ATM LEASEBACK SCHEMES-- any insight?

[grimreaper]

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.

This is where we are at opposite ends. The bulk of any recovery will come from net winners. How much is of course unknown at this point. It certainly will be much lower than the losses, that goes without saying. I don't see *pennies on the dollar* though. I mentioned before that anything over 20% would be significant and I think that's very possible. We won't know for a year or two, but we WILL eventually find out. Until that point in time , it's just going to be a bunch of back and forth. Maybe we'll get a clue on what the receiver is up to in the next quarterly report in Feb.

[Judge Roy Bean]

...
This is where we are at opposite ends. The bulk of any recovery will come from net winners. How much is of course unknown at this point.

Ah, but which of the "net winners?" Don't forget the old saying about not being able to wring blood out of a turnip and then there's the fact that some point the resources to pursue those who have effective asset-protection strategies will be exhausted.

And has has been pointed out any number of times here, there is a certain amount of reluctance to prolong an expensive battle on behalf of victims who, in the minds of reasonable people, should have known better.

[grimreaper]

...
This is where we are at opposite ends. The bulk of any recovery will come from net winners. How much is of course unknown at this point.

Ah, but which of the "net winners?" Don't forget the old saying about not being able to wring blood out of a turnip and then there's the fact that some point the resources to pursue those who have effective asset-protection strategies will be exhausted.

And has has been pointed out any number of times here, there is a certain amount of reluctance to prolong an expensive battle on behalf of victims who, in the minds of reasonable people, should have known better.

Well, as you are aware there is NO defense to a Ponzi, so *asset protection* will be limited. For example Homestead...Retirement accounts..(unless they were NASI). We'll see how aggressive the receiver is in this case. People here are looking in rear view mirror as far as past results in ponzi schemes. I'll quote Dylan here>>> *the Times are a changing* and there is a definite effort to set examples and pursue Ponzi schemes. SEC and Receivers are getting much better at ferreting out assets. Stay tuned.

[snookered]

At the present time, the Receiver is still managing the operation of the 235 ATM's that do exist, and has stated that at some point in time that they will be sold.

That's quite a few machines (I know, not the 30,000 purported), but I'm curious how one would value those current contracts and future revenue? They must be worth at least several million, yet nowhere close to the amount that would be required to make everyone whole again.

Does anyone have any idea what they might be worth?

[The Observer]

They must be worth at least several million...

Why would you think that they are worth several million? I think it has been stated before that machines like this (as used equipment) are probably worth less than $4,000 apiece, but I will defer to James on this since he has had experience in this area. But let's say for argument sake that the receiver can find buyers willing to pay $4k for an ATM. At that quote we come up shy of $1 million just for the machines.

I am guessing that you believe that the machines can be sold at a higher value based on where they are placed and on how much future revenue they will generate for the buyer. That is a fair assumption to make at the beginning, but the unanswered question is coming up a with an accurate future value of the money invested by any buyer. The biggest problem is that the receiver cannot guarantee the buyer will be able to keep the machine at its current site for ther rest of its operating life, nor be able to replace it with future machines. The "landlord", for lack of a better term, may not agree to to the old agreement that was forged with NASI, and could demand that the machine be removed, or that the new owner will have to settle in granting more generous terms in order to keep the machine there. Or a competitor may come in with a sweeter deal that will be more attractive to the landlord.

Even if a buyer is able to keep the machine situated where it is currently, they may find that the revenue earned is not as great as it was, or that NASI lied about the returns it was making. Serious buyers will do diligent research and have some pretty strong evidence in their hands before meeting a price set by the receiver. The receiver is not going to have the time or inclination to do this homework and will probably set prices at a level to encourage buyers, to bid.

If these machines sell, my guess is that they will all be bought by a competitor who wants to remove competition and secure some of the sites (or at least keep them from other competitors swooping in and taking over a previosly vacated spot).

[JamesVincent]

Why would you think that they are worth several million? I think it has been stated before that machines like this (as used equipment) are probably worth less than $4,000 apiece, but I will defer to James on this since he has had experience in this area. But let's say for argument sake that the receiver can find buyers willing to pay $4k for an ATM. At that quote we come up shy of $1 million just for the machines.

$2-3k would be much more realistic. As far as whether the location adds any value, it would be hard to tell without knowing specifics on the machine and location. Too many unknown variables to give you an accurate estimation. How much revenue the machine actually brings in, number of transactions, maintenance, etc. And if the receiver is running the machines then I would imagine they are using a service company to maintain them, service the cashbox, etc. so there's an additional expense that will come out of how much the machine makes. That's if the machines are still being used, in one of the posts I had talked about whether the stores had the right to remove the machine when NAS went under if service had stopped. We have no clue if there was an interruption of service and some of the machines got yanked. Any of the scenarios that Obs brought up are feasible, that another contractor could buy them up IF they get the locations for cheap or the machines themselves cheap enough. Even with some good locations I doubt you would be looking at a million, much less more. They just aren't worth it.

[notorial dissent]

Actually, of all the whatif, kindasortamaybe questions that has come out of this mess this one comes the closest to having a realistic answer.

