickrDavid Balan, writing at Overcoming Bias, has a nice observation about knowledge and action."Most of the discussion on this blog seems to focus on figuring out how to identify biases. We implicitly assume that this is the hard part; that biases can be really sneaky and hard to ferret out, but that once you've identified a bias, correcting it is pretty straightforward and mechanical...
Why Don't Franchises Don't Reveal Earnings Power
Posted on September 26, 2008Image via WikipediaDarrell Johnson, writing at Frandata, has a great post on earnings claims.An argument used by some franchisors ("We're not allowed to make such representations.") goes away. "More than 700 brands, or approximately one fourth of all active franchise brands, make FPRs [financial performance representations] today, and that number is steadily growing...
James Asset Advisory Ponzi
Posted on September 26, 2008Image via WikipediaFrom the SEC Press Release on the James Asset Advisory PonziOn September 24, 2008, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Southern District of Florida against James Asset Advisory, L...
When is an Award a Bribe?
Posted on September 23, 2008A franchisor press release announces that"Nurse Next Door Home Healthcare Services is proud to announce that, this past weekend, Chris Wilkinson and Tawnya Ketch accepted the inaugural Nurse Next Door Franchise of the Year Award on behalf of their Nanaimo franchise...
NakedShorts: A nation of morons, led by idiots
Posted on September 23, 2008Image via WikipediaI have to most of reprint Greg's post on the current financial problems.A nation of morons, led by idiots Problem: Too-big-to-fail financial institutions Solution: Bigger financial institutions (BAC+CFC+ML/JPM+BSC/BCS-LEH ad nauseum)...
Cold Stone Case Study
Posted on September 22, 2008Image via WikipediaI am in San Diego for the meeting of the AAFD Standards Committee, saw a Cold Stone franchisee.Gwendolyn Bounds, writing at the WSJ has an article on Cold Stone, with three warnings for franchise buyers. "1. Is there too much expansion? Cold Stone's rapid pace of store openings was enticing...
What is too good to be true? That frauds and scams self announce.
Posted on September 19, 2008Image via WikipediaI am critical of regulators who claim that if the victims of fraud had just realized that "if it sounds too good to be true, then it probably is." This "advice" makes the victim of a con criminal feel that there was some simple check by which they could have avoided the con criminal...
How to spot a fraud?
Posted on September 19, 2008Nevil Gibson, writing at New Zealand's The National Business Review, has an interesting question."Which comes first - the con man or the gullible victim? In the case of Derek Turner, the answer is just as likely to be the latter than the former. Few who watched TV3's 'docu-drama' on Turner, The Million Dollar Con Man, will not be appalled by the story, except that it reveals a long-familiar pattern...
Robotic thoughts
Posted on September 19, 2008Image via WikipediaNotwithstanding my view that the prisoner's dilemma game is both the most over researched and under studied experiment in all of social psychology, Mind Hacks points to a mildly interesting article."One study that found that the perceived 'human-ness' of another player in a game altered the extent of activation in brain areas associated with understanding others' mental states...
Is Teaching Financial Literacy a Waste of Time?
Posted on September 19, 2008Image by Getty Images via DaylifeSteve Dubner writes, over at the Freakonomics blog, about teaching financial literacy."Not long ago, I wrote about the sad state of financial literacy in the U.S., and how some people, like Annamaria Lusardi of Dartmouth, are proposing widespread education to fix the problem...
FTC Sweep Stops Peddlers of Bogus Cancer Cures
Posted on September 18, 2008Image via WikipediaFrom the FTC Press Release:The Federal Trade Commission today announced 11 law enforcement actions challenging deceptive advertising of bogus cancer cures. The FTC charged the companies with making unsupported claims that their products cured or treated one or more types of cancer...
False Franchising Numbers
Posted on September 18, 2008Image via WikipediaJim Coen, who writes a very nice franchising blog Let's Talk Franchising, had a good comment on my earlier article about Franchising being a Con. I am going to reprint it all because Jim makes some excellent points about bogus numbers used by franchise brokers to sell dubious systems...
Robotic thoughts
Posted on September 18, 2008Image via WikipediaNotwithstanding my view that the prisoner's dilemma game is both the most over researched and under studied experiment in all of social psychology, Mind Hacks points to a mildly interesting article."One study that found that the perceived 'human-ness' of another player in a game altered the extent of activation in brain areas associated with understanding others' mental states...
Is a Franchise a Sure Thing? No
Posted on September 18, 2008Barry Thomsen has an interesting and informative article about franchising, in which he writes:"The only sure thing I've learned from owning a franchise is that the franchisor receives their initial fee and a check every month that you are open for business...
Ad Surf Daily Ponzi Calculations
Posted on September 17, 2008Image by Raymond Yee via Flickr Interesting debunking of the Ad Surf Daily ponzi;One promoter engaged me in a very lengthy explanation of how "ASD only paid out 50% per day so how could it be a ponzi?" Well, let's look at that. The marketers of ASD used this sleight of hand to confuse the hapless members, at first glance, that does make some sense, right? "We take in $10,000, we keep $5000, and we profit share the other $5000 minus some administrative expense"...
Franchising is the latest Big Con
Posted on September 17, 2008Image via Wikipedia Les Stewart, always provocative, makes an important point about the limitations of franchise pre-purchase investigation."I believe modern mom-and-pop franchising has largely morphed into a Big Con. Illusion of Legitimacy: The methods of the confidence game have evolved into a much more difficult fraud to deal with because there is very little difference in the look of a blatant scam and a legitimate business format franchise...
Persuasion Science and Practice
Posted on September 17, 2008Image via Wikipedia Dr. Robert Cialdini has a neat article about reciprocation at his Inside Influence website. "The rule for reciprocation--that we feel obligated to give back to others the form of behavior they have first given to us--explains a lot of human behavior, including some baffling instances...
Great Stories from Around the Net
Posted on September 17, 2008Image via Wikipedia 1. Bad State Regulator: How State regulators allow thousands with a criminal past to peddle home loans -- costing consumers millions - from the Miami Herald. "When state regulators showed up at Samantha Johnson's mortgage company, she had already stolen her first house...
Could Mary Kay survive in Only A Retail environment?
Posted on September 16, 2008Image via Wikipedia Tracy Coenen raises a fascinating question over at Pink Truth, about whether Mary Kay could survive in a pure retail market.As we all know, the market for Mary Kay with actual retail customers is pretty small. Mary Kay depends on inventory orders from consultants and directors...
To think or Not to think
Posted on September 16, 2008Image via Wikipedia Interesting post over at the Psychology Today blogs, by Art Markman, about making decisions based on gut feel instead of reason:"For the past eight years, much has been made of President Bush's tendency to make decisions from his gut...
Usana Investigative Blog
Posted on September 16, 2008Image via Wikipedia Interesting post by a person who appears to be investigating USANA talking about being approached by a USANA Rep."The woman did not strike me as some kind of con artist, and she seemed to be fairly revealing about the nature of the company...
More Transparency Talk
Posted on September 16, 2008Image via Wikipedia Megan McArdle is another commentator who believes in the myth of disclosure in the earnings opportunities markets."I would much rather see America's regulators do what government is really good at: transparency and coordination. Providing as much detailed information about firms, securities, and markets as they can, particularly in assessing systemic risks...
Too Few Regulations?
Posted on September 15, 2008Image via Wikipedia Tyler Cowen, writing before the September 15th, 2008, on financial regulations states:"In short, there was plenty of regulation -- yet much of it made the problem worse. These laws and institutions should have reined in bank risk while encouraging financial transparency, but did not...
Pipe Ponzi
Posted on September 15, 2008Image via Wikipedia From a SEC Press Release on a Ponzi Scheme enabled by Private Investment in Public EquityThe Securities and Exchange Commission today charged an Irvine, Calif., attorney and two other promoters for conducting a $52.7 million Ponzi scheme in which they sold investors bogus PIPE (private investment in public equity) investments, promised unrealistic profits, and misappropriated more than $20 million of investors' funds to function as their own personal piggy bank...
Systemic Change in Franchise Systems: How to Handle Technology
Posted on September 15, 2008Image via Wikipedia Tariq Farid writing over at the IFA, has an interesting although flawed article about introducing new technology in a franchise system in order to collect royalties more efficiently:The article starts off with stating the obvious, but soon veers into pro franchisor territory...
