ATM LEASEBACK SCHEMES-- any insight?

[Gregg]

~~~snip~~~

As far as I'm aware a judge will not sign off to seize someone's primary residence unless that person is liable both criminally and civilly. Things like boats, second homes, investments, vehicles (maybe, but again not if it's the only vehicle), basically things not essential for living may be up for seizure. And, again, for the receiver to get that far into it would require a great deal of money from where ever they are getting paid from and it may very well not be worth the hassle.

James, I have never seen a home, primary or vacation, ordered sold so I don't think there's any legal reason it can't be done, just that its not. Although now that you mention it I recall that taking someone's home in Florida is damn near impossible, when Home State Savings and Loan crashed Marvin Warner claimed his million dollar horse farm there was his primary residence and got to keep it (this was the 80s, a million dollar home was a big deal back then. In fact, it seems incredible now that Home State, a failure that amounted to just $140 million in losses almost caused the collapse of the entire state chartered Savings and Loan industry, how quaint. Today thats a middling sized ponzi scheme on moneymakergroup)


Anyhow, my point, aside from a possible homestead exemption notwithstanding, is that anything is possibly subject to seizure, but the theory is not the same as the reality.

I will point out that Dustin Fennel, who I mentioned somewhere as having been a winner of over half a million dollars in Crusin88 and CEP I think (I get them confused after the years) did spend $375k on a house that was lien free when the receiver went after him, and the receiver settled with him for $8,000 saying that was a reasonable settlement considering his overall financial condition. I remember screaming at the screen when I read it and thinking I didn't care if he was homeless he should have to pay more than eight grand of the half million he stole. Dustin was not just a lucky early investor, he was actively involved in running the scam and the fictional internal payment processor. One of the great injustices that broke me of my illusions....

[grimreaper]

From receiver web site:
Question: Will a fair fund or other type of recovery be set up for the investors to recover their money? If so, how and when does this happen?
Answer: Everything we recover will go into receivership estate and protected for the court. What is done with any recovery will ultimately be determined later and will have the Court’s involvement.

[Gregg]

I don't see any mention of victims there.

Realistically, if there's anything left over I expect them to give it to victims, but if the Judge says no, it'll go into the kind of things they spend drug dealer's seized funds and stuff like that. Maybe they'll set up a D.A.R.E. ATM network

[grimreaper]

Everyone in a Ponzi is a victim. Those left with profits take a double hit....at least that's how it's perceived.. understandable.

[Judge Roy Bean]

Everyone in a Ponzi is a victim. Those left with profits take a double hit....at least that's how it's perceived.. understandable.

Nonsense.

Not everyone is a victim. Try to understand the difference between active and passive involvement.

Consider an ignorant participant who invested ten years ago and never promoted the scheme vs. someone who helped get the ball rolling and kept recruiting participants because they knew what was going on.

Do you actually think they are equally liable?

The real world doesn't work the way you keep trying to portray it.

[grimreaper]

There were only two perpetrators....show me an organized hierarchy. This scam literally sold itself. Those who were receiving distributions morphed into true believers and spread the *word*. Nothing like friends and family to convince others...best sales pitch of all time. I have seen with my own two eyes how it spreads...you haven't seen Jack Squat.

[Judge Roy Bean]

... I have seen with my own two eyes how it spreads...you haven't seen Jack Squat.

Other than thirty or more years of schemes and the end results.

[grimreaper]

But I was *the fly on the wall* with this one....up close and personal. In fact, I was encouraged to join several times. Have you been in THAT situation? Doesn't sound like it. This story is VERY compelling...especially when you see how people are getting 20% for over 5-10 years. It was like a *fly trap*...seriously. You didn't need *recruiters and insiders*...it sold itself.

[Gregg]

But I was *the fly on the wall* with this one....up close and personal. In fact, I was encouraged to join several times. Have you been in THAT situation? Doesn't sound like it. This story is VERY compelling...especially when you see how people are getting 20% for over 5-10 years. It was like a *fly trap*...seriously. You didn't need *recruiters and insiders*...it sold itself.

452 pages of them

http://www.talkgold.com/forum/f15-.html

[The Observer]

But I was *the fly on the wall* with this one.

But not the fly on the wall in NASI's offices - that would be the fly people would consider in the know. You seem to think that your experience with the 6 or 7 people who invested somehow means that you knew everything that went on with this scam - but it doesn't. It only proves that you have some insatiable need to be the focus of attention. Heaven knows that being proven wrong on this forum repeatedly by several of the experts here hasn't diminished that need.

You seem to have forgotten a few messages directed at Ted earlier in this thread by a person who was working for NASI and securing investors for Joel and Ed.

