ATM LEASEBACK SCHEMES-- any insight?

[grimreaper]

I also notice (and agree, its kind of central to the point I've been trying to make for 6-7 months) that going back 7 years your model shows only 801 of the total 31,000 contracts sold as being pre-SOL for the purpose of clawbacks. Look at that again and let it sink in kids, out of 31,000 contracts sold, it's possible and even likely that less than 1,000 of them are, for the purposes of clawback, in profit.

Math, it isn't just for breakfast any more.

Yes>>>>so we don't really know that do we? Using that *model*, he shows >>>>12700 contracts sold in the last year. If you use the 12K per that's 152M in the last year. But, we have been told that they sold 123M in the LAST YEAR AND HALF. That would extrapolate to around 100M in the last year>>>or 8300 contracts>>>35% LOWER than the model. However, the actual TOTAL published is very close to his TOTAL! ERGO>>>> The prior year totals are not weighted properly are they? I'm convinced the growth was *lumpy* and some investors bought HUGE amounts at various times which *could* have been within the profit period.
BTW...profits were made by those with contracts over FIVE YEARS OLD....the reach back goes back SEVEN YEARS. So, any ATMS purchased prior to 2010 would be *in the money* at the time of collapse in June 2014.

OPINION ALERT

Also>>> for NET WINNERS>>>> The claw back applies to the DISTRIBUTIONS (fraudulent transfers) going back 7 years, it has nothing to do with when the contracts were purchased. They aren't going to characterize the distributions as payback of principal vs profit. They will simply calculate what the total profits were and take the LESSER between total profits vs distributions in the 7 year period.

[worried]

It's only a simple model... it doesn't artificially limit the sales towards the end, etc.... It surprises me to see it match the 2011 numbers in the Joel 'interview/infomercial', but I also acknowledge that 'tuning' the exponent to match the 31000 total at the end without considering the limiting of sales towards the end throws the whole curve off a bit. It was only an exercise to look at general behavior when adjusting different parameters. And it IS instructive in that regard, especially when you just look at the desired result ('skim'), vs changes in initial sales, exponent, etc..

To your point about the number of contracts in place 7 years ago, play with the spreadsheet a little bit to get your own idea of the maximum number you can have and still remain solvent until Aug 2014... You suspect 'lumpiness' in contract sales... I DON'T after having played with the model, any jump in sales, even if only a spike (an 'impulse'), REQUIRES an increase of the exponent value to stave off bankruptcy. They went for too long for me to not suspect that Ed (the accountant) knew much more than me on this subject and the stories of Joel 'limiting' the sales just makes it seem more obvious that they controlled the growth pretty well until they hit 2011 when I'm willing to bet 2500+ sales/yr just became unattainable (hence the advertisement and the reports of trolling time-share seminars, etc.). So, it doesn't really matter what I think, but I'm inclined to also believe that the number of contracts with significant claw-back-able profits is going to be somewhere around that 800-1200 number (those that sold just BEFORE the 5-yr mark just won't have very much profit to give back will they?)... THEN, the people who OWN those contracts (and this is a significant variable) have to actually still have some kind of tangible assets to claw-back.... optimism is fine, but everybody really needs to plan for the worst.

[worried]

Also>>> for NET WINNERS>>>> The claw back applies to the DISTRIBUTIONS (fraudulent transfers) going back 7 years, it has nothing to do with when the contracts were purchased. They aren't going to characterize the distributions as payback of principal vs profit. They will simply calculate what the total profits were and take the LESSER between total profits vs distributions in the 7 year period.

I'm sorry, but I just don't understand what you're trying to say here... my understanding is simply that the claw-back will be applied to 'profits' only, and only going back 7 years. What is wrong with that statement?


