ATM LEASEBACK SCHEMES-- any insight?

[grimreaper]

In a "traditional" Ponzi scheme, there are a lot more net losers than net winners. Now, this one may be different, as there seem not to be any records kept, but that seems the way to bet.

That defies logic..you need to PAY PETER FROM PAUL'S POCKET...so the differential between the two is limited. Maybe not an ideal *50/50*..but certainly the ratio is based on this principle. Losers will usually exceed winners since the house of cars collapsed...however, the differential is within a range. In other words..you're NOT going to see 10 losers for very winner in most cases..if not ALL cases.

[Arthur Rubin]

In a "traditional" Ponzi scheme, there are a lot more net losers than net winners. Now, this one may be different, as there seem not to be any records kept, but that seems the way to bet.

That defies logic..you need to PAY PETER FROM PAUL'S POCKET...so the differential between the two is limited. Maybe not an ideal *50/50*..but certainly the ratio is based on this principle. Losers will usually exceed winners since the house of cars collapsed...however, the differential is within a range. In other words..you're NOT going to see 10 losers for very winner in most cases..if not ALL cases.

Not if "Ponzi" is withdrawing money. Then there is an overall loss. Even if not, there are usually big winners and small losers. You're not going to see 10:1, but 2:1 seems likely, and 4:1 does not seem unreasonable.

[Gregg]

I have never, not in 15 years ever, seen a large scale ponzi scheme with 20% net winners. If it's paying out 20% annually the participants are getting paid back their own money for 5 years on every contract. Since the payments due grow much faster than the incoming new funds, the scheme collapses on its own when the new money in doesn't grow as fast as the monthly payments due, and mathematically that pretty much means at least 80% of the contracts are net losers. Don't blame me, blame Theaetetus.

[Lost Income]

The conversations in here about clawbacks are moot. Currently the Receiver has recovered very little money thru forensic accounting, has failed to be tough enough on Joel & Ed to recover the cash they've hidden over 19years, and don't expect much money to be recovered thru clawbacks once investor's attorneys start fighting back and dragging it out. So in the end (whenever that is) after the Receiver is paid, investors will receive such a small percentage of their loss that it will be of little help. Unfortunately that's the real world.

[Hyrion]

has failed to be tough enough on Joel & Ed to recover the cash they've hidden over 19years

That assumes they hid anything rather than spend it on a more lavish lifestyle then their future income prospects could afford.

Unless.... of course... you have evidence of that hidden money - in which case I'm sure the Receiver would be highly interested in being informed about that if s/he's not already aware.

[Gregg]

They've got homes and cars, if the cars aren't leased. They may have some cash lying around, but I think they were just siphoning off enough to present a good lifestyle and the rest went back out as supposed profits to keep the scheme running longer. 10 years is a long to to maintain a ponzi scheme, a good part of the incoming payments had to be going right back out.

[grimreaper]

and the rest went back out as supposed profits to keep the scheme running longer. 10 years is a long to to maintain a ponzi scheme, a good part of the incoming payments had to be going right back out.

Indeed....but you're looking at over 15 YEARS here! That goes back just prior to the year 2000! I personally know several going back to 2000. Very few would drop out with consistent payments and of course many more were added along the way...building the base. ALL THOSE WHO WERE IN BETWEEN 2000 AND 2009 ARE WINNERS..so you have TWICE AS MANY YEARS that the winners span vs losers. Now I don't know how that translates to actual #s, but I would venture to say we have a substantial # of winners and I would very be surprised if the # was LESS than 30% vs losers (at 70%).

[Tednewsom]

In what realm of reality would anyone believe anything that Gillis and Wishner said? There is nothing to indicate that they every told the truth about much of anything. As far as I can determine, not one thing they claimed or said has been found to be true, so why start building fantasies on something they claimed. They were/are serial liars and conmen, that's what they do lie and con.

Welllll... with the maximum amount of respect, N.D., that's not exactly true. All the best lies have a basis in truth, otherwise they wouldn't be even slightly plausible. The really-really good lies are not only partially factual but verifiable. Yes, they are only a partial truth or a deliberate misinterpretation of the facts, but they're anchored in truth. A partial list:

1) "We've never had legal challenges in all the 17 [or 12, 0r 9, whatever is appropriate] years we've been in business." [True, and fairly verifiable. OK, it's like a professional hitman who brags, "No arrests," but it is "true."]