Franchise Trade Shows
Posted on September 15, 2008Image via Wikipedia The Canadian Franchise Association has a checklist about how to maximize your return at attending a franchise tradeshow."Do your homework and research franchise systems, industries and markets.Do develop a list of questions to ask and don't be afraid to ask them Do dress professionally - first impressions are important...
Edward Jones & Co Settlement
Posted on September 12, 2008Image via Wikipedia California Attorney General Edmund G. Brown Jr. today announced a $7.5million settlement with financial-services firm Edward Jones & Co. for the company's failure to inform its customers of its revenue-sharing agreements with various mutual-fund companies...
Con Man and Advance Fees
Posted on September 12, 2008Image via Wikipedia I have followed Jack Payne's Con Man blog with mixed feeling. Although I would like to see Payne as the modern Joseph Weil, or the Yellow Kid, his novel and writing is a bit stilted for my taste.I keep hoping for more from Jack, and today I think he delivered on his observations about the advance fee scam...
Franchisor Guru's Secrets
Posted on September 12, 2008Image via Wikipedia Any time I hear "secrets to success" I automatically think scam.So when the National Post did an article on "Franchisor Guru Reveals his Secrets", I had to read it.This is what Derek Sankey, from the National Post, wrote:"Whether you're looking to buy into a franchise or trying to roll out your concept by taking the business to the next level, those who have had repeated success employ some similar strategies...
I am Dumb, but Dummies Lie
Posted on September 12, 2008Image via Wikipedia One of the most interesting and challenging logical phenomena discovered in the 20th century was the rigorous study of the relationship, for a certain class of statements, between what the statement asserted, and what the statement said about itself asserting what it did...
Bowdoin's Last Call?
Posted on September 11, 2008Image via Wikipedia Patrick Pretty is reporting on his website that Bowdoin has given his last public performance regarding Ad Surf Daily."The embattled president of Ad Surf Daily no longer will participate in conference calls at the advice of his attorneys, ASD members report...
Earnings Claims, what are they?
Posted on September 11, 2008Image via Wikipedia Kerry Pipes has a good article about Financial Performance Claims, or Earnings Claimings for franchise systems.If you get an FDD and there is no Item 19, he says [Charlie Simpson, COO of Great Clips], ask a very direct question: Why not? "How they respond to that will you give you a glimpse of the integrity and the sustainability of that franchise...
Prepaid Phone Card Fraud
Posted on September 11, 2008Image via Wikipedia From the FTC Press Release regarding Prepaid calling card fraud:The Federal Trade Commission today told the U.S. Senate Committee on Commerce, Science, and Transportation that while the FTC will continue its aggressive law enforcement and consumer education programs in the prepaid calling card arena, pending legislation would benefit consumers by providing "an additional remedy to those already available to the Commission...
YTB Lawyer Resigns
Posted on September 11, 2008Image via Wikipedia Not a good sign for YTB, their new lawyer resigned."On September 3, 2008, John D. Simmons resigned from the Board of Directors of YTB International, Inc (the "Company"). Mr. Simmons resignation was prompted by his belief that as a general matter he could not effectively influence the practices of the Company's management...
Credit Repair Fraud
Posted on September 10, 2008Image via Wikipedia From the FTC Press Release on Credit Repair Fraud:The Federal Trade Commission charged two credit repair marketers with violating federal law by collecting advance payment for credit repair services and falsely promising to remove derogatory information from consumers' credit reports - even if the information is accurate and not obsolete...
AmeriDebt Refunds to Consumers
Posted on September 10, 2008Image via Wikipedia From the FTC Press Release on the AmeriDebt Consumer Fraud:The Federal Trade Commission announced today that the agency returned approximately $12.7 million to consumers this week from a settlement with Andris Pukke and his companies, AmeriDebt, Inc...
Franchise Investigation Revolutionized
Posted on September 09, 2008Image via Wikipedia Don Sniegowski, editor of Blue Mau Mau, has a fantastic development about franchise investigation."A new database of free and searchable online franchise documents has been launched today. The site searches financial statements, franchise agreements, franchisee litigation against franchisors and more by accessing more than 3,200,000 franchising related documents from the public records of California's Department of Corporation's online database system for franchisors that register in that state...
Can You Detect Lies?
Posted on September 09, 2008Image via Wikipedia Seth Godin has an interesting claim about lies:"Humans are lie detectors. We hear stories. We enjoy them. We try them on for size. We're looking for falsehoods and we sniff them out. We value the truth and we enjoy it. And we're always wary about the occasional lie...
Bidz.com Doing a Pump and Dump?
Posted on September 09, 2008Image via Wikipedia Sam Antar has an interesting discussion about Bidz's share repurchase program.Why are Bidz.com (NASDAQ: BIDZ) insiders selling shares as the company is buying back shares, especially when management has claimed that the company's shares are undervalued? Legendary investor Warren Buffett, CEO of Berkshire Hathaway (NYSE: BRKA), was once said: Now, repurchases are all the rage, but are all too often made for an unstated and, in our view, ignoble reason: to pump or support the stock price...
How to Become a Professional Con Criminal
Posted on September 08, 2008Image via Wikipedia How to Become a Professional Con Artist "If it sounds too good to be true, then you're dealing with an amateur con artist." Dennis Marlock Dennis Marlock has written an interesting book on the art of the short con, important for our understanding of persuasive techniques of con criminals...
123 Not Fit for Franchising
Posted on September 08, 2008Image via Wikipedia Jonathan Maze, writing at the Franchise Times has an excellent story on the downfall of 123 Fit Franchise"123 Fit was built around a fitness regime designed by Wilson that is more intense than the Curves workout - one that continues to receive raves even from the company's biggest critics...
The Stock Market is a Ponzi
Posted on September 08, 2008Image via Wikipedia Mark Cuban, writing at his blog, confirms that we can model the stock market as if it were a Ponzi scheme."I've said a lot of this before. The stock market is by definition a ponzi scheme. As long as money keeps on coming in, then there is someone to take the stocks from the sellers...
End of Authority for Blog Gurus?
Posted on September 08, 2008Image by Tamar Weinberg via Flickr Darren Rowse on his popular blog writes about the Blog Panel at the upcoming Blog World Expo."I had confirmation this week that Jeremy from ShoeMoney is joining our 'make money online with a blog' panel at Blog World Expo...
Franchisee Compliance Due Diligence
Posted on September 08, 2008Image via Wikipedia Richard Solomon writes, over at BMM, about what franchise disclosure really amounts to."Franchise agreements became much stricter in providing for franchisor options. Business information management technology exponentialized in its ability to "report"...
Where Are the Gurus?
Posted on September 05, 2008Image via Wikipedia Like you, I am a fan of Jeremy Shoemaker, Brian Clark, and Darren Rowse, read their RSS feeds and generally enjoy their observatons. Shoe gossips, Clark provides insight, and Rowse is consistently steady with practical advice. So, I wonder what the following graph means? Are they losing their collective audiences, is the market for attention not growing, or is it a meaningless picture? Related articles by ZemantaGreat Darren Rowse Problogger Interview by Guy on SunThe Future of Blogging RevealedTwitterMeme13: Angering New Bloggers in TechRedesign of Problogger...
How to Create A Better Stop Sign
Posted on September 05, 2008From Dan Ariely's Predictably Irrational, The Corporation does Coordination http://view.break.com/542649 - Watch more free videos Buy Dan's Book, Predictably Irrational.Related articles by ZemantaIs your market "predictably irrational"?Amazon and B&N; suggest wildly different booksPricing IrrationalityWant me to spend? Give me cash...
Disagreement is Disrespect
Posted on September 05, 2008Image via Wikipedia Robin Hanson's posts at Overcoming Bias often intrigue me. He appears to be engaging, perhaps deliberately, in what the philosopher Grice called flouting conversational implicatures. Just read this."When you knowingly disagree with someone you are judging them to be less rational than you, at least on that topic...
Dead Amway Co-Founder Jay Van Andel Remembered at Republican National Convention- Former Amway President, Dick DeVos Comes out in Support of Sarah Palin
Posted on September 04, 2008Image via Wikipedia Rachel, writing at OPTree, reports on an interesting connection between the Republican convention and Amway."Early in the night, before speeches by President Bush, Fred Thompson and Joe Lieberman, convention go-ers and leaders remembered Republican Leaders who have passed away during the last four years, including Van Andel, a large presence on the Republican political scene...