Here's another thought... if there are 1000 contracts in claw-back position, then over 7 years, the profit that is claw-back-able is (let's pick a number between the $200/month and $330/month distributions, say $280 (just because it makes the numbers a little easier))

$280 * 7 * 12 * 1000 = ~$24,000,000

that clawback pot of $24M has to get spread out to almost 2400 victims (minus the few who felt the 'claw')... that's $10k apiece.... If there are 2000 contracts in perfect claw-back position, that's still only $20k apiece.... if there are 10000 contracts in perfect claw-back position that's $100k apiece, but you're not going to be anywhere near 10000 or even 2000 I think... .... and it also occurred to me that the receiver might not just divy up the proceeds that way, he MIGHT scale the payouts according to how much of a loser you are. The people that spent $6M in that last month probably deserve more than someone who bought JUST 1 ATM 4 years and 11 months before Aug 2014.... don't know...

[grimreaper]

So, it doesn't really matter what I think, but I'm inclined to also believe that the number of contracts with significant claw-back-able profits is going to be somewhere around that 800-1200 number (those that sold just BEFORE the 5-yr mark just won't have very much profit to give back will they?)... THEN, the people who OWN those contracts (and this is a significant variable) have to actually still have some kind of tangible assets to claw-back.... optimism is fine, but everybody really needs to plan for the worst.

Well, it appears the average #contracts owned per investor is 15. You can get a pretty good perspective by taking the # investors at the end>>>2000 (determined by the # checks sent out in month prior to the collapse) and divide that into the total contracts (30000). It certainly would be at least 10. You can also get a clue by looking at the survey of 200 investors here>>>
https://nasivictims.wordpress.com/

If you use your # CONTRACTS subject to claw back ..say 1000 CONTRACTS..that would only represent 67 INVESTORS, if you use AVERAGE 15 CONTRACTS per investor.
Of course, I don't know what you consider to be a *significant claw-back-able* profit? Certainly anything over 10K would seem to be. If an investor had 10 contracts (average investor) and was *in the money* on all of them, that would be 20K plus for just ONE YEAR beyond the 5 year holding period for profit.

[worried]

A contract bought for $12000 1 month before the 5 yr mark will only have $200 worth of claw-back exposure. There is a continuum of such contracts between the 5 and 7 yr mark, ever calculate the area UNDER a parabolic curve between two points on the x-axis? Here's a hint, the total area is NOT the highest y-value of the curve times the distance between the two points on the x-axis. It's a lot less than that. Counting up the claw-back exposure of those contracts bought between the 5 and 7 yr mark is just like that. The ones bought right AT the 7 yr mark have a full 2 years of exposure, but REMEMBER, since the growth of contracts from year to year is EXPONENTIAL, that number of contracts is significantly LESS than (look at the model) the number at the 6 and 5 yr mark... if you want, go ahead and increase the time resolution of the model to monthly and see for yourself. It's still just a model, but it'll give you an idea.... So... 'significant' is a SUBJECTIVE term that I applied in an attempt to allude to the complexity I just described. The end result is that, just like Gregg said, you're not going to get much, relatively speaking, from those contracts bought between that 5 and 7 yr mark.

And... somebody on here pointed out that, sure, the AVERAGE contracts/victim may be 15, BUT, that average is pretty meaningless because the DISTRIBUTION of contracts/victims is widely variable (look up statistical distributions and see if you can figure out which model applies to the PARTIAL sample of numbers taken by the survey and then figure out what the corresponding parameters are for that distro (chi-values, etc.) and THEN, you can start to talk about probabilities of actually GETTING all that exposed money based on the number of PEOPLE likely to have enough money to go after (I think you'd have to research and rely on historical receiver clawback data for this), but, remember you only have a PARTIAL sample of people from the survey, you have to state your probabilities using 'confidence intervals'.

http://en.wikipedia.org/wiki/List_of_pr ... tributions
http://en.wikipedia.org/wiki/Confidence_interval

Gregg and others just seem to know from experience that unfounded optimism has hurt people... I just don't see a lot of optimism in the numbers....