2) "It's a thriving, growing company." [True, though it grew like a weed rather than a rose.]

3) "You're not buying securities, it's a partnership between you and the company." [Technically true on its face, from the point of the sales pitch and the contract itself. When you look at the totality of the scheme, no, it's transparently bullshit and anyone here or at the SEC could see the reality, but per the written agreement, legally true.]

4) A quote from Gillis to his salesperson relayed to me by my friend the investor when I raised red flags with a ten-page dossier 9 years ago: "Well, there are other companies that sell ATM leasebacks which are crooked, but ours is 100% honest and legitimate." [Half true. And since there was no paperwork or legal documentation to the contrary, it appears 100% true to anyone who investigates without simply doing the math and seeing the obvious warning signs.]

5) "If you need to cash out your ATMs within the first 5 years, you can get your full investment back, plus whatever profits you've received to that point." [True, relatively. There are the occasional anecdotal episodes where it might have taken months, but the two investors I personally know cashed out for different reasons and had no problem getting their initial investment back from NASI, and kept what little gravy they'd already received. The full truth is, this was like a "Money-Back Guarantee" on any product-- damned few people will ever bother with it, so you can afford to take a minor hit corporately on that One-out-of-100 person who has to bail, or wants to.]

6) "If your ATM isn't making the minimal amount of income every month, we'll guarantee that you receive the minimum payment anyway." ["True" again, but not for the altruistic reason implied in the pitch. The reality being, no ATM ever made money, because there were none, and that money was shaved off new investors' dough. However, every investor until last year seems to have continuously been paid at least the minimum contractually promised, plus or minus a few dollars to keep it superficially believable.]

7) "We're always on the lookout for good locations for ATM placements." [True, absolutely, but once more, not for the reason implied. Gillis admitted to the court that he spent much of his office time locating "good locations." Of course, the location would already have an ATM there and he was just looking for an address he could use to fake out investors on the paperwork, but the statement still is factually not false.]

8 ) "We'll guarantee you'll make at least 20% per annum." [Well, yeah, true, the total paid out in any given year equaled 20% of the initial investment. And this appears numerically true when you add up the payments in hand, so you've got "real life" verification of the promise. OK, again, it's money stolen from new investors, but a check in the mail is real; a vague suspicion that things aren't on the level is thus negated by the actual cash.]

9) "Most of our satisfied investors are so enthusiastic, they've reinvested in even more units." [Sure, true enough. Once they're mentally on the hook and get that monthly check, they're true believers who've lost their logical compass.]

10) "We'll let you talk to any of our investors to verify what we promise." [True. Hey, why the hell not? The investors are already devoted members of the NASI cult. It's a safe bet for Gillis to let a new chump talk to a happy old one.]

11) "You'll start to make money immediate; within 2 months (or three, whatever.)" [True. Why wait? Shave off $300 bucks from the sucker's own investment for the next few months and pay it back to him as if he's "making" money. Another happy customer.]

12) "When you've gotten your initial investment back, you'll continue to earn at least the monthly minimum after that, in perpetuity." [True, the payments continued, thus the number of "net winners." Equally true and left unsaid is this aspect is a cancer in the scheme and eventually make it topple of its own Ponzi-fied weight. It's a game of numbers and timing, like a guy running down a hill with a huge boulder rolling after him. NASI had six years of coasting on the initial payment for each "ATM" before the payments on any one particular ATM contract actually became a drain on the company's finances. Like the running man, they kept moving (i.e., kept gathering more contracts, new ones and happy repeat customers), and paced the rolling boulder as long as they could.)

Point being: lying asshole that Joel Gillis was, nearly ever lie he told had a basis in fact, or at least was partially true, a lie of omission. And his repeated statements that NASI itself had so much faith in its profit-making ability [Sure. Why not?] that it bought one ATM for every one it bought for each happy customer... it makes simple, logical sense. ("Why should we pay out every dime of new money? If we hold as many 'contracts' as the investors, half the payout money comes right back to us.")

