ATM LEASEBACK SCHEMES-- any insight?

[Tednewsom]

You guys be perplexin' me with the use of the that-there three-letter article, "the," as in "the money."

"a number of these people either plowed their earnings back into NASI, moved the money elsewhere or blew it in."

"It still comes down to saying someone was a 'net winner' and them still having the money are two entirely different things."

and this'un, which uses "that" instead of "the," but the point it the same

"the salespeople were living on that money, and that it is long gone in to living expenses etc, and therefore non-recoverable"

Unless an investor had the insight to discretely keep all NASI loot in a separate holding account from assorted bond and stock dividends, savings accounts and assorted earnings from heroin sales and crooked gambling, or had a specific lock box designated with the label "Crooked ATM Profits Only," one has to assume all funds paid from NASI to an investor were comingled with the investor's other income. There's no other way to say, "Oh, yeah, I got $500,000 from those crooks, but that's all gone. This $2,000,000 over here was something else entirely, so you can't touch that, nyah nyah nyah-nyah nyah."

Point being-- it makes no difference that a given net winner spent the money he or she got in 2009, or 2011, or 2014. If they've got assets now, then for the purpose of clawback and redistribution of embezzled funds, whatever that person has now is subject to seizure.

observer wrote:
I don't have any reason to disagree with you on those points. I just think that none of the salespeople are going to be in the Top Thirty Netwinner's Circle.

I agree and never implied differently, but since they played an aggressive role in the scam rather than purely a passive one, the attitude toward them must therefore be different, with regard to legal status and potential recovery.

[The Observer]

Point being-- it makes no difference that a given net winner spent the money he or she got in 2009, or 2011, or 2014. If they've got assets now, then for the purpose of clawback and redistribution of embezzled funds, whatever that person has now is subject to seizure.

And, Ted, my good persistent and passionate buddy, you have put your finger on the point that nd, Gregg, I and others have been saying for the last few months. Let me quote you specifically in support of that point from your statement above:

If....

Experience has shown that this word "if" opens up a number of possibilities for non-collection of the debt. "If" allows for the pursued to defend themselves from any attempt to liquidate their assets. It is simply not enough for Mr. Netwinner to be in possession of an asset. You must show the courts that this asset has enough personal equity directly attributable to Mr. Netwinner that will allow for a court seizure and sale to be conducted and all such expenses incurred byt the court covered before you can pursue that asset. You must be able to attract bidders to such a sale and know that the asset is desirable (in good condition, in operating order, and/or has clear title). The asset itself cannot be a lawsuit waiting to happen; bidders tend to shy away from assets that have a crowd of injured plaintiffs lining up to have a go at the new owner. You must have some reasonable expectation that this asset will not suddenly end up in a bankruptcy estate if and when Mr. Netwinner decides to hide behind a Chapter 7 filing (it is rumored that bankruptcy judges are only exceeded in their power and authority by God, they tend to be very protective of assets covered by the stay of collection).

And if Mr. Netwinner has done other sneaky things to move assets out of his name and ownership, you are going to have to be prepared to spend more money, effort and time proving that he is really the owner of the asset, that he didn't legitimately transfer or sell those assets, that the new owner is not an innocent party protected under law for a bona fide purchase, and that Mr. Netwinner's bogus transfers rendered him insolvent.

Ted, I am not sure how far the receiver is going to go in trying pursue collection from the net winners who decide to not to pay up. I would presume that the receiver will pursue a judgment from the court as a reasonable expense. But I don't know if the receiver will go beyond that in trying to collect unless his or her office can see that pursuit of any of the assets will be easy, quick and will avoid lengthy litigation. In other words, a quick turnover of funds. I have no doubt some of the net winners are going to believe that the receiver is just bluffing and that they can spend some money up front to make themselves appear to be not worth the time and hassle to pursue. The receiver may pick on one or two juicy targets that have left themselves open to easy recovery and hope that this example will cause others to come in from the cold. He may decide that only one or two of the pack are worth it and will leave the judgments in place against them in case something better turns up down the road.

As I said: "If." As you said: "If"

"If" is not a strategy.

[grimreaper]

We assume these big net winners are very savvy at hiding assets...yet they were foolish enough to be duped into a Ponzi that begged scrutiny from the get go. I maintain the bulk of these investors were naive and uninitiated in the world of finance and lack the CRIMINAL acumen sufficient to foil a claw back. Yes, there are some who will succeed in doing so....so, as you say>>>IF the majority are successful in doing so, then the recovery will be miniscule.....IF...

I think you're going to see the litigation phase that's a lot more efficient as well. Latest report states the cases will all be heard in one court with one judge presiding who familiar with the case. They will herd in all litigants in mass and it will be next to impossible to muster any defense with a prima facie case of Ponzi starring them in the face. I assume most *defences* will center around the plea that they have no assets to cover the claw back. Judge will be well prepared for that. This entire discussion is IF....but that cuts both ways.

BTW, One of people I know will settle and they have seen the report.

[Tednewsom]

grimreaper: We assume these big net winners are very savvy at hiding assets...yet they were foolish enough to be duped into a Ponzi that begged scrutiny from the get go. I maintain the bulk of these investors were naive and uninitiated in the world of finance and lack the CRIMINAL acumen sufficient to foil a claw back.