[grimreaper]

The success of this scam and it's spread was due, primarily, to the WORD OF MOUTH and the mouth watering GUARANTEED 20% RETURNS that people were receiving year in and year out. Gillis would *pump it* every now and then (as evidenced with the introduction of IRA ACCOUNTS). The people in his offices, etc served in an administrative capacity. I know it's *only* 7 people I'm familiar with, who got in over an extended period of time. However, it's very indicative of how this thing spread. I can trace the INITIAL purchases of a family member to someone who owned over 50 ATMS at the time and they met Gillis at a country club. This person alone was responsible for bringing in many investors and received nothing in return, since those people were family members as well. I saw how those family members in turn *recruit* others who again did the same thing. Very compelling.
As I recall, there was a lady who posted here backing Gillis (Ted might recall her name) and admitted to introducing MANY friends to the scam. She has a FB page which I visited and I saw THOUSANDS of *friends* on her page. She's some type of motivational speaker (?) and received nothing as far as I know. The scheme was virtually self perpetuating, which is why it lasted so long.

This not to say there may have been people who got kick backs and promoted this, but they couldn't have been the *ENGINE* that drove this scam to 2400 investors...no way.

[Lost Income]

Clawbacks - If one investor can avoid paying back profits because they couldn't have known they were being given illegal monies after signing contract with Joel or because they would have to sell asserts, then all investors can avoid paying back profits. So can anyone positively verify investors that actually were forced to pay back money regarding a ponzi situation like this?

I'm asking, because so far it appears that significant clawback money will need to be recovered for giving investors back anything, unless the SEC has the balls to squeeze Joel & Ed hard enough to recover more of the monies they've taken over the past 19 years.

[notorial dissent]

At this point the assets of the corpus are what was on hand when the gov't seized NASI earlier this year, and that is about it. They will have to finish going through the books to see what they can find, but right now it doesn't look like there is going to be much beyond what they currently have.

The likelihood of large clawbacks is right on par with there being huge hidden assets. Slim and none.

[Gregg]

http://www.zeekrewardsreceivership.com/

http://patrickpretty.com/2014/05/05/urg ... ss-action/

http://www.sec.gov/litigation/complaint ... p21532.pdf

http://www.ebullionremission.com/

http://www.sec.gov/litigation/litreleas ... r22776.htm

http://www.sec.gov/litigation/litreleas ... r22776.htm


As I've said before, its not always done, but it does happen often, and recently its getting more common. All of the cases I linked above, though, were schemes that still had large amounts of cash on hand and/or easily recoverable that provided the bulk of eventual restitution, unlike NASI where the company was tapped out before they shut it down.

[grimreaper]

At this point the assets of the corpus are what was on hand when the gov't seized NASI earlier this year, and that is about it. They will have to finish going through the books to see what they can find, but right now it doesn't look like there is going to be much beyond what they currently have.

The likelihood of large clawbacks is right on par with there being huge hidden assets. Slim and none.

Here's one
http://www.ponzitracker.com/main/2014/1 ... winne.html

The prospect of recovery for victims appeared bleak, with one source reporting that the Department of Justice has estimated that victims could recoup 10% to 20% of their investment. Authorities were able to quickly seize what remained of Galemmo's assets, which included over $500,000 in cash, various real estate including a condo in Florida and Galemmo's former office building, and over $100,000 in automobiles.

One of the largest sources of recovery for victims of Ponzi schemes typically comes from lawsuits against scheme investors fortunate enough to ultimately profit from their investments. Aptly known as "clawback" suits in Ponzi jurisprudence, the suits seek recovery of "false profits" consisting of amounts in excess of that investor's net investment in the scheme. Because the scheme operator does not generate the promised returns from legitimate activities, these transfers are nothing more than the redistribution of new investor funds. While extensive caselaw generally recognizes that clawback targets can keep the amount of transfers adding up to their total investment in the scheme (absent signs that the investor did not act in good faith in receiving the transfers), the law is clear that any receipt of funds over an investor's net investment can be recovered as "false profits."

One of the "net winners," as they are known, in Galemmo's scheme was Michael Willner. Willner was one of Galemmo's original investors, whose initial investment of several million dollars allegedly multiplied several times according to fictitious account statements provided by Galemmo. Willner also allegedly served as a recruiter for new Galemmo investors, and the lawsuit alleged that Galemmo paid commissions to Willner for referred investors. Willner allegedly withdrew "millions" of dollars in excess of his original investment.