[grimreaper]

You just outlined why they were so successful for over 15 years...

[chronistra]

Indeed....but you're looking at over 15 YEARS here! That goes back just prior to the year 2000! I personally know several going back to 2000. Very few would drop out with consistent payments and of course many more were added along the way...building the base. ALL THOSE WHO WERE IN BETWEEN 2000 AND 2009 ARE WINNERS..so you have TWICE AS MANY YEARS that the winners span vs losers. Now I don't know how that translates to actual #s, but I would venture to say we have a substantial # of winners and I would very be surprised if the # was LESS than 30% vs losers (at 70%).

And how many of those who were in prior to 2009 reinvested in additional machines after that date? I'd guess a pretty fair number of those who were in between 2000 and 2009 are now net losers after considering their post-2009 investments.

[grimreaper]

And how many of those who were in prior to 2009 reinvested in additional machines after that date? I'd guess a pretty fair number of those who were in between 2000 and 2009 are now net losers after considering their post-2009 investments.

I'm sure there were those, in fact I know some investors that did just that...but it was a mixed bag. You had people from 2000 reinvesting in the INTERVENING years up to 2009 as well as POST 2009. My point is that the SPAN of time for profits was TWICE as long as the interval for losers.

BTW (as far as I can tell) it doesn't matter if you profited prior to the 7 year statute of limitations, since they're not going to *characterize* the distributions one way or another as far as *payback* of principle vs *profit*. They will attempt to clawback ALL distributions in excess of initial investments ( total profits) for a 7 year span, taking the LESSER figure (Total 7 year distributions vs total profit). So you can have investors who may hold on to some profits, should the total profit amount exceed the total distributions for the 7 year period (2007-2014).

[Gregg]

BTW (as far as I can tell) it doesn't matter if you profited prior to the 7 year statute of limitations, since they're not going to *characterize* the distributions one way or another as far as *payback* of principle vs *profit*. They will attempt to clawback ALL distributions in excess of initial investments ( total profits) for a 7 year span, taking the LESSER figure (Total 7 year distributions vs total profit). So you can have investors who may hold on to some profits, should the total profit amount exceed the total distributions for the 7 year period (2007-2014).

You don't know that, and there's not really any way to know that. The receiver MIGHT so argue, maybe not, and if (I think that's "If...." # 14,562 for those of you keeping count) he does, the defendants might not agree and the matter will be litigated. How good are the records? Are they as good before 7 years ago than after?

The likelyhood of the net winners being 30% is about as likely as Hillary getting the Republican nomination, it just ain't gonna happen. Have you ever taken more than a moment to do the maths involved? In the beginning the first payments will self fund payouts for 48-60 months depending on how much the promoters skim, in the end, ALL of the income is not enough to satisfy one month's payouts and any built up reserves are gone. So in the months after it runs out of original funds, it takes 40-50 new investors (all new losers) to make payments to the current membership, a steadily increasing number of whom are net losers. Those 40-50 new investors are the next month among the net losers and 45-55 NEW investors must come in to cover next month's payouts, and the next month it takes 60-75 NEW losers and so on (the number of losers is not linear and the difference between current income and deferred liabilities is astonishing. Math, kids, its why ponzi schemes must fail.

The reason why there are 30,000 contracts are it took that many sales to keep up what they owed each month, the number almost had to be less than 20,000 as recently as May or June. The had to increase the sales dramatically in order to just keep the wolves from the door and that's why, fund-wise, most of the losses occur at the end of a scheme, and most of the sales, also.

[Gregg]

Actually, the above illustration of geometric progression should start at somewhere between 48 and 60 months in, and the number should start at 8 or 9, the growth rate proportional to the increase in total scheduled liabilities.... for those playing the home game...it still reaches 45-55 within a year or so after initial reserves are exhausted.

[The Observer]

Math, kids, its why ponzi schemes must fail.