AdSurfDaily documents Subpoenaed
Posted on September 04, 2008Image via Wikipedia Dave Hodges, writing at Tallahassee.com about AdSurfDaily, claims"Quincy-based AdSurfDaily Inc. has until Tuesday to respond to a subpoena from the U.S. Attorney's Office requesting more documents in a grand jury proceeding that may involve a violation of the government's wire-fraud statute, a criminal offense...
Why Our Brains Cannot Grasp Probabilities
Posted on September 04, 2008Image via Wikipedia Michael Shermer, writing at Scientific American, has an interesting observation about chance and the measurement of risk."Have you ever gone to the phone to call a friend only to have your friend ring you first? What are the odds of that? Not high, to be sure, but the sum of all probabilities equals one...
Apply for Airborne Refunds, Now
Posted on September 04, 2008Image via Wikipedia From the FTC Press Release on Airborne products;September 15, 2008 is the last day for eligible consumers who purchased Airborne products over a six-year period to apply for refunds. Details on eligibility can be found at www.airbornehealthsettlement...
Palin Vetted for VP?
Posted on September 03, 2008Image by sloomis08 via Flickr As a Canadian, I don't have much of a horse in the upcoming US Presidential Race, or what I call "Crown the King" race.Having lived in the US for several years, I have a great deal of respect for the underlying democratic institutions...
Business Opportunities - Tips From Florida
Posted on September 03, 2008Image via Wikipedia When you can log on to the Florida site which provides advice about purchasing business opportunities, it does have some good information.Many Americans dream of owning their business. Although many achieve this dream, others run into financial ruin by falling prey to scams devised by unscrupulous promoters of business opportunities...
New Cult Products From USANA
Posted on September 03, 2008Image via Wikipedia From Rachel at OpTree, we learn about the new USANA products.We have gotten our hands on the pricing for the products and this should be an exciting and profitable edition to the vast line of USANA nutritional products. REV3 Energy (12 cans) $66...
Pinnacle Quest Indicted for Fraud
Posted on September 03, 2008Image via Wikipedia Tom McLaughlin, at the Daily News, has a nice story on the Pinnacle Quest Fraud.Niceville residents Mark and Claudia Hirmer have been arrested by federal authorities and charged with conspiring to "impair and impede the Internal Revenue Service...
Jerry Reed
Posted on September 02, 2008Image via Wikipedia Jerry Reed passed away today. He was a much better performer than generally recognized. In honor of his passing, here is one of ironic songs.Jerry Reed had a great ear for some of the absurdities of modern life, which he passed on in his country songs...
Shop to Earn Refund
Posted on September 02, 2008Image via Wikipedia Tracy Coenen, who is researching the business opportunity Shop to Earn, writes:"This isn't the first reader commenting here about their ability to get a refund from ShopToEarn (aka ShopToEarth). If you sign up as a member, there is apparently a clause which offers refunds, but members seem to have a hard time actually getting their money back...
ASD Fraud at $93.5 million
Posted on September 02, 2008Image via Wikipedia From David Arnett, at Tulas Today, about the growing AdSurfDaily Ponzi,"The U.S. Secret Service has identified and frozen additional funds from AdSurfDaily, Inc (ASD) raising the total from approximately $53 to $93.5 million, but the worldwide investigation first reported on Tulsa Today continues...
CPA Watchdog?
Posted on September 02, 2008Image via Wikipedia Does anybody know if this affiliate protection will work?"CPA Watchdog? is announcing the launch of their new site, which will feature a revolutionary new suite of affiliate verification services for the CPA (cost per action) affiliate advertising industry...
ACN MLM == Pyramid Scheme
Posted on August 29, 2008Image via Wikipedia Here is an interesting exchange between Kenneth Woodruff and a unnamed friend, with Kenneth drawing out his friend about ACN."(10:01:55 AM) kennethpwoodruff: dude(10:01:57 AM) kennethpwoodruff: really?(10:02:02 AM) kennethpwoodruff: who hooked you into this?(10:02:48 AM) CloseFriend1: i have 2 neighbors that are already doing it(10:02:53 AM) CloseFriend1: and making money(10:03:25 AM) kennethpwoodruff: that still doesn't make it "not a pyramid scheme"(10:03:50 AM) CloseFriend1: no doubt(10:04:07 AM) CloseFriend1: it's just better than any one of them that I have seen before(10:04:13 AM) kennethpwoodruff: you're going to have to make $23K / year just to break even(10:04:29 AM) CloseFriend1: how do you figure?(10:04:40 AM) kennethpwoodruff: There are cost of being ACN Rep...
Amway - Vulnerable?
Posted on August 29, 2008Image via Wikipedia Robert FitzPatrick, on his new blog, writes about Amway"Amway is foundering and fighting for its life. New upstarts are challenging it, riding on the political and legal highway that Amway paved. Though Amway is huge, it also is hugely vulnerable, a house of cards...
Wextrust Ponzi Expands
Posted on August 29, 2008Image via Wikipedia In an unsurprising move, the SEC amended its Complaint against Wextrust Capital"its principals, and four affiliated Wextrust entities, to add defendant Joseph Shereshevsky's wife, Elka Shereshevsky, as a relief defendant, alleging that Joseph Shereshevsky attempted to hide more than $900 thousand in investor funds by placing them in accounts putatively in her name...
Confidence In The Con
Posted on August 29, 2008Image via Wikipedia In a historically inaccurate and misleading manner, the NPR has a radio interview with A and B on confidence schemes, or cons."The confidence scheme certainly seems like an American obesession -- the golden age of grift came courtesy of the Jazz Age -- and boy does Hollywood love a huckster...
Truston Receives 2008 Shaping Info Security Award
Posted on August 28, 2008Image via Wikipedia Hey, this looks pretty interesting. (And no I am not an affiliate of Truston!)Tom Fragala, writing at Truston, announced that his product for identity theft:"Info Security Products Guide has honored us with the Shaping Info Security 2008 award...
Final Farewell to Mary Kay
Posted on August 28, 2008Image by .sanden. via Flickr Interesting retrospect from JTA, writing at Pink Truth about a ex-distributor complaining about Mary Kay's representations about how much she would earn;"It took me months and months and months to take the position that the Mary Kay business is fatally flawed...
S&P Rating For Tupperware
Posted on August 28, 2008Image via Wikipedia From Rachel writing at OP Tree, we learn that S&P has raised their rating on Tupperware debt from BB to BB+"While S&P feels that Tupperware has made significant improvement, they still feel that it will be necessary to keep a close eye on the company...
How Much is A Bratz Worth?
Posted on August 27, 2008Image by JimmyMac210 via Flickr I had been following this trademark case, between Barbie and Bratz, because I was fairly sure that litigation was the wrong move for these parties.Mattel was incensed that its designer moved on and took his drawings of Bratz dolls with him; the designer Carter Bryant was incensed that his great ideas of Bratz dolls fell on deaf ears at Mattel, until MGA took his idea, ran with it, and improved it...
Are You Too Easily Impressed?
Posted on August 27, 2008Image via Wikipedia Robin Hanson certainly thinks so.He has a provocative post at Overcoming Bias about the relationship between expertise, credentials and rationality."Yesterday I reported that top med school docs are no healthier for patients. Today I report that even at private schools, teachers who are fully certified do not help students perform any better on math and science tests: Data from the National Education Longitudinal Survey of 1988 (NELS:88) were used to investigate the effect of teacher licensure status on private school students' 12th grade math and science test scores...
Wheels of Justice Grind Slowly - Biofuel Scam
Posted on August 27, 2008Image via Wikipedia From the FBI Press Release on an Bio Fuel Scam, and some nice detecting work from the Police using the internet:"U.S. District Judge Elizabeth Kovachevich today sentenced KARL and HELEN REHBERG for their involvement in a biodiesel fuel scam in Lakeland, Florida in the 1990's...
Hedge Funds Investors Defrauded Out of $20 Million
Posted on August 26, 2008Image via Wikipedia From the FBI Atlanta Press Release:MANYU OGALE, 44, of Jacksonville, Florida, was arraigned today before United States Magistrate Judge Russell G. Vineyard on charges of wire fraud related to a "Ponzi" investment scheme.United States Attorney David E...
