ATM LEASEBACK SCHEMES-- any insight?

[JamesVincent]

Thanks all. Sounds unlikely we will see NAS convicted of anything before having to file 2014 taxes, and eventually a fraud conviction is inevitable. Sooner these guys are in jail, sooner they stop spending our money.

Honestly, I wouldn't even give it an unlikely chance, it would be even lower. ND is correct in that the receiver may very well be in a position to send out some sort of forms to investors for tax year 2014, again no way of knowing that for fact until early 2015. A lot of these things kinda hinge on chance, like whether or not accurate records were kept, whether or not they really tried to hide money off shore, whether or not the main people cooperated 100% from the getgo, etc. The receiver for TelexFree, Kenneth Bell, is a damn fine and aggressive receiver and did almost miracles handling it. However, he also had the great luck of catching Burks 100% off guard and unprepared and caught him with a lot of money in the bank. With NAS and Zeek that wasn't the case, the receiver at Zeek is still trying to go after the primaries almost 3 years into receivership and he is also a damn good and aggressive receiver. We have not seen enough to judge how aggressive the receiver handling NAS is and it's been too short a time to really get a feel for where he's going to go.

[notorial dissent]

James is quite right, regrettably. From what I've seen of the corpus inventory so far, it doesn't look like there is much there to work with. I'm very much afraid that the "boys" probably spent or foolished most of what they got away, leaving very little left in the end. My suspicion, and it is just my own cynicism speaking, is that if they were attracted to the likes of Fuel Doctor, they probably were attracted to other things like that, and that isn't a good sign or news. People who invest in things like that are like compulsive gamblers, if they'll do it once, they'll do it again.

Out of curiosity, I really would like to see the audit just to see what they were actually doing, and how they were doing it, but I wouldn't expect it to show or hold any good news of any kind.

[grimreaper]

The entire issue of assets is a red herring. In essence>>>there are no assets...ZILITCH. What we have here is a RECOVERY issue that will hinge on those who have profited and the redistribution of those profits to net losers. That's it folks.

[notorial dissent]

Nice fantasy, however, I suspect that is all it is. Unless the "boys" turn out to have been better businessmen than it seems at first blush, I am rather of the opinion that the only corpus assets are going to be the cash left, whatever they can sell the machines, and/or contracts for, and whatever they can wring out of the principals and recover from the secondaries. I really don't expect to see much of a payout beyond pennies on the dollar. My sense is that the math is against you. Without having see the actual reports I'm just guessing, but still it doesn't take much stretch.

[Lost Income]

I'll be really surprised if the Receiver can accurately determine who each investor is and send each a correct 1099, in time for their 2014 tax preparation. Given the money retrieved so far, the percent returned to each investor will be peanuts unless the Receiver can clawback a lot of money, so best to not count on money back and someday get a small surprise.

[notorial dissent]

It doesn't sound like the boys were much at keeping records, although they must have had some list of who they were supposed to be paying each month, but it doesn't sound like they kept too good of records about where it all came from. All I can say is that I'm glad I don't have to be on the financials audit as it sounds like it is going to be a nightmare. Physical inventory probably didn't take long or amount to much since it sounds like the only thing they actually owned were the machines and some furniture.

They may have to go back and pull bank records to see who the actual investors were, and if the paid in cash, there may not even be that much record.

[grimreaper]

I'll be really surprised if the Receiver can accurately determine who each investor is and send each a correct 1099, in time for their 2014 tax preparation. Given the money retrieved so far, the percent returned to each investor will be peanuts unless the Receiver can clawback a lot of money, so best to not count on money back and someday get a small surprise.

They successfully identified 2400 investors as evidenced by the recent mailing. They will be able to
*reverse engineer* all payouts and already have been given the *templates* used to identify what *ATMS* were assigned to each of those investors. The receiver also mentioned that they have the capability to analyze the BANK PAYMENTS to all investors. Forensic accounting is a specialty and the receiver is very familiar with the various techniques that will be applied here. I still maintain the lion's share of any recovery will come from recovery of false profits.