There is that. If they were anything close to being "sophisticated investors," they'd never have gotten within the same zip code as Wishner and Gillis.

Will it be a cakewalk to recover illegally-received funds from people who'll claim they received them in good faith and that the yacht they bought has nothing to do with phantom ATMs? No, of course not. But I expect the attorneys charged with recovery are not necessarily inexperienced naïfs who just graduated law school, that perhaps their SEC opposite numbers may have been down this road before, and maybe even that the experienced receiver has developed a nose for sniffing out the aroma of criminal bullshit.

*sigh* Just call me a cockeyed optometrist.

[The Observer]

grimreaper: We assume these big net winners are very savvy at hiding assets...yet they were foolish enough to be duped into a Ponzi that begged scrutiny from the get go. I maintain the bulk of these investors were naive and uninitiated in the world of finance and lack the CRIMINAL acumen sufficient to foil a claw back.

There is that. If they were anything close to being "sophisticated investors," they'd never have gotten within the same zip code as Wishner and Gillis.

This is not an issue of whether they are sophisticated investors. This is an issue of them having more money to defend their assets than the people who are trying to collect. If they are motivated enough to believe that they need to protect the home that the angry mob is coming after, they are going to motivated enough to pick up the phone and start looking for an attorney who can advise them what to do. After that, it will be an issue of time vs. the deeper pockets. The fact that the receiver is offering a discount of 30% is just another indicator of the tough battle ahead to pursue those clawbacks through courtrooms.

But I expect the attorneys charged with recovery are not necessarily inexperienced naïfs who just graduated law school, that perhaps their SEC opposite numbers may have been down this road before, and maybe even that the experienced receiver has developed a nose for sniffing out the aroma of criminal bullshit.

It would be far better to do some research on how far the receivers in the past were willing to go to recover monies before they closed their operations and called it a day. You may get a better idea of why one of the first lessons most attorneys in this line of work learn on the job is to recognize when they are fighting over a carcass rather than a live horse.

[grimreaper]

*This is not an issue of whether they are sophisticated investors. This is an issue of them having more money to defend their assets than the people who are trying to collect.*

They better be good at hiding that money they're going to use to defend themselves. BTW..there is no defense they can use....only smoke and mirrors as to where the $$ went.

[Gregg]

Personally, I think the receiver is bluffing and will consider it a win if thirty people come forward to accept a settlement. Odds are he'll take the easy pickings, litigate against few other big winners who don't settle and at most get judgements against the rest which he'll then dispose of by selling to a discount collection firm for 10 cents on the dollar as a package deal.

The case being decided in one court sounds like a big win but its not.

Let's just hypothetically say I was a net winner. So, some court in California awards a judgement against me for an amount I consider more than a little. Big deal. You have a valid judgement against me but I'm not in California, I'm, depending on my mood and what my lawyers think is more a pain in the ass to you Ohio or Pennsylvania. You are still, in order to get anything from me, going to have to litigate the matter where I, and my assets you're trying to take, are located. Having the judgement means you have a good start to maybe put a lien on my house (but as we know, neither of the places I call home are legally mine) but you'll have to get that lien in Adams County or Warren County Ohio. Fine, so you file a case and win here. You now are in line behind the bank that holds a mortgage at the very least, quite possibly the county who I owe property tax to and just to make it even more complicated, turns out I never declared any of that sweet ponzi profit on my tax returns and by the time that was over I owed 3 times my equity on the home to the IRS, who, by the way, put a lien on the house of their own. Oops, looks like another, "if..." which I have a whole hard drive full of, and for every one I have, there are 3 more possible which I've never seen before or thought up...

Over under is about 5 cents on the dollar returned to victims, after another 2 years of legal wrangling.

[Gregg]

And I'll put $100 on the under.

[Judge Roy Bean]

...

And if Mr. Netwinner has done other sneaky things to move assets out of his name and ownership, you are going to have to be prepared to spend more money, effort and time proving that he is really the owner of the asset, that he didn't legitimately transfer or sell those assets, that the new owner is not an innocent party protected under law for a bona fide purchase, ...

Given the number of years involved, the net winners may have acquired all manner of assets using blended funds and may have also legitimately sold them. Imagine, for example, in year three Mr. and Mrs. Netwinner bought a sail boat and in year six they sold it because Mrs. Netwinner had to have hip surgery that insurance only covered 50% of.

Where does that path lead?

[Gregg]

I would also like to go back a few pages to something I said a few months ago

They'll be asked. If they cannot do so, and its so determined to really be the case that they can't, it is what it is, they don't have to explain why they lost it, they only have to prove they don't have or control it. "I spent it on hookers and blow" might be good enough.
And even if they do have it, hell, they have every penny and more in FDIC insured accounts, they can still negotiate. If I were so situated I'd open with offering 2/3 and say "I'm paying your legal fees if you go to court and there's no risk you'll lose". That would almost certainly be accepted.

The receiver is offering nearly that as his opening negotiation.

Soon after, Observer pointed out what I was alluding to just now about actually collecting once the receiver gets a judgement..