Citi Bank Admits to Stealing from Customers
Posted on August 26, 2008Image by Getty Images via Daylife Sometimes when you are wondering about economic view of the world, which leaves out fraud, then think about this story, from the AG in California about fraud. Citibank after a three-year investigation into the company's use of an illegal "account sweeping" program...
Ad Surf Daily Money's Seized
Posted on August 26, 2008Image via Wikipedia The US Government has responded to the Ad Surf Daily's Emergency motion.The Government has a number of interesting arguments.First, they note that:"Bowdoin/Harris Enterprises, Inc.; Adsurf Daily, Inc.; and Mr. Thomas A. Bowdoin, Jr...
Fake Authority
Posted on August 26, 2008Image via Wikipedia Are you that person who knows everyone?You met JFK just before he died, Obama asks for your advice on economics, and just possibly you might have worked for CIA.In other words, are you a fake?Obtaining indirect authority because you surround yourself with people who accomplished something?Well, USANA was playing the fake authority role at the Olympics...
Ad Surf Daily Not a Ponzi Scheme - Legal Expert Says So
Posted on August 25, 2008Image via Wikipedia So is Ad Surf Daily a Ponzi scheme? Well, the Gerald Nehra, the MLM lawyer says no.In his affidavit, in support of the Ad Surf Daily's motion for relief, Nehra claims that Ad Surf Daily is not a Ponzi scheme.Nehra has submitted an affidavit tendering himself as an "expert witness" for Ad Surf Daily...
Are Ads are the New Online Tip Jar?
Posted on August 25, 2008Image via Wikipedia Seth Godin, a well respected internet marketed, bucking conventional wisdom about Adsense stated:"I can say this because there are no ads here but,If you like what you're reading, click an ad to say thanks.Pretty simple, but not an accepted online protocol, at least not yet...
Ronald Keith Owens Agrees to Pay Nearly $2.5 Million Restitution
Posted on August 25, 2008Image via Wikipedia From the FBI Press Release about a Ponzi Fraudster: Ronald Keith Owens, 72, of Mineral Wells, Texas, pled guilty in federal court last week before U.S. Magistrate Judge Paul D. Stickney to an Information charging offenses related to an investment scheme he ran, announced U...
Lies, Liars and Con-men
Posted on August 25, 2008Image via Wikipedia Russ Sears, writing at Daily Speculation, has nice post about the Klondike Gold Rush, and the role of con-men.Wherever there are rational people responding to instinct, doing foolish and irrational things, you will find a swarm of lies and deception...
Goffman on Fraud and Rationality
Posted on August 22, 2008Image via Wikipedia One of the major themes in this blog, running through the examples of fraud and deceit, is that fraud, misrepresentation, and lies are not anomalies in civil society. They are the very fabric of social life and rational action.Accepted sales techniques, persuasion by attorneys, and calls to action by politicians use the same methods exploited by shills, con criminals, and fraudsters...
Christian Fraud II
Posted on August 22, 2008Image via Wikipedia An email from an advance fee scammer:Although beloved in Christ, I am Sister Martine Zago, Kuwait. I am married to Mr. Dea Tacita end Zago, who worked with Kuwait embassy in Ivory Coast during twenty-six years before his death in 2006, after a brief illness that lasted only five days...
Franchise Review in NZ and Mediation
Posted on August 22, 2008Image via Wikipedia Part of the text of the speech by Commerce Minister Lianne Dalziel at the Business Opportunities & Franchise Expo, Auckland, on 16 August 2008"The particular focus is on whether those entering into franchise agreements have adequate information to make good business decisions, while ensuring that we don't impose unnecessary compliance costs on the sector that are disproportionate to the risks involved...
ASD Fights to Re-Open Business
Posted on August 22, 2008Image via Wikipedia Roman Lillie, of WCTV, write about Auto Surf Daily:"Advertising company Ad Surf Daily has filed a motion to re-open its door after being shut down by the Feds. But the U-S Attorney's office will now have extra time to respond to that request...
MLM Danger of Autoship Programs
Posted on August 22, 2008Image via Wikipedia Rachel, writing at Op Tree, unwittingly described a legal trap for network marketers, the autoship program:"Reliv International has just launched a new auto ship program that they hope will increase customer retention and enables its independent distributors to increase sales and build stronger, long lasting relationships...
Arbitration and Statutory Franchise Fraud
Posted on August 21, 2008Image via Wikipedia Fascinating case from the US 6th Circuit Court of Appeals concerning the relationship between the validity of an arbitration clause and the statutory failure to disclose all material information in the Franchise Disclosure Document...
Weight Guru Banned, Yet Again
Posted on August 21, 2008Image via Wikipedia William Zale, writing at Trade Regulation, reporting about poor Kevin Trudeau"Infomercial producer and weight loss book author Kevin Trudeau--held in contempt for intentionally violating a 2004 injunction by making an infomercial that misrepresented his book's content--was ordered by the federal district court in Chicago to disgorge infomercial royalties conservatively estimated at more than $5...
Scammer Jailed
Posted on August 21, 2008Image by _Massimo_ via Flickr From the FBI Press Release:A Burbank man was sentenced today to nine years in federal prison after being convicted earlier this year on charges related to a fraudulent investment scheme. Thomas Mitchell Johnson, 53, was convicted in February on charges related to a scheme in which he defrauded a North Carolina man out of more than $8...
Can You Sell an Unproven System as a Franchise?
Posted on August 20, 2008Image via Wikipedia One of the major myths of franchising is about be tested in a Colorado Court room The myth is that when you are buying a franchise, you are buying a proven business system.For many franchise systems, this is false.There is no proven, there is only the inevitable slogan: "In business for yourself, but not by yourself...
Myth of Financial Literacy Education
Posted on August 20, 2008Image via Wikipedia Lauren Willis writes about disclosure law that:"Seller disclosure and largely unfettered consumer choice is the dominant model ofr egulation in the U.S. for credit, insurance, and investment products. As these products have become more complex and the consequences of consumers' inability to understand them more dire, financial literacy education is a necessary corollary to the disclosure model...
Cash and Cars to Settle FTC Charges for "Money Making Secrets"
Posted on August 20, 2008Image via Wikipedia Here is a fraud that is going to become more commonplace, which stresses the important of the FTC's new Biz Op Rule.From an FTC Press Release,"Two brothers have agreed to settle Federal Trade Commission charges that they misled consumers with false earnings claims for work-at-home schemes involving free government grants, mystery shopping, online surveys, and data entry...
Fraud News You can Use
Posted on August 20, 2008Image via Wikipedia We are going to focus on recoveries for frauds, usually pennies on the dollar.Greg Newton, writing at Naked Shorts, has the best headline I have seen for a while: Most Pointless $300m Order Ever."The U.S. Commodity Futures Trading Commission (CFTC) today announced that Paul Eustace of Ontario, Canada, was ordered to pay more than $279 million in restitution and a $12 million civil penalty, based on an order that resolves a CFTC enforcement action against him for defrauding commodity pool participants in four pools that he managed...
University of Miami Used in Massive Ponzi Scheme
Posted on August 20, 2008Image via Wikipedia Abbie Boudreau and Scott Zamost from CNN are reporting a new Ponzi scheme, with the Florida University implicated. "A Florida man used facilities at the University of Miami to run a multimillion-dollar Ponzi scheme and recruited school employees for the operation, angry investors and investigators tell CNN...
Ponzi Enabler Charged
Posted on August 19, 2008Image via Wikipedia From the FBI Press Release: A Mexican national who allegedly ran a bogus investment program that promised primarily Spanish-speaking victims a 100 percent return on their investments has been arrested on a federal charge of bribing a bank official who allegedly took payments in exchange for covering up activities related to the fraud scheme...
What is Retail Sales for MLM Companies?
Posted on August 19, 2008Image via Wikipedia Imagine reading the 10K of a retailer like Sears, Walmart, or K-Mart and trying to make sense of the following language, from the most recent 10Q from Herbalife:"A key non-financial measure we focus on is Volume Points on a Royalty Basis, or Volume Points, which is essentially our weighted unit measure of product sales volume...