[grimreaper]

They may have to go back and pull bank records to see who the actual investors were, and if the paid in cash, there may not even be that much record.

Yes, they specifically stated that bank transactions to all investors would be scrutinized. All the investors I know received CHECKS from the bank accompanied by a detail of all ATM *transactions* for the month. Yes, I have seen these up close and personal.

[Tednewsom]

At the risk of 1) repeating myself and 2) getting any victims' hopes up... I sincerely doubt the two grifters were idiots or spent all their money.

Bear in mind, Joel said in print, and to any number of other "investors" that for every $19,500 contract, NAS bought two machines of their own (or one extra, presumably, on the $12,000 bargain subscriptions.)

But as we know now (and some of us have suspected all along), there were no machines purchased, no overhead. I suspect this simply meant Gillis and Wishner were owners of machines only on paper, just like every other investor. The major difference is, they had no money at risk on any "ATM," yet on the books would be considered "owners" and thus in line for "profits" as they came in, earning two dollars for every one dollar paid to a victim. (This would apply even though the "profits" were simply new subscriptions for "new ATMs.")

Even if you adjust slightly from quarter to quarter depending on your new & changing pay-out nut, and reduce that 2:1 payout to the NAS boys over the years to adjust for the heavier numbers of subscribers-- that is a BOATLOAD of cash, far in excess of the couple hundred grand they had in the bank at the end. And it makes the couple of million they pissed away on the Acu-Jack gas-enhancer look like peanuts by comparison.

[grimreaper]

Even if you adjust slightly from quarter to quarter depending on your new & changing pay-out nut, and reduce that 2:1 payout to the NAS boys over the years to adjust for the heavier numbers of subscribers-- that is a BOATLOAD of cash, far in excess of the couple hundred grand they had in the bank at the end.

Yes, but if they were behind the curve with payouts to new investors, that money they would have reaped had to go to new investors to prevent a melt down.

[Lost Income]

I seriously doubt that most of the huge amount of money Joel & Ed laundered was spent on non traceable items, so I'm expecting the SEC (whom is paid for by my tax dollars) to use whatever forceful measures are reqd to get Joel & Ed to reveal the location of all their hard assets and bag of cash stanched that they made in this fraudulent scheme.

[Judge Roy Bean]

I seriously doubt that most of the huge amount of money Joel & Ed laundered was spent on non traceable items, so I'm expecting the SEC (whom is paid for by my tax dollars) to use whatever forceful measures are reqd to get Joel & Ed to reveal the location of all their hard assets and bag of cash stanched [sic] that they made in this fraudulent scheme.

I doubt they received much in terms of cash from their victims, which means if there were large amounts stashed they would have had to have withdrawn it from a bank account somewhere along the line which means there will be a record of those withdrawls. Spending cash on large-ticket items isn't as simple as it sounds, either - unless you're connected to some other criminal enterprise who is willing to help you get around the factoring issue. For a percentage, of course.

One has to wonder if these two yahoos were "connected" to certain resourceful fellows.

[Tednewsom]

There is that, of course. In the wake of NAS's inevitable collapse, I mused about that very inevitability. Surely Wishner, if not Gillis, knew all along what the final act would be. Accountants usually can add, subtract and multiply. There was no other possible outcome: the house of cards would collapse. It was a mathematical certainty.

And this particular scam was run resolutely by the playbook. There were no variations or clever rococo filigree on the edges. It was point by point what all other ATM leaseback schemes did, hence my initial posted question.

And we are led to believe that after two decades' worth scamming and skimming, the two grifters at the center of it end up with nothing. That they worked for nearly twenty years at an intricate and time-consuming con for free, for the sheer altruism of paying stolen money to old subscribers from new subscribers' funds. ("Hey, Ed! We got two million bucks this month! And guess what?!? We paid out three! Ha-hah!! What a great racket this is!") That they hung in there long past the literal point of diminishing returns, watching their corrupt creation collapse month by month, with the inevitability of unwanted in-laws showing up for Thanksgiving.