That is the pitfall I will avoid in the Ponzi scheme I am devising right now. It will not rely on any math whatsoever. That way, when it collapses, the net winners will outnumber the net losers on a scale of 1000 to 1. The net losers, by the way will be happy, since recovery will be so easy and if not, the net loser will only be a net loser due to losing than less 5 cents on every dollar invested. So every one will be a net winner!

On a more serious note, I am designing a spreadsheet tool that should demonstrate some of the dynamics of Ponzi schemes in terms of the math, and why it will not possible to ever achieve a 1:1 ratio of net winners to loser, as some here fantasize about. The first couple of demos I ran on the rough working model I have showed the schemes running out of cash by year 7, but only if the scammer picked up an additional 5 investors every year for that time period (based on $20K investments, skimming at $20K per year and a 20% payout). The net losers outnumbered the net winners, and the potential clawback money from the net winners could not satisfy all of the net losers. Maximum recovery (which is pie-in the sky) only approached 25 cents on the dollar for the net losers. Obviously the skimming can be increased , which will result in a smaller potential recovery pool. Once I get the time and the nerve to run it out for 19 years, the results should be even more dramatic in terms of losses and what can be recovered from the net winners.

[webhick]

Don't forget that Dipshit Duo likely got a sizable loan. I believe it was in the Receiver's first report that one of the ATM servicers withheld a large chunk of cash from the payout. He didn't come out and say it was repayment of a loan, but it's fairly obvious.

[Tednewsom]

Observer wrote:
why it will not possible to ever achieve a 1:1 ratio of net winners to loser, as some here fantasize about.

Well, ummm... no... no, I don't think there's been a soul on this board who ever said that. The most optimistic in the crowd has dared to go so far as to suggest there might be recoverable money somewhere. I speed-read through 85 pages and couldn't see anyone saying "All losers will get all their money back from all winners." I did see a picture of the Lone Ranger, and some fun blabbing from a couple of smart, happy NASI customers.

Observer also wrote: The first couple of demos I ran on the rough working model I have showed the schemes running out of cash by year 7, but only if the scammer picked up an additional 5 investors every year for that time period (based on $20K investments, skimming at $20K per year and a 20% payout).

That ought to be what happens. When the original first- and second-year "ATMs" mature and get back up to Zero (at NASI's 6th, 7th and 8th birthdays), they become a drain. The funds ought to start running out at that point and tip the scales toward insolvency. The company's profits should start getting slimmer, the amount skimmed therefore sensibly ought to be reduced in yearly increments because they'll need the funds to keep up the growing charade, etc., etc. That's what ought to happen logically, mathematically. Historically.

But it's not what happened. It lasted 17 years. And from all reports, Gillis wasn't scrambling any faster at the end than he was 10 or 15 years before. Go figure. So... what's wrong with this picture?

[Gregg]

You're not seeing all of the picture, mostly. He wasn't making a big deal about scrambling, nobody saw him scrambling, it wasn't obvious he was scrambling....he was scrambling.

All you need to keep it running longer is a combination of re-investments and new suckers, and ALL ponzis have at least a little of both, most have more than a little. Observers doesn't mention any reinvestment of profits in his spreadsheet and uses a very modest and linear new sucker rate. Reality usually doesn't work that way, and the longer it runs the more the thing tilts toward losses.

[Hyrion]

Observer wrote:
why it will not possible to ever achieve a 1:1 ratio of net winners to loser, as some here fantasize about.

Well, ummm... no... no, I don't think there's been a soul on this board who ever said that.

Actually:

I estimate that there are 1000 winners and 1000 losers. 2000 total, since that was the total # checks issued prior to the melt down.

[grimreaper]

Yes I did...and I don't think I'll be that far off. The dividing line is around 2009 and the scheme ran almost 15 years. Time span for accumulating winners (even partial) is TWICE that of losers, so even though scheme attracts more people at a greater rate post 2009..I don't see a large differential in #s between the two. Also keep in mind, many of the post 2009 contracts are *reloads* from pre 2009 and you're not going to count them twice if they still remained net winners. Hopefully we'll get an answer from the receiver.

[The Observer]

Well, ummm... no... no, I don't think there's been a soul on this board who ever said that.