The underlying thing to remember here is that the "boys" were cheap and dishonest throughout their entire operation, so I have a hard time taking anything they said at face value or fact on anything they said or did.

I have to agree, again, with JV here, I seriously doubt the machines were ever worth more than maybe $2k new or used, and that like any computer, the minute you get it out of the box and plugged in, it depreciates a whole heap. I'm betting that right now as surplus used machines, they aren't worth all that much, particularly when the next generation of machines will have to be able to handle the new generation of security on the smart cards coming in the next couple of years. So the machines are probably expensive electronic scrap that may ultimately have to be paid to be hauled off.

It is a KNOWN given that the machines are bringing in about $$$$ a month, and I don't care enough to go look it up, so do some work on your own, but if you figure that amount over a year, as an average, that is what the machines are worth dollar wise a year, at the moment.

They fly in the ointment here, is that no one knows at this point, just how long the placement contracts are for any of the 230 odd machines, so they could continue on for quite some time, or could be coming to an end any time now. Not a comforting variable.

If I read the reports correctly, most of them are already being serviced by other companies, and I would expect that the Receiver is trying really hard to get those companies to just buy the things out right and be done with it.


The machines are a trickle of money for the corpus, and a very small, but probably only real hard asset, but that is about all.

[snookered]

Thank you all! I appreciate the responses.

[Gregg]

The ATMs currently bring in between $90k and $150k and the receiver would like to keep them running so they can sell off the legitimate ATM business.
The receiver can run the ATM business from his office so he’d like to close NASI’s office to save money on rent.

A totally arbitrary but nonetheless valid way to value a business is to figure out a return of capital. So, if prospective business wanted to buy them all as an ongoing business, they would compute their own cost of capital and what percentage above they they want to make on their new purchase. If said company was going to borrow the money (or even if they pay cash they still have to compute cost of capital as if they are borrowing) and their interest rate to do so is 10%, and they want to make 5% pretax above cost of capital (a fair amount for this purpose) they'd want the accounting profit to equal 15% per year of what they paid for the business.
At the most optimistic number, $150k per month, figure thats cash flow, NOT accounting profit. Somewhere they would have to determine how much of that figure is expenses to the servicing companies, location fees, depreciation etc... the big variable here is depreciation. If the machines are beyond a certain age there is no depreciation left, but also that might mean they're due to be upgraded and that means future costs to take into account. ALso figure in this is a fire sale, they're going to need to be sold as is, and as a package, no cherry picking the good ones from the bad ones, an M&A Banker is going to have to look at this, but off the top of my head the million sounds a little optimistic but not by much. A million eight is pretty good cash flow, the lower number is still more than a million a year.

As far as the existing contracts, if the business is sold as an ongoing concern they should continue under new ownership. I fully expect one of the companies currently servicing them to be the buyer, and they'll be stealing them because they know better than anyone who much they're worth and also know the sale is distressed and honestly outside of them there's not a lot of people looking to drop that kind of money for a fairly specialized and capital intensive business. For what its worth, if the servicing contracts are long term, I'll put the over/under at $400,000. I'm more than interested in what they end up getting for them, though, I was amazed at the amount they are bringing in, although the report doesn't very well explain the figures quoted, it could be that most of it is eaten up by operating costs that aren't evident.

[The Observer]

Averaging that cash flow to $120K a month over 235 machines, means roughly $500 in fees per machine. At $3 a pop. that is over 150 transactions a month. Seems high to me. but if this info is from the receiver, far be it from me to quibble over it.

But Gregg is right, you can't solely value on gross cashflow and what has to be taken into account are the operating and maintenance expenses, the duration of the current contracts for their location (or fees), and how many and how soon these machines will have to be replaced. Any serious bidder in my mind is really going to be evaluating their bid in regards to the likelihood of being able to keep the locations as long as they can reduce operating costs. I would think any long term service contracts that are in place and have to be honored will drive off many bidders.

[notorial dissent]

As Observer and Gregg have pointed out, the value of the machines is in what their monthly income is and how long their contracts are for. The machines themselves, other than as place holders, is probably close to nil at this point. What it boils down to is how much longer they are going to be a cash cow, and if in fact they are. My impression from reading the Receiver's notes, was that the monthly expense on them was pretty high, which means the actual income versus cash flow may not amount to much in the end. My feeling is that the "boys" were probably using the float from the machines as well to prop up their scam, since that was how they did everything else.

Basically a case of chickens and eggs hatching and I wouldn't count on too many if it were me.

[Judge Roy Bean]

... My feeling is that the "boys" were probably using the float from the machines as well to prop up their scam, since that was how they did everything else.

Basically a case of chickens and eggs hatching and I wouldn't count on too many if it were me.

Out of curiosity, what did they use for a depreciation life on the machines - or did they just expense them?

[notorial dissent]

That would be a really good question. I really want to see what their books looked like, and if there actually were any, and to see just how dishonest they were in their book keeping and tax calcs.

Again, the impression I'm getting off the Receiver's report is that actual book keeping wasn't exactly a priority, or anything they did much, sounds more like they jsut made it up as they went along.