Look, in the work I do (engineering, not financial btw) I've spent a LOT of time dealing with all that complex minutiae, but often it's really better to NOT get too lost on the details and just 'worst-case' and 'best-case' an analysis.... That's why I pointed out that (again going by my model which is NOT the gospel, but has to be close enough for these kinds of discussions) even if you had 2000 contracts with FULL 7 year exposure, it doesn't amount to much in recovery... and HERE you can use your AVERAGE, $20k recovery on 15 contracts qualifies as pennies on the dollar... hope for the best but plan for the worst

[grimreaper]

Gregg and others just seem to know from experience that unfounded optimism has hurt people... I just don't see a lot of optimism in the numbers.... hope for the best but plan for the worst

I'm not trying to imply that net losers here should be optimistic...certainly history tells us they will be very fortunate if they can recover 25 cents on the dollar after all is said and done. I think this case *could* result in a relatively better outcome historically because of it's simplistic nature and the ability of the investigators to identify winners and losers. You also have capitulation and admission of guilt up front by the perpetrators. In addition, as many here have pointed out, profits are one thing>>>clawing them back is another. The debate here is seems to be about the actual amount of $$$ *on the table* that losers... IN THEORY... could recover. I'm of the opinion that there is a substantial amount of *net profits*...but it appears that only TED and myself are of that opinion.

[Tednewsom]

"Substantial" being relative. To cynical old me, 10 cents on the dollar is "substantial," considering the circumstances. A lot of our crew of genuine experts have weighed in with the opinion that the total amount of recovered dough will be "$ 000,000.00," plus or minus a dollar. There may well be previous Ponzis which resulted in exactly that. I find that difficult to believe, given the length of time it was "profitable" (or at least self-supporting) and the amounts paid out to early marks-- and presumably equal amounts syphoned off to the two crooks.

[grimreaper]

"Substantial" being relative. To cynical old me, 10 cents on the dollar is "substantial," considering the circumstances. A lot of our crew of genuine experts have weighed in with the opinion that the total amount of recovered dough will be "$ 000,000.00," plus or minus a dollar. There may well be previous Ponzis which resulted in exactly that. I find that difficult to believe, given the length of time it was "profitable" (or at least self-supporting) and the amounts paid out to early marks-- and presumably equal amounts syphoned off to the two crooks.

By *substantial* I was only referring to net profits subject to claw back....not what ultimately may be recovered. As I recall, you were of the opinion, that there could be as many as 1000 net winners?

[Gregg]

I'm not trying to imply that net losers here should be optimistic...certainly history tells us they will be very fortunate if they can recover 25 cents on the dollar after all is said and done. I think this case *could* result in a relatively better outcome historically because of it's simplistic nature and the ability of the investigators to identify winners and losers. You also have capitulation and admission of guilt up front by the perpetrators. In addition, as many here have pointed out, profits are one thing>>>clawing them back is another. The debate here is seems to be about the actual amount of $$$ *on the table* that losers... IN THEORY... could recover. I'm of the opinion that there is a substantial amount of *net profits*...but it appears that only TED and myself are of that opinion.

You keep acting like this is the only time they've busted someone and been able to identify all the participants, not true. Identifying everyone involved isn't that complicated in most of the scams, and some of them now have over one million victims, many using anonymous payment processors based overseas whose business model is hiding the identity of the account holders. And still, in the end, they identify ALL the winners and most of the losers.
The very few Ponzi schemes that end up with victims getting something back ALL do have one thing in common, when the authorities showed up to lock the doors, there were more than a few million (or few tens of millions) in the bank. Because of the math we've now graphically demonstrated here for you, and which you still want to ignore, when the Feds find a pile of cash in the bank its very often, by itself, enough to pay back 20-30% of the victims right away. You see, more than once, the authorities have started looking into schemes because of reports from banks about funny things going on in accounts. Sometimes they even close the account and the scheme scrambles to find a new bank that will take their money (word gets around when a bank kicks you out) In ASD, the Secret Service walked in and found I think $47 million in cash, uncashed checks and money orders because Andy couldn't find anywhere to deposit it. As the scam, like THEY ALL DO, was growing on an ever steepening growth curve, even though it had been going on for a few years most of the money had come in at the end, and a significant portion of it was right there, in little deposit bags, at the office.

And again I ask you, how much again did they find on hand when NASI was raided? Enough for a used Camry IIRC..... Right now, for me, the over/under on total recovery via clawbacks is $4 million, minus expenses. Total amount free to distribute to victims less than $3 million.

Of course, all this high-falutin mathy geek past performance driven using model and just happens to be close at a few waypoints guessing stuff is just that, because you PERSONALLY know 7 people who were in on it.