Ummm, yes there was, as was pointed out. And you would have only had to sped read through the last 3 pages to find that statement. But since you imply here that the statement on the face of it is patently false and no one would have made such a statement, doesn't that give you pause about the credibility of grimmie? After all, he made that statement without being forced to and it was obviously pulled out of a dark place where one would not ordinarily go to retrieve factual possibilities. And now that he is trying to qualify his ridiculous statement, it is obvious that he is hoping to distance himself from the fact that he is making this up as he goes. At what point, Ted, are you going to realize that he is no better than Joel and Ed in regards to spouting unbelievable nonsense? Longer than it took you to figure out Joel and Ed were making it up as they went?

"I...couldn't see anyone saying "All losers will get all their money back from all winners."

No, I was indulging in hyperbole when discussing my "new" Ponzi scheme. But the fact remains that grimmie has been holding out all along that the clawbacks in this scheme are going to result in more (read "significant") payouts than the typical Ponzi scheme. Why? Well, grimmie is basing this on the 5,6 or 7 people he "knows" that were involved and is extrapolating from those few people and their investments to determine that there must be 1000 net winners in this scheme. WIth that kind of statistical analysis, you can make any kind of evaluation you want. I wonder why the receiver didn't just hire grimmie to calculate the recovery amount so the receiver's office could just hand out judgments to the first 1000 investors? It would have saved a lot of money and time, right? Tell you what, Ted, would you be interested in taking a ride on a passenger jet designed based on the same system of calculation? No? Then why you are defending this kind of nonsense?

I might reason a guess as to why you are doing it. You have someone that you care about very much involved in this mess up to their eyelashes. And you hate to see them going through this pain every day. And you would like very much for there to be a happier ending for this person that what is being predicted on this thread - so much so that that you want every stone to be turned over and considered in order that your friend is not harmed as bad as we say she will be (or is). And that is the problem, Ted. If you are losing your perspective on this situation, you are going to end risking not only your friend's need to recover emotionally and move on, you are risking yourself on several fronts that could lead you to not making the best decisions and getting involved beyond what is reasonably necessary - to your own personal loss.

People like grimmie can walk away from this mess and not have to be responsible for the nonsense and garbage that they preach. After all, one can find all the free advice they want on the Internet. But you can't hold that person liable for giving you that kind of advice. Once the receiver closes up shop and shuts down the recovery for NASI, grimmie isn't going to be around here to answer for why he came up so short on his predictions. He wasn't here during the previous 5 years when you came here and started asking important questions. He only showed up once the train wreck started happening, and trying to pretend that he knows something about this situation.

But I will tell you one thing that he doesn't know, Ted. He doesn't know about the pain that your friend is going through, and he doesn't care. If he did, he would have thrown those net winning relatives/friends/associates that he claims he knows overboard at the beginning and made sure the information was in the hands of the receiver as to actually improve the chances of recovery. But instead, he just pulls "reassurances" from a place where the sun doesn't shine - and that he doesn't have to take responsibility for.

Sounds kind of like what Joel and Ed did, right?

Observers doesn't mention any reinvestment of profits in his spreadsheet and uses a very modest and linear new sucker rate. Reality usually doesn't work that way, and the longer it runs the more the thing tilts toward losses.

Reinvestment includes too many variables, since you would have to track the net winners and decide how many reinvested and how much and when. And I have no idea whether the re-investments were a result of the original investment was cashed in and used to purchase a new investment, or simply the "dividends" were reinvested as new investments and whether the new investments themselves resulted in a new loss and whether the receiver would use that to offset against the net wins of previous investments. As you can see, the sky is the limit. I am simply tracking the number of new investors needed each year to keep the payouts coming; you could treat any or all of those new investors as "re-investors" but would have to specify so if I added that option into the spreadsheet. I will eventually break this down into a monthly payout scheme that NASI was operating on instead of a yearly payout.

And you are right, that I am being conservative in adding new investors to my current model as I design it, so that I can pick up any errors or flaws that might be hidden or otherwise exaggerate the results when bigger numbers are used. Even the amount of skimming was kept low, just as a way of allowing for a "bigger" recovery pool. As I said, even in this event, 25 cents on the dollar was the top mark that the model achieved.