[JamesVincent]

But Gregg is right, you can't solely value on gross cashflow and what has to be taken into account are the operating and maintenance expenses, the duration of the current contracts for their location (or fees), and how many and how soon these machines will have to be replaced. Any serious bidder in my mind is really going to be evaluating their bid in regards to the likelihood of being able to keep the locations as long as they can reduce operating costs. I would think any long term service contracts that are in place and have to be honored will drive off many bidders.

Something else to keep in mind is whether the machines are good, quality ones worth upgrading or not. With the new technology coming out and smart cards going into use any older machines will need a major upgrade to adapt. Some manufacturers and models are easily, and relatively cheaply, upgraded while others aren't. ATMs can run anywhere from $3k-$8k brand new so whoever buys into this has to make a decision whether or not it is worth paying out money for that location when they know they will have to put more into almost immediately. Which, of course, will drive down what they offer per machine. I would think the best way for the receiver to do it is offer the entire thing up at auction. That way you will get some competition from companies who have some money to spend and who would be willing to put some into it. I think you would get much more out of it then just offering it piece-meal. You may have some machines that have a transaction count of 300 or more per month while some only get 100. The 100 one wouldn't be worth getting into unless you got the 300 one along with it, to balance it out.

[notorial dissent]

And a lot of it will depend on how long the lease on a particular machine in a particular spot is good for. No lease and that machine might be worth nada.

[The Observer]

I would think the best way for the receiver to do it is offer the entire thing up at auction. That way you will get some competition from companies who have some money to spend and who would be willing to put some into it. I think you would get much more out of it then just offering it piece-meal. You may have some machines that have a transaction count of 300 or more per month while some only get 100. The 100 one wouldn't be worth getting into unless you got the 300 one along with it, to balance it out.

And you would be right. Selling all of the machines as one lot is the easiest way and the cheapest way for the receiver to deal with all of the issues present. That way you avoid having bidders cherry-pick the best of the machines, leaving the worst of the machines/locations unsold and in the end abandoned. It also will remove the burden of the receiver having to provide information on each and every machine. They can be catalogued with an uniform description and history, and then it is up to every bidder to evaluate the entire lot on their own to determine what they want to bid. The only downside to this approach is that it will eliminate a lot of small-time bidders which will mean that the bid amounts will be less.

If the machines were not in locations and were warehoused, I would consider selling them off as a separate lots, but only if there were enough bidders out there to ensure that all 235 machines were going to receive bids. But the problem here, as you mention, is the age and tech level of these machines, so you would run the risk again of getting stuck with unsold machines.

Wait a minute. With the unsold machines, you could fill them up with dinars, and then set them up outside a Dinarian Convention. They would pay for themselves in a hour!

[grimreaper]

NASI Ponzi made the *LIST* on WIKIPEDIA..last entry on the list. Congrats Joel and ED! You're now in the good company of Madoff and Petters!

http://en.wikipedia.org/wiki/List_of_Po ... st_century

[Tednewsom]

I for one wish them all the creature comforts and good health Mr. Madoff has received, plus a guaranteed 20% annually.

[Tednewsom]

Well, I hear from a little birdie that there was some drama recently, though not necessarily of the PERRY MASON kind. Remember SANFORD & SON? Rascally Redd Foxx clutching his chest and yelling, "It's the Big One, Elizabeth! I'm comin' to join ya, honey. This is the Big One!"

So I'm told:

In a first-thing-in-the-morning court appearance by Wishner and Gillis, there was some idiotic typo screw up, which did not make the judge one bit happy. The entire charge sheet was read into the record (which took over a half hour), and when they came to Line 14, Gillis' lawyer objected that the filing said Gillis was "in charge" of NASI, arguing that he and Wishner were co-responsible. It was a stupid error, and I love the idea that Gillis' attorney wanted to shift at least half the blame onto Wishner. The judge told them the thing should have been correct in the first place. Finally they adjusted it and named both as "in charge."

The (alleged) scammers were supported by family members-- and closely observed by a couple dozen scammed victims.

The eminent Mr. Joel Gillis, auditioning for the Redd Foxx role, tells the judge he needs to sit down because he's feeling under the weather. He then collapses with a dramatic ker-flump on the courtroom floor. It's The Big One!

There just so happened to be a doctor in the courtroom-- but in an interesting comedic plot twist, he wasn't there for Gillis & Wishner: he was on the side of the victims. He "resuscitates" the poor fella-- then turns away in disgust and walks off. In response to that, Gillis's charming wife tells him, "Fuck you, asshole."

They called for the paramedics. I expect if Gillis has an agent, he immediately called NBC with a great idea for a new sitcom, LOVE THAT PONZI.

It begins.

[The Observer]

Ah, well, that sort of behavior is not too surprising. Especially given what we already know about the arrogance of Joel. But his attornies should be having a real serious conversation with him about acting up in the court room, because that could come back to haunt him when sentencing is handed down.

But if there has been a tentative agreement on a plea-bargain deal, then Joel may feel that he can act out as much as he wants since he already knows what is in store for him.