While Willner allegedly received "millions" in excess of his original investment, the settlement takes into account his financial condition, and also discloses that a majority of the settlement amount will come from a federal tax refund due to Willner. The remainder will come from the sale of Willner's interest in a private company that was purportedly purchased with funds traceable to Galemmo's scheme.

[The Observer]

Let's see, 1.4 million recovered on $100 million in losses. Here in our quadrant of the galaxy the math works out to less than 2 cents on the dollar. But in grimreaper's corner of the world that is a significant recovery!

This not to say there may have been people who got kick backs and promoted this,...

Uh, that is exactly what you did say in a earlier post:

There were only two perpetrators....

Back to whether homes could be seized and sold as part of the recovery. In my experience, it is a difficult road to pursue but it can be done. If it can be demonstrated that the residences of Joel and Ed built up equity in those homes from victims' monies, a case can be made to pursue a court-ordered seizure of the homes. But if there are bona fide secured priority creditors against the properties, then their secured interest has to be satisfied first from the sale of the home - and if it can't then a court is not going to be signing off on a seizure. And going further out on a limb here, if there are other valid owners of the properties who were not part of the NASI scam and have an equity interest in the property, that interest is also protected under the law. The home could be sold but all of the above secured interests get their money first. Then the administrative costs of the seizure and sale have to be paid out of the remaining monies.

Other questions come to mind: Could the spouses of Joel and Ed file for an innocent spouse ruling in order to protect their interest (community property or joint tenancy) in the home? And if there was a transfer of property out of the name of the two scammers prior to NASI crashing, what lengths will the receiver go to determine if this transfer was fraudulent and retrieve the property? Depending on how many roadblocks (legitimate or not) exist, the receiver may see it as too expensive to pursue.

[grimreaper]

Let's see, 1.4 million recovered on $100 million in losses. Here in our quadrant of the galaxy the math works out to less than 2 cents on the dollar. But in grimreaper's corner of the world that is a significant recovery!

They're not done....

The firm has also filed other lawsuits against third parties seeking recovery for Galemmo victims, including a suit against several prominent financial institutions related to their dealings with Galemmo. The firm was able to interview Galemmo before he reported to federal prison, and it is possible that other net winners could be pursued.

BTW, this scheme is not structured as uniformly as NASI. All net winners will be relatively easy to identify with NASI. So it's not a question of identifying them or even finding them....it's going to come down to the receiver's ability to successfully retrieve the profits.

[Arthur Rubin]

Gregg, did some lawyer tell you that you needed to pay him/her so the privilege would protect your conversation?

Gregg probably watched Perry Mason. He always asked for a retainer, even if the client only had $1.39.

[itzallgone]

...
Just one example: Gillis's daughter owns a high-end Italian restaurant on Ventura Boulevard, along with her husband. I think Joel Gillis is actually on paper as one of the principals. It's been there two or three years now. Tell me that wasn't kickstarted with NAS funds.(And that, by extension, is an asset which can be foreclosed.)...

Pure speculation - and I would suggest people use caution in posting such things.

Wrong, judge. Jill and Daniel Wishner (daughter-in-law and son) almost surely knew what was going on. I bet you if we asked them if they invested in NASI they wouldn't answer. They almost surely knew exactly what was going on. They almost surely reaped some of the benefits.

To mention facts, like that there was a registered license in the name of Edward Wishner for their pizza place is fact.

If it was such a sure thing, why didn't their family invest? Why aren't they apologizing for their father's actions. Everyone has a right to know that they are the family of a Ponzi scheme perp. There is no libel in that.

[The Observer]

Wrong, judge. Jill and Daniel Wishner (daughter-in-law and son) almost surely knew what was going on. I bet you if we asked them if they invested in NASI they wouldn't answer. They almost surely knew exactly what was going on. They almost surely reaped some of the benefits.

Really doesn't make logical sense to call Judge Roy Bean "wrong", then sprinkle a word like "almost" throughout your conclusion. It indicates that you are hedging, meaning you are not confident of what you are saying - and thereby meaning that the JRB is possibly not wrong.

There is a good reason for JRB to say that and people should be paying attention to that advice before putting words out in the public that can't be retracted.

BTW, this scheme is not structured as uniformly as NASI.

So, in other words, you are admitting you picked a bad example in your repeated failure to prove yourself right, that you keep picking examples that only support what the others have telling you over and over on this forum.

You don't seem to understand that no one has ever said clawbacks won't happen; what they have said is that clawbacks will not result in in any kind of significant recovery for the victims of this scam, that the number of sources for clawbacks will be much smaller than the number of net losers out there, and that in the end, the total recovered from this scam is going to be pennies on the dollar - just like every other Ponzi scam that has gone down.