This made little sense to me regarding basic human behavior. They were not total morons, and certainly knew they were hip-deep in criminality from the start. Gillis's evasions to potential subscribers or money managers about specifics, his avoidance of allowing anyone to do due diligence, etc., shows his understanding that his "business" was crooked from get-go. His post-collapse statements redundantly underline it. They knew the jig was up several years ago, when I started asking questions-- relayed by their sales person directly to Gillis. They knew about the dissection of their scheme here on Quatloos. And if they had as much sense as God gave a goose, they knew the SEC and the authorities would be knocking on their door soon.

I suppose you could write all this off as bone-headed hubris, that they continued long past the point of the scheme losing a fortune because they liked giving away pots full of money every month, but that begs credulity. They do not strike me as lovable rogues filled with the milk of human charity.

And then the whole enterprise, the entire history of NAS and its previous clones struck me as weirdly familiar. Historically, when the Mob moves into a profitable business, they demand a chunk of the profits (a monthly 10%, or 40%, or 80%. Whatever)-- or else. Most people will balk at the ominous "or else" part, and continue their business as best they can under the circumstances. They try to keep the dry cleaning shop open, they try to run the nightclub at a profit, they attempt to keep their restaurant working, even though their profit margin is slipping into the negative column. The "... or else" motivation keeps them moving, despite the financial drain. Eventually, whatever the business is, it reaches an unbearable strain on the owner. He goes bankrupt, torches the place for the insurance money (maybe he even collects), and tries to start again. And the Mob moves on to the next sucker, using precisely the same "script," with exactly the same result, because it works.

Move this a step further back, again based on historical precedent. The Mob doesn't muscle in, but funds an enterprise from the beginning, laying out how it's going to be run. Sure, the company might actually turn out to be "profitable" on paper, but the continuous syphoning of funds will doom it in the end. My favorite example is "Bryanston Films," a distribution company founded in the 1970s by a couple of broken-nose NYC mooks who figured it was a good racket. They had some tremendous success with films like Return of the Dragon, Texas Chainsaw Massacre and, notably, Deep Throat. But eventually it collapsed big time. The money had been syphoned off (it didn't help that Big Tony Peraino was indicted for racketeering and jumped bail out of the US).

So what we have with the NAS scenario is: a company is founded on a pre-existing successful (criminal) business template... it thrives for quite a while, scamming and stealing money... the principals unaccountably continuing to run the company long past the point where it's profitable... and the odd result of a "multi-million dollar enterprise" ending up cash-empty.

Just a thought. BTW, no slur intended on Sicilian Americans. I include Russian gangs, Israeli thieves, Chinese tongs and Wall Street bandits in the generic category of "the Mob."

[Lost Income]

My point exactly. After 20 years of enjoying their life from this scheme, it likely Joel & Ed had a financial exit plan just in case, for themselves & family to continue a decent life style. Hopefully the SEC can be aggressive as they please.

[snookered]

Happy Holidays everyone.

I was just advised by a trusted Police Officer friend, that she heard on AM 1070 (Los Angeles) radio that Joel and Ed were charged today. I checked the 1070 website, but I don't see anything. But, I do trust that my source actually heard it. Does anyone know of a way to find out if this is true?

[JamesVincent]

Two Woodland Hills men accused of orchestrating a 15-year-long Ponzi scheme that defrauded nearly 2,000 investors of more than $100 million were charged Tuesday in federal court.

Joel Barry Gillis, 74, and Edward Wishner, 76, operated Nationwide Automated Systems Inc. in Calabasas, allegedly promising investors 20 percent annual returns if they purchased an ATM.

The men would allegedly entice investors to pay about $12,000 for each ATM, leasing the machine back to NASI in return for a payment of 50 cents for each transaction the unit processed.

The U.S. Securities and Exchange Commission shut down NASI in late September and the matter was investigated by the FBI, which led to the charges filed Tuesday.

http://www.labusinessjournal.com/news/2 ... zi-scheme/


Merry Christmas!