Business-Opportunity Fraud Advice from Monster Career Advice
Posted on August 19, 2008Image via Wikipedia According to an article at Monster Career Advice:"The Federal Trade Commission (FTC) says that fraudulent business opportunities consistently rank in the top 10 categories in its database of consumer fraud complaints"In fact, if the frauds were ranked by amount lost, biz op scams would rank 1 or 2...
Professional Association of Travel Hosts (PATH) Speaks out Against YTB
Posted on August 19, 2008Image via Wikipedia Rachel writes at OP Tree about the YTB scandal:"The Professional Association of Travel Hosts (PATH) has just formally released a statement with regards to recent legal action taken against YTB. PATH applauded the recent legal action taken against the online travel company by the State of California...
Gifting Club Scam
Posted on August 18, 2008Image via Wikipedia Jamie Hall, writing in the Edmonton Journal, talks about a gifting club scam currently making the rounds in Alberta."Women in central Alberta involved in so-called gifting clubs may be unwitting participants in a pyramid scheme, the RCMP warns...
Cooling the Out the Mark
Posted on August 18, 2008Image via Wikipedia Erving Goffman wrote "On Cooling out the Mark" in 1952. It was an application of Mauer's elaboration of con criminals method of ensuring that their victim did not raise too much of a fuss with the federal authorities, "cooling out the mark" to other adaptations to failure...
Red Flags at Pre-Paid Legal
Posted on August 18, 2008Image via Wikipedia Barry Minkow writing at Fraud Discovery Institute has released a report about Pre-Paid Legal claiming:"Pre-Paid Legal' reported "above the surface" numbers in bold text, boasting about increased membership revenues, net income, and earnings per share...
The Rabbi Who Lost $100 Million
Posted on August 15, 2008We are finally getting some facts, but not necessarily material facts, about the WexTrust ponzi scheme.Ianthe Jeanne Duggan, writing at the WSJ, about the WexTrust Ponzi, has identified the Rabbi that gave authority or blessing to the scheme:"Rabbi Chaim Silver of the B'nai Israel Congregation in Norfolk, Va...
AAFD is Serving the Franchising Industry
Posted on August 15, 2008Image via Wikipedia Lance Winslow, writing at Ezine Articles, has an odd view about franchise litigation."When a franchisor is sued it hurts the entire franchise system, because any money received from extortion like lawsuits is less money take away from the money that the franchisor needs to support the franchise system...
Gerry Spence on Faking It.
Posted on August 15, 2008Image via Wikipedia Gerry Spence the noted American Trial Lawyer has started writing a blog.Although he is writing about a lawyer gaining and keeping credibility in Jury trials, he makes a terrific observation about fraud."Our worst enemy is our own species...
Ponzi Criminal Captured
Posted on August 15, 2008Image via Wikipedia From the FBI Press Release:"R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, Miami Division, announced that defendant Salman Shariff, a former Miami-based hedge fund operator, was sentenced today by Chief U...
Ad Surf Daily Part II
Posted on August 14, 2008Image via Wikipedia Auto Surf programs are an odd duck in the scheme of fraud. Unlike franchise fraud, biz op fraud, or mlm fraud, a large majority of the individuals involved know that the underlying scheme is a fraud, yet continue to participate.The AG of Florida claims that the Ad Surf Daily was a fraud because:"ASD depended upon new victims to turn over cash in order to make promised payments to those who had earlier given money...
More on Lies told by MLM
Posted on August 14, 2008Image via Wikipedia Tracy Coenen continues her examination of Dr. Jon Taylor's lies that prospects to MLM are told.Some of these misrepresentations work because of the underlying psychology of influence.Here is the one that I consider both deceitful and very effective...
Remedies for Misleading Advertising
Posted on August 14, 2008Image via Wikipedia Here are three different and interesting remedies for misleading advertising.First, as reported by Steven Gardner, litigation director of Center for Science in the Public Interest:"The FTC's crackdown on Airborne is welcome news and should serve as a template for similar actions against many other companies...
Commodity Pool Ponzi Scheme Alleged
Posted on August 14, 2008Image via Wikipedia"United States Attorney Rebecca A. Gregory announced today the filing of an Information charging a 57-year-old Nacogdoches man with three counts of criminal conduct relating to his operation of a commodity trading pool in the Eastern District of Texas...
Talk to Current Franchisees First?
Posted on August 13, 2008Image via Wikipedia Lance Winslow is a fascinating guy - he was repeatedly sued by the FTC over his non franchise car washing franchise.He tried to convert it to a mere license arrangement, which also failed.From time to time, he shows up making good points about the FTC and the Franchise Rule...
YTB: MLM Fraud to Franchise Fraud?
Posted on August 13, 2008Image via Wikipedia Prior to becoming intimately involved with California's AG, YTB announced it was going to become a franchise. YTB International, Inc. (OTC Bulletin Board: YTBLA - News; "YTB" or the "Company"), a provider of Internet-based travel booking services for travel agencies and home-based independent representatives in the United States, Bermuda, the Bahamas, and Canada, today announced that the Company is contemplating the replacement of its referring travel agent ("RTA") business model with the implementation of a franchise operating system, potentially in 2009...
Fraud News For Tuesday
Posted on August 13, 2008Image via Wikipedia Optree's blog has an nice analysis of the DSA's statement regarding YBT's membership and it being sued by the AG of California."The DSA has finally made a statement regarding the status of one of their companies that is currently in trouble, namely, YTB, the online travel company and DSA member currently being sued in 2 states for over $100 million dollars for fraud as well as the California DA...
Picture of AdSurfDaily Crash
Posted on August 13, 2008/* This picture tells the story: try to keep under the radar kiddies.
Kay Services Ponzi Scheme
Posted on August 12, 2008Image via Wikipedia Unlike the WexTrust Ponzi, the Kay Services scheme as reported seems more simple:"The Securities and Exchange Commission announced today that it filed a civil injunctive action against Kay Services, LLC, and its sole owner and officer, Marcia Sladich, alleging that they orchestrated a Ponzi scheme raising more than $10 million from at least 1,000 victims, many of whom were members of the Family Federation for World Peace, formerly known as the Unification Church...
Oregano Supplement Marketers Advertising Fraud
Posted on August 12, 2008Image via Wikipedia In the coming years, we are going to see some serious battles over claims by health supplement marketers.The current state of advertising supplements and making medical health claims is summarized in this FTC press release."The marketers of a line of dietary supplements have agreed to pay $2...
WexTrust owners duped Orthodox Jews
Posted on August 12, 2008Image by Getty Images via Daylife Sometimes I despair about the quality of investigative writing on frauds.Here is Robert Manor's view, writing in the Chicago Tribune, of the WexTrust ponzi:"Our complaint alleges an affinity fraud of very large scale," said Andrew Calamari, associate director of enforcement for the SEC...
SBA Conceals Massive Loan Fraud
Posted on August 12, 2008Image via WikipediaKeith Girard, writes at All Business, about the Small Business Administration program and fraud."More than 60 OIG reports over the past five years have hammered the SBA about poor lender oversight and the potential for loan fraud. But in an outcome that's all too familiar in light of the SBA's Katrina disaster, the agency failed repeatedly to follow up on the recommendations...
Who is Shop to Earn?
Posted on August 11, 2008Image by RaeA via FlickrShop to Earn is a new network marketing scheme that makes very little economic sense.A number of commentators, Tracy Coenen at Fraudfiles, Techdirct, and Every Day Finance have written about Shop to Earn.No doubt many individuals think that they can make $4100 in 30 days, based on the slide show at the Shop to Earn website...
Wextrust Capital LLC Ponzi
Posted on August 11, 2008Image by Getty Images via Daylife"The United States Securities and Exchange Commission today filed charges against Wextrust Capital, LLC (Wextrust), its principals, and four affiliated Wextrust entities, alleging that defendants conducted a massive Ponzi-type scheme from 2005 or earlier that raised approximately $255 million from approximately 1,200 investors...
USANA Settlement - From the Court Records
Posted on August 11, 2008Image via WikipediaSome people have a hard time understanding that the USANA did not prove any of its allegations against Minkow. A reader emailed me this question:"I've been engaged in a conversation with Len Clements regarding the outcome of the courtcase between USANA and Minkow...
Spam King Dead
Posted on August 11, 2008Image via WikipediaAs reported by the US Attorney's Office in Denver:"Edward "Eddie" Davidson, age 35, also known as the "Spam King," was found dead this morning after an apparent murder suicide, United States Attorney Troy Eid announced. Last Sunday, July 20th, Davidson walked away from a federal prison camp in Florence...