So if the receiver in this case is able to establish that net winner X owes Y amount of dollars, what assets they own or do not own do not come into the picture at that time. However that judgment allows a person to pursue to some limit the assets of an owner, but it has to be at the plaintiff's expense. They are the ones who have to identify potential assets that can be seized and have to go back to court to get authority to seize those assets (or garnishment of income).

Gimme another $50 on the under.

[notorial dissent]

I have to go with Gregg here based on what I've seen so far, and past experience. When I first heard this my first thought was that he had to be bluffing in the hopes of getting a little back from some of the ones who really did make out in the scam. I'm still not inclined to think they will go after very many simply on a cost basis answer. This is all just pure speculation until the Receiver actually puts out some actual hard numbers, which is what I'm still waiting for, but Magic 8-Ball say "Outlook not so good."

On another note, that Gregg only sort of touched on, there is another joker in the deck, a big nasty one, called the IRS. My suspicion, well experience really, tells me that whatever the Receiver turns up, they will forward to the IRS, and it is more than likely that they are going to want to play too, about unreported or incorrectly reported income, and guess what, they get to go to the head of the line, so someone could have made out big time, and end up losing it all to the IRS, leaving the Estate with nothing to collect. I've seen that happen all too many times. I suspect at this point the IRS is just sitting back letting the Receiver do all the work and incurring all the expense with someone already assigned to start looking at the numbers once the Receiver comes up with some, and then they'll start sending out paper. They'll start comparing 1099's and tax returns, and there may be some people in for a very unhappy time. I say this, since NASI didn't seem to be so hot on keeping books, that I have no great expectations for accuracy in information sent, if sent to the IRS at all.

[Gregg]

*This is not an issue of whether they are sophisticated investors. This is an issue of them having more money to defend their assets than the people who are trying to collect.*

They better be good at hiding that money they're going to use to defend themselves. BTW..there is no defense they can use....only smoke and mirrors as to where the $$ went.

Its more than likely right that there is no defense against them not being entitled to keeping the money, but "I don't have 2 cents to my name" is often an effective defense in not paying any of it back. Hell, even the IRS lets you off the hook if they determine what you owe is "noncollectable".

[Tednewsom]

On the level of smaller investors, as far as I'm aware NASI actually did send out accurate 1040s, and those people paid taxes on their income. I'm going to assume Wishner actually did the same for larger investors. That would make basic accounting sense (even considering what a putz he was), dumping the onus of paying taxes on the investors rather than NASI risking being bitten in the ass themselves.

[Tednewsom]

Its more than likely right that there is no defense against them not being entitled to keeping the money, but "I don't have 2 cents to my name" is often an effective defense in not paying any of it back. Hell, even the IRS lets you off the hook if they determine what you owe is "noncollectable".

Yes-but Yes-but Yes-but...

It is not all that difficult to discover someone's net income or assets, whether it's the IRS doing it or the SEC or the courts doing it under subpoena. And if one represents in a legal statement one's net worth as zero and somebody in charge asks, "Mmmm... what about this $4 million over here?" now they've committed fraud, not to mention contempt of court. Not a thing most jurists are prone to shrug off.

[grimreaper]

They can subpoena ALL relevant financial documents as the IRS would do in an audit. That will include ALL bank records...business records...any brokerage records as well as funds put in *sheltered* retirement accounts. All this along with a list of any assets such as homes..property..etc. There not going to simply take people at their word and this will have them jumping through a LOT of hoops in the process....a daunting task for sure. Then you have the Lawyer fees. Only those who truly are bereft of assets will escape.

[Gregg]

So how do I account for the $5,000 a week I spend on hookers and blow? Should I be looking for a coke dealer who invoices me?

[Tednewsom]

For a substantial consideration, I might be induced to look for all those receipts I have somewhere. Let's see... physical therapy... charitable contributions... out of pocket medical expenses... entertainment... mental mileage... depreciation on brain cells and assorted other organs...

[grimreaper]

So how do I account for the $5,000 a week I spend on hookers and blow? Should I be looking for a coke dealer who invoices me?

Yeah...that's if you only deal in CASH all the time. They will trace any credit cards..checks..hard assets...accounts...laundering attempts. So all these naïve investors are good at that and are used to living a clandestine life style..like the MOB?? Yeah..right.

[Arthur Rubin]

So how do I account for the $5,000 a week I spend on hookers and blow? Should I be looking for a coke dealer who invoices me?

Yeah...that's if you only deal in CASH all the time. They will trace any credit cards..checks..hard assets...accounts...laundering attempts. So all these naïve investors are good at that and are used to living a clandestine life style..like the MOB?? Yeah..right.

I don't have much experience, but it seems to me that most of those businesses prefer cash. I will admit that some of the (illegal) "hookers" on some web sites state that they take credit cards, but, again, I don't have personal experience.

[I was researching the sites for listings in DMOZ. That's my story, and I'm sticking to it.]

[webhick]

So how do I account for the $5,000 a week I spend on hookers and blow? Should I be looking for a coke dealer who invoices me?

I thought you had accountants pay for it all. Do they not keep accurate records?