[webhick]

Looks like they may effectively be getting life in prison. You know, assuming they're convicted and the judge isn't too lenient.

[grimreaper]

So I assume they have been booked and arrested?

[The Observer]

And we are led to believe that after two decades' worth scamming and skimming, the two grifters at the center of it end up with nothing.

Because that is typically what happens with the promoters of Ponzi schemes. They end up with nothing. Why? Because the Ponzi scheme typically means that most of the money needed to keep the scheme has to go into paying the marks back so that (1) the victims don't get suspicious and (2) so that the scheme can attract new investors to make up the inevitable shortfall.

That they worked for nearly twenty years at an intricate and time-consuming con for free, for the sheer altruism of paying stolen money to old subscribers from new subscribers' funds.

You keep pushing the two extreme possible options:

(1) Wishner and Gillis were the clever, evil con men with a very cunning plan that allowed them to maximize and hide their ill-gotten gains in some secret place.

The problem with this scenario is that it runs afoul of some very painful facts:

(a) These guys are senior citizens. So regardless of whether they go to jail, there isn't going to be much time for them to enjoy the haul wherever they stashed it. A clever scammer would have left much earlier so he could spend his haul while he had the wits and physical ability to enjoy it.

(b) The likelihood of them being free for the short time they have left on this earth is rather unlikely. Again, if they were as smart as you paint them, they would have cleared town years ago.

(c) Given the above two issues, I would argue that if they were really clever enough to establish a cash hoard beyond the reach of anyone, they would have been smart enough to realize when to shut the operation down and flee to a country where there are no extradition treaties. But these guys didn't do that. They kept running the scheme right up to the bitter ending and then meekly admitted everything to the first official who started asking questions. What is even more astounding is how these two clever fiends knew there was trouble starting 5 years ago and still stayed at the helm as the ship slowly sunk. Smart enough to squirrel money away, but not smart enough to run away? Even when they were spotted a five year lead?

(d) Given that our dastardly duo threw a ton of money away on a Fuel Doctor investment seems to be another fact that argues that Ed and Joel couldn't be that smart, cunning and clever.

(e) And oh, yeah, they also sunk money into those trailers to rent out. That was another brilliant brainstorm.

(2) Ed and Joel were just stupidly running a Ponzi scheme and were either bemused enough to stick around and hand money back or were doing it out of altruism.

Well, you have spent time debunking this; it is a extreme and ridiculous proposition that anyone can knock it down without too much thought, and I am not going to spend anymore time on it.

The problem, though, is that you are not stopping to consider that there are probably more logical reasons somewhere between the two extremes.

As I pointed out earlier, Ponzi schemes require most of the money being paid to go back to the "investors." The more money that gets skimmed off the top, the more investors that the conman has to round up. Otherwise the scam is going to run out of money a whole lot sooner. Ed and Joel kept this scam running for 19 years and only had 2000 investors involved at the end. That alone suggest that the amount of money being skimmed off the top wasn't large enough to threaten an early demise and that they were able to keep the rubes happy until the last couple of months.

So I would argue that our twosome were just taking enough money to keep their bills and expenses paid, and to splurge here and there on luxury items and bad investments. The only reason they hung on was because this was their meal ticket, their support for their lifestyle and family. At some point they became convinced that they could keep this going until they died. At which point it wouldn't matter anymore. And at some later point, it became clear to them that they could not get out, that this scam was going to come crashing down around their head. But because of their age, the roots they had put down, and the fact there was no place to run, they simply gave up. This had become too big of a burden and I would hazard that the end of NASI was in some way a relief for Ed and Joel.

I know people don't want to hear that their money is gone, but in all likelihood it is. Ed and Joel were not bold enough, not smart enough, and not clever enough to clean out the tills when they could have. For if they were, they would have done so a long time ago.

[grimreaper]

They left only road kill in their wake.... now be fed to those who got in late and lost their arse.