Issac Hayes - Moving On
Posted on August 10, 2008Issac Hayes has passed on, at the tender age of 65. A reminder of the 1970's.
Cuppy's Franchisor Suspended by AAFD
Posted on August 08, 2008Image via WikipediaAt BMM, the AAFD announced that it was suspending the AAFD's accreditation of the Cuppy's Coffee Franchisor:"The American Association of Franchisees and Dealers announced today that it has suspended its recognition of Cuppy's Coffee and More, LLC as an AAFD Accredited Contract recipient, pending a determination of the Association's Board of Directors that AAFD's Accreditation of the Cuppy's contract should be withdrawn...
Bermuda Connection to YTB
Posted on August 08, 2008Image via WikipediaAlex Wright writes, at the Royal Gazette, about the Bermuda connection with YTB:"Hundreds of Bermudians who signed up to YourTravelBiz.com (YTB) with the dream of making a fast buck could be set to lose out after California Attorney General Edmund Brown filed a lawsuit to shut down the travel website...
AD Surf Daily Scam Exposed - Reprieve of 12 Daily Pro
Posted on August 08, 2008Image via WikipediaCatherine Holahan, writes at Businessweek, about AD Surf Daily: "Sonny Pham, 50, may have dismissed Ad Surf Daily (ASD) as just another online get-rich-quick scheme--if he hadn't seen the Web videos. YouTube had dozens. Some featured company founder, 74-year-old Thomas "Andy" Bowdoin, describing in a folksy twang how his "business opportunity" had helped thousands generate "excellent" profits...
Fraud Links for Thursday
Posted on August 07, 2008Image via WikipediaTracy Coenen, writing at Walletpop, about the YTB lawsuit, notes the similarity between YTB and Shop to Earn."Mutli-level marketing companies like this pop up all over the place. Their defenders claim they are legitimate business opportunities because there is a product or service being offered...
Influence Links for Thursday
Posted on August 07, 2008Image via WikipediaThe New York Times has an interview with Cialdini, Goldstein, and Martin on their new book 50 Scientifically Proven Ways to be Persuasive.As would be expected they have some interesting observations that go against the grain of common expectations...
Team Minkow Winning Streak Continues
Posted on August 06, 2008Image via WikipediaIt is remarkable how little people understand legal judgments and the obvious signs of a winning settlement.Les Clement writes of Barry Minkow's decision to stop commenting on USANA as "The timing of Minkow's surrender was not that surprising considering his already discredited case against Usana, and to a lesser extend Herbalife, had taken another battering the past few days...
Neulan Midkiff Found Guilty
Posted on August 06, 2008Image via WikipediaFrom the FBI Press Release about Neulan Midkiff and Travis Correll's investment fraudAfter four hours of deliberation, a federal jury issued a guilty verdict today against a 66-year-old Forest Lake man who was charged with defrauding 519 people nationwide out of approximately $30 million in an investment scheme...
Does Cold Stone Churning Locations?
Posted on August 06, 2008Image via WikipediaOver at Sean Kelly's Unhappy Franchisee, an ex franchisee of Cold Stone Creamery complains that the franchisor turned down 3 legitimate buyers of his franchise, that he was forced to close, and that the franchisor immediately resold the location - pocketing the fees that they would not have got had there been a transfer...
Brown Sues To Topple Online Pyramid Scheme; Your Travel Biz
Posted on August 05, 2008Image via WikipediaFrom a Press Release regarding Your Travel BizCalifornia Attorney General Edmund G. Brown Jr. today announced a lawsuit against YourTravelBiz.com for operating a "gigantic pyramid scheme" that recruited tens of thousands of members with deceptive claims that members could earn huge sums of money through its online travel agencies...
Lord Simcoe Day Franchise News
Posted on August 04, 2008Image via WikipediaRichard Solomon, Paul Steinberg, and myself met in Detroit over the weekend to plot, strategize and about killer pre-purchase franchise due diligence. At the "Dearborn Inn in a suburb of Detroit, a nine hour non stop meeting took place amongst Paul Steinberg, Mike Webster and Richard Solomon, attending as Seamus Muldoon...
Why is Sam Antar Right about USANA? Part I
Posted on August 04, 2008Image via WikipediaSam E. Antar recently wrote me and stated: I read your recent blog post entitled, "USANA Health Sciences Pays Off." I respectfully respond to your blog post below: (1) Contrary to your allegation, I have never received a penny from USANA; (2) I was never a party to USANA's lawsuit against Fraud Discovery Institute (FDI) and Barry Minkow; (3) Because I was not a party to that case, I was not consulted regarding the settlement and had no involvement in it; (4) Other than what I've read on the internet and in court documents accessed via PACER, I don't know anything about the settlement, including the terms of the confidential settlement agreement...
More Money needed for Franchise
Posted on August 01, 2008Image via WikipediaTodd Shields, writing at CaryGrove CountrySide, about franchising has an interesting observation, which should have been expanded.He writes:"With one's life savings on the line to open a franchise restaurant in the Chicago suburbs, detailed market studies are a must read...
Swindled Businessman Fights Back
Posted on July 31, 2008Image via WikipediaBarry Minkow is championing Joe Palermo as a fraud fighter."Joe Palermo understands the good and bad of business. Beginning his career in the financial offices of organizations as considerable as Viacom, United Cable, and the Hearst Corporation, he has gone on to successfully launch or acquire several other companies...
Killer Pre Investment Due Diligence
Posted on July 31, 2008Image via WikipediaInteresting testimonial over at BMM, for Killer Pre Investment Due Diligence:"If you are even thinking about investing in a particular franchise! You need the protection (killer due diligence) that only street-smart fighters like Richard can provide...
Success Vending Salesmen Sentenced For Fraud
Posted on July 31, 2008Image by beckysmurf via FlickrFox News, from Las Vegas, reports on the Success Vending Biz Op scam:"All four defendants, who were charged in 2006, had pled guilty to conspiracy to commit mail and wire fraud in connection with Success.According to documents filed in the case, Success and National defrauded 673 people from throughout the U...
New Franchise Disclosure Rule
Posted on July 31, 2008Richard Gibson, writing about franchising, for the WSJ has an article on the new FTC franchise rule.He writes:"Franchisers will have to list any lawsuits they've filed against franchisees in the past year. Previously, only franchisee-initiated litigation had to be reported...
Tasti D-Lite Franchise
Posted on July 30, 2008Image via WikipediaEllen Byron, of the WSJ, has a complete puff piece on Jim Amos and the Tasti D-Lite franchise."Now, the franchising guru behind Mail Boxes Etc. and I Can't Believe It's Yogurt is betting that such Tasti D-Lite devotees can be cultivated in cities around the world, just as competition among frozen treats is heating up...
Judging Reputation
Posted on July 30, 2008Image via WikipediaHere is a very tall claim by reported by the BPS Research Digest:"It takes just a tenth of a second for people to make judgements about you based on your facial appearance.Janine Willis and Alexander Todorov asked university students to rate the attractiveness, likeability, competence, trustworthiness, and aggressiveness of actors' faces after looking at their photos for just 100ms...
Usana Health Sciences Pays Off
Posted on July 30, 2008Image via WikipediaBarry Minkow and Sam Antar got paid out by USANA to stop their investigations into the USANA business model.At least, that is how I read the following press release about the settlement between USANA and Minkow. "USANA Health Sciences, Inc...
Direct Selling Association's Position Against Truth in Advertising
Posted on July 29, 2008Image via WikipediaRecently, I have been posting about whether Mary Kay distributors could be a franchisor, a topic which had a great following over as Sean Kelly's blog, Franchise Pick.In 1997, Joseph N. Mariano, then counsel to the Direct Selling Association, laid out the DSA's opposition to being regulated by the FTC as a business opportunity franchise...
What can You Learn at Franchise Exhibitions?
Posted on July 29, 2008Image via WikipediaJason Gehrke, writing at his blog at Smart Company, has some interesting but incomplete ideas about getting value from attending a franchise trade show.First, there is an interesting idea."Take your spouse/partner/significant other...
How We Drive
Posted on July 29, 2008Image via WikipediaI have become a recent fan of Tom Vanderbilt's blog, How We Drive. I thought the story Wired did on Tom was very revealing:"Driving down a New Jersey highway three years ago, Tom Vanderbilt decided to stop being a goody-goody. He fought the urge to merge at the first indication that his lane was ending and rode it right to the pinch point, wedging his way in front of a furious driver at the last second...
Mea Culpa - Thanks to My UK Readers
Posted on July 28, 2008Last week, I wrote about a blogger Felicity Lowde which claimed that a woman named Rachel North was lying to the public.However, a reader alerted me to the fact that:"Felicity Lowde, a 4 times convicted stalker who has spent 3 years harassing a lady called Rachel North, a survivor of an al-Qaida attack in London who runs a popular blog...
Canadian Class Action Law: A Flawed Model
Posted on July 28, 2008Image via WikipediaWalter Olson writes, over at the Point of Law blog, that:"Unfortunately, they say, Canada's relatively new class action format is abnormally liberal on the key issue of class certification standards, which is likely to open especially wide dangers for abuse...
USANA Health Sciences Winners?
Posted on July 28, 2008Image via WikipediaBarry Minkow has apparently given up pursuing USANA over its business model.According to a press release:"Barry Minkow and the Fraud Discovery Institute (FDI) today announced the settlement of their lawsuit pending in the United States District Court for the District of Utah...
Coordination Problems for Lobster Fishermen
Posted on July 28, 2008Victor Niederhoffer writing at Daily Speculations, has a deft description of the business cycle for lobster fishermen."During the boom of 2004-2006, many lobstermen expanded their equipment and territory and operations. Many new boats were completed...
Legal Aid used to fund Franchise Lawsuits
Posted on July 25, 2008Image via WikipediaLes Stewart, writing at Franchise Fool, has an interesting observation about Legal Aid and Franchise lawsuits:"This is a first: I have never seen a publicly funded legal aid program used to fund a franchise legal action.Not that surprising that the New Zealand government doesn't want to touch the Blue Chip mess with a 10 foot pole...
Friday Morning Fraud News
Posted on July 25, 2008Image via WikipediaWilliam Zale, writing at Trade Regulation Blog, has a nice summary of the recent eBay and Tiffany's lawsuit:"Famous jeweler Tiffany failed to establish that online marketplace eBay engaged in false advertising under the Lanham Act in connection with the sale of counterfeit jewelry on its site, the federal district court in New York City has ruled...
Baker's Delight Franchisee Forces National Investigation
Posted on July 24, 2008Image via WikipediaIn Australia, there is a new impetus to review the franchise disclosure laws - this time from the agency which reviews securities.Deanne de Leeuw, a former franchisee of Bakers Delight has succeeded in getting the franchise relationship looked at by Australia's Joint Standing Committee on Corporations and Financial Services...
Is That Business Legitimate or a Scam?
Posted on July 24, 2008Image via WikipediaJohn Tozi, writing at Business Week, has a good article on business opportunities.He writes: "The Internet is littered with offers for home-based business opportunities that promise big profits for easy work. But many of these offers, which range from envelope stuffing to medical billing, are really scams that prey on people's aspirations to work for themselves...
Unfair Conduct
Posted on July 24, 2008James Thomson, at Smart Company writes about a Franchisor and allegations of unfair conduct:"The Australian Competition and Consumer Commission has launched legal action against franchisor Seal-A-Fridge and its director Nigel Rooney, alleging the company engaged in unconscionable conduct towards its franchisees...
Screwed Again
Posted on July 24, 2008Image by chad davis via FlickrFrom Davis Freeberg's Digital Connection: Related articles by ZemantaMulti-Level Marketing Company Threatens Blogger Who Writes Critical PostNewfangled DRM Even Better At Punishing Paying CustomersDid DivX close Stage6 to duck copyright litigation?Ziff Davis Files Bankruptcy, Gets $24...
Subway Continues to Expand
Posted on July 23, 2008Image via WikipediaJim Coen, over at Franchising in New England, writes about the expansion of Subway, in contrast to Starbucks contraction:"Don Fertman, director-development for the sandwich shops, said there's now about one Subway for every 13,800 people in the U...
Bad Advice about If Your Identity Is Stolen
Posted on July 23, 2008Image via WikipediaTom Fragala has a nice little piece about bad advice regarding identity theft, at his blog Identity Theft.Apparently, Tom could not get his post accepted at Consumerist, and so posted it at his website.In the spirit of helping, I am going to pass it on...
When is a Mary Kay IB Consultant a Franchisee?
Posted on July 23, 2008Image via WikipediaThere are two discussions about the amount of inventory an Independent Business Consultant for Mary Kay needs to start their home business.The first discussion about initial inventory is at Pink Truth and the second is at Franchise Pick...
Stop the Franchisor Madness
Posted on July 22, 2008Image via WikipediaHere is a description, from BMM, of the perfectly wrong franchise system:"Assumptions:1. The franchisor thinks the franchisees are stupid and can't walk and talk at the same time.2.The franchisor has only one sole-source supplier.3...
Judge Roy Bean - Hang'em High
Posted on July 22, 2008Image via WikipediaJudge Roy Bean is on a roll about the mortgage fraud and those who enabled it:"Well Squaliforme champion Phil Gramm's mouth finally did him in, which should improve McCain's chances of being elected this fall. In a typical 'let them eat cake' moment, the Godfather of predatory lending and bank deregulation spoke a partial truth - but it wasn't well crafted enough and revealed the mind-set that permeates the Washington lobby culture...
Is ACN a Pyramid Scam?
Posted on July 22, 2008Image via WikipediaAt the scam.com forum, there is considerable debate about whether ACN is a pyramid scam. One poster cites, in support of his theory that ACN is an illegal pyramid scam, two Government announcements, one from Australia and the other from the Canadian Competition Bureau...
Fraud News for Tuesday
Posted on July 22, 2008Image via WikipediaI had observed in numerous posting that the 12Daily Pro scam was likely a money laundering scheme - $200 million from Indonesia ended up in the US via illegal money transmitters using the internet. The money transmitter in the 12Daily Pro was Stormpay...
From a Veteran Dunking Donuts
Posted on July 21, 2008Image via WikipediaOver at BMM, an anonymous poster writes about being in the employee of an evil franchisor, possibly Dunkin Donuts:"The job of the loss prevention department was to nail as many franchisees as possible for technical breaches of the franchise agreement, terminate them, and bring in as much "restitution" as possible...
Piracy and Silver Bars
Posted on July 21, 2008Image via WikipediaThe Economist has an interesting take on the grey market, putting in a plug for pirates:"In other industries, piracy can help to open up new markets. Take software, for instance. Microsoft's Windows operating system is used on 90% of PCs in China, but most copies are pirated...
Sneaky Franchise Lawyer Tricks Part III
Posted on July 21, 2008Image via WikipediaThis is the third Sneaky Franchise Lawyer trick, and I promise you that it is a doozy! The first Sneaky Franchise Lawyer Trick was the general observation that a lot of good questions may not be answered in the UFOC or FDD. "So what is the significance of good questions that are not the in FDD or UFOC? Well, the usual integration/waiver clause in a franchise agreement will block you from being able to rely upon the answers you received to questions that were not in the FDD or UFOC...
Unhappy Subway Franchisee
Posted on July 21, 2008Image via WikipediaInteresting letter to Bob Purvin, the Chair of the AAFD, posted at BMM:"I am a multi-unit Subway franchisee, writing to you with hope that you will kindly offer me some common insight. I have been in the dark. I'm certain I'm not the first who has been at your door step...
Sunday Counterfeit News
Posted on July 20, 2008Image via WikipediaInteresting recommendation about a law book discussing the legality of the grey market, over at Jed's Gray Blog:"Finding good books on the parallel market is not an easy task. Despite its long and prominent history in US and European legal practice, the parallel market is usually relegated by most writers to a chapter regarding diversion of goods...
Saturday Morning Fraud News
Posted on July 19, 2008Image by -syko- via FlickrTracy Coenen has a nice round-up of all the bloggers who are rallying to the support those posting critical remarks about Shop to Earn. "It all started a few weeks ago when blogger Everyday Finance wrote a post about the ShopToEarn and ShopToEarth program...
Google committed Fraud?
Posted on July 18, 2008Image via WikipediaA class action lawsuit in California has sued Google for: "for fraud, business code violations, and unjust enrichment, claims arising from the company's alleged sale of low-quality ads. In the parlance of online marketing, "low-quality ads" refers not to shrill infomercials but to ads that generate a poor response or show a poor conversion rate due to problems with placement, audience targeting, or related factors...
The Value of Franchisee Associations
Posted on July 18, 2008Image via WikipediaRubert Barkoff, writing at the IFA, states: "Twenty-five years ago, "franchisee associations" was an unpopular phrase. This phrase put fear into the minds of franchisors. A franchisee association was tantamount to unionism. It signified a breakdown of the working relationship between the franchise system and franchisees and a vote of no confidence...
How Lies Spread
Posted on July 18, 2008Image via WikipediaSam Wang and Sandra Ammod, writing at the New York Times, have a very interesting observation about declarative sentences which are false, commonly known as lies. They claim that "The brain does not simply gather and stockpile information as a computer's hard drive does...
Safedivert New Telemarketing Scam?
Posted on July 18, 2008Image via WikipediaFrom time to time, some one text messages me on my cell. This is pointless as I delete them all: if you want to converse with me, you can email me and get by my spam filters. If I don't know you, you might want to call first. Markus, writing at his blog Plenty of Fish, has a good description of a new text message scam...
Why Limiting Auditor Liability is Wrong
Posted on July 17, 2008Image by Getty Images via DaylifeSpeaking of gatekeeper liability, Sam Antar argues, at his white collar fraud blog, that "Audit firms put too many relatively inexperienced staffers on audits to do much of the leg work. Most auditors never take a single semester in-depth college level course devoted exclusively to combating fraud or understanding weaknesses in internal controls before graduating college...
Who Should Help Prevent Fraud?
Posted on July 17, 2008Image via WikipediaThe outcome of the eBay lawsuits in France and United States reflect different views about gate-keeper liability. Gate-keeper liability is roughly the legal theory that liability should attach not only the person carrying out the fraud but those who innocently enable and negligently supervise the fraudsters...
Franchises: The biggest risk of your life?
Posted on July 17, 2008Image by lakerae via FlickrPeter Singler, a franchise attorney in California, who is also counsel to the Culligan Distributors has some very interesting observations about franchises. Who is Peter? Apart from the former Chair of the American Franchisee Association...
Shop To Earn
Posted on July 17, 2008Image via WikipediaTracy Coenen, writing at her blog the Fraud Files, has asked for support for a blogger and herself who have written about Shop to Earn's business model. Tracy summarizes the problem with Shop to Earn in the following way: "I am going to look into this company more and write up some of my thoughts...
Blood in the water?
Posted on July 16, 2008Jason Gehkre, writing at Smart Money, has an interesting view about the new franchise enquiry in Australia. "The inquiry's terms of reference are: "To inquire and report on the operation of the Franchising Code of Conduct, and to identify, where justified, improvements to the Code, with particular reference to: The nature of the franchising industry, including the rights of both franchisors and franchisees...
The Gray Blog: eBay wins against Tiffany's
Posted on July 16, 2008eBay lost in France; eBay won in the US. As summarized by Jorge Espinosa, writing at the Grey Blog, "After a devastating ruling from a French Court, reported previously in the Gray Blog, and a user revolt over terms of payment, E-Bay has finally received some good news...
Fairness In Franchising
Posted on July 16, 2008Image via WikipediaGillian Hadfield wrote this about the franchisor/franchisee relationship in 1990. I have quoted a large part of her analysis because it highlights the difficulty in controlling the relationship via a legally binding contract. This is a theme I will be returning to: the necessary incompleteness of the franchise contract and what it means for the corporate governance of a franchise system...
The inventory "investment" con in Mary Kay
Posted on July 16, 2008Image via WikipediaOver at Pink Truth, Tracy writes about inventory con in Mary Kay "The secret to getting Mary Kay consultants (especially new ones) to order lots of inventory is overcoming their objections. New consultants typically are skeptical about spending thousands of dollars on inventory that they're not even sure they can sell...
New Federal inquiry into Australian Franchising
Posted on July 15, 2008The Australians have launched yet another enquiry into franchising. But there was a nice economic observation in the piece. "The reality of franchising is that a franchisee has to outperform other independent businesses by a significant margin to have an equal return to their pockets, let alone a better result...
The End of a Franchise
Posted on July 15, 2008What happens when a franchisee's term ends? And the franchisor decides not to offer a renewal of the franchise on the then current terms in order to resell the location? This is a problem that the Australian Government is dealing with. Last August, 2007 Competitive Foods Australia made submissions to the Government regarding franchise renewal, which included the following overview: The law in Australia does not provide any or any adequate protection for tenants and franchisees who lose the goodwill they have built up in their businesses when landlords and franchisors fail to renew their leases and franchise agreements upon expiry...
New FTC Online Resource for U.S. Antitrust Laws
Posted on July 14, 2008Image via Wikipedia"What are the antitrust laws and how do they promote and protect competition? Find the answers in a new online resource from the Federal Trade Commission, the FTC Guide to the Antitrust Laws. This plain-language guide is written for consumers and business people with questions about the antitrust laws...
Unique Yogurt Mixes
Posted on July 14, 2008Image via WikipediaIn selling a franchise, the seller is usually required in Canada and the US to provide the purchaser with information about the franchise and operation of the system. At common law, much of what is required by statute would not be required...
How We Drive, Tom Vanderbilt's Traffic Blog
Posted on July 14, 2008When is slower faster? This is a very interesting video from Tom Vanderbilt about traffic coordination. Related articles by ZemantaMoving In Together to Get a Handle on TrafficTraffic: Why We Drive the Way We Do
Phoenix Boiler Room Banned from Telemarketing, The Results Group
Posted on July 14, 2008Image via WikipediaIn 1988, I completed my PhD thesis on rational choice theory, and my external examiner was A.K. Sen. The thesis showed that there was an expanded group of choice behaviour that could be thought of as rational, in the maximizing preference economic sense...
Protest Against Pigeon King Ponzi
Posted on July 11, 2008Image via WikipediaScott Hunsberger, of Business Opportunities Buster, has asked me to pass on and publicize this meeting. A demonstration is planned for July 30, 2008 in Kitchener, ON. at the Creditors meeting for the bankruptf Pigeon King International; a demonstration like the following Farmers from across Canada and the US have become victims of what is showing signs of a very large pyramid/ponzi scheme which has failed and left 100's of farmers with useless pigeons to feed and support...
Can Pigeon King Investors Recover some of their Money?
Posted on July 11, 2008Image via WikipediaBetter Farming, who has done a terrific job writing about the Pigeon King ponzi scheme stumbled at bit in writing about some methods investors can recover their money. "Jim Patterson, who leads the Toronto-based law firm Bennett Jones LLP's fraud law practice group, told Better Farming earlier this week that he is not currently informed enough about the PKI situation to comment specifically, but will look into it...
Are You a FranWad?
Posted on July 11, 2008Image via WikipediaAre you a FranWad? Well, if you won't pay $750 to attend a seminar to understand how to perform background investigations on franchisors, you are probably a FranWad. Richard Solomon, writes over at franchise investment site BMM, about FranWads: "I see amongst the franchisee community an intense resentment at having to pay significant legal fees to obtain investment risk reduction that they believe they are automatically entitled to from the government and are not getting...
eBay denied stay in LVMH case
Posted on July 11, 2008Image via WikipediaRoger Parloff, writing at his legal blog at Fortune Magazine, reports that "The French Court of Appeals today denied eBay's (EBAY) petition to stay an injunction issued June 30 by a Parisian court that requires eBay to halt all sales of four LVMH (LVMUY) perfumes over any site worldwide that is accessible from France, according to an eBay spokesperson...
Avoid the Scams. What Does John Chow Advise?
Posted on July 10, 2008Image via WikipediaJohn Chow and Shoemoney are known for their sometimes not so friendly rivalry with regard to affiliate marketing. Last month, June 2008, John Chow has a guest blogger Steve write about about how to avoid business opportunity scams...
Bankruptcy filing says Pigeon King owed $23 million
Posted on July 10, 2008Image via WikipediaFrom the bankruptcy filings of Pigeon King: "The breeder contracts appeared to be that of an investor nature. The debt declared by the Officer of Pigeon King International Inc. for the bankruptcy documents was the original purchase amount by breeders less any