[webhick]

And again I ask you, how much again did they find on hand when NASI was raided? Enough for a used Camry IIRC.....

It was $461k in just NASI's account. $46k in various other accounts (including personal). So, more like a 10 year old Veyron that's been in a couple of accidents and sometimes comes alive and tries to eat the neighborhood kids.

[Tednewsom]

By *substantial* I was only referring to net profits subject to claw back....not what ultimately may be recovered. As I recall, you were of the opinion, that there could be as many as 1000 net winners?

I thought I was just agreeing with you, I've never bothered to figure the thing out except in the broadest sense.
But why not? The thing lasted 17 years; their head salesperson had a stack of regular customers in the 200-300 range; there was another sales person who (guessing here) probably had 100, maybe 200 or more. And Gillis was selling a crapload of these things himself. You subtract their 400 from a thousand and Gillis only had to sign 600 suckers in the entire first 3/4s of the scheme. So, yeah, that's 1000 "net winners" (acknowledging that if they bought more machines later, they might dive backward into the "net losers" pool.). That's also 1000 happy customers spreading the word and hauling in more suckers. And the remaining 1000 were probably of urgent necessity because the bubble was inflating too much.

[grimreaper]

So, yeah, that's 1000 "net winners" (acknowledging that if they bought more machines later, they might dive backward into the "net losers" pool.). That's also 1000 happy customers spreading the word and hauling in more suckers. And the remaining 1000 were probably of urgent necessity because the bubble was inflating too much.

I think some miss the point that for every new investor, the new funds cover FOUR older investors PLUS THEMSELVES for a year (if you just simplify and use the same distribution amounts for both old and new). Yes, this still requires ever growing numbers of new investors, but not like a pure pyramid would. It's a simplification, but shows that this can't be analyzed like a simple pyramid . Also, as you pointed out...older investors may have gone back in as *new investors*as well, but remaining net winners in the end. So, as you, I believe we have a much larger # of net winners. 1000 would be half the total and about a 50/50 split winners/losers. In any event I don't see 5:1 losers vs winners. I'm hoping we will eventually find out when the receiver submits his next report.

[worried]

Try looking at it this way:

You start by selling one contract that pays 20% annually.

You start with that $12000 in the bank (ignore savings account interest) and just pay the $200/month for 5 years.

At the end of that 5 years, you just sent out the last $200 and have $0.00 in the bank. You run out and sell another contract to somebody. Now you have $12000 in the bank again, but now you have to pay out $400 per month.... You're going to have to sell another contract in 2 and 1/2 years.... then 1 and 1/4 years, ... then 0.625 years, then 0.3125 years.... etc....

OR... say at the end of the first 5 years when you hit $0.00 you go out and sell TWO contracts. GREAT, right? Now you've got $24000 in the bank... but wait, now you've got THREE contracts to service, that's $600/mon going out, that will only last 40 months... ok... go out and sell THREE contracts instead of just two => $36000 in bank but have to service FOUR contracts at $800/mon, that will only last 45 months...... ok.....try selling TEN contracts when you first hit $0.00 => you'll have $120,000 in the bank, BUT you have to service 11 contracts at $2200/mon, so that will only last 54 months.... You can sell a MILLION contracts at that first 5 yr mark but that money will NEVER, EVER, EVER last the next full 60 months. This is the way exponential systems like this work. If you're just not good in math, well, fine, but do yourself a favor and listen to people who ARE...

edit:... look, this is very basic stuff for people who study a lot of math, like engineers or accountants... Ed knew exactly what he was doing. They would NEVER have lasted so long if he didn't. The questions just remain: what was the end game plan and what went wrong?

The math doesn't support, in ANY way, your 'belief'... far from it.... just because you don't understand the math doesn't mean it's wrong...

[worried]

So, as you, I believe we have a much larger # of net winners...

It was 'belief' that got 2400 victims into this mess.... anytime in life you hear yourself say
"I believe", you should think to yourself "be careful"... because, unfortunately, belief often leads to unjustified certainty... and such certainties are the root of a lot of evils in this world...

edit: and, grimreaper, just because you need help thinking logically and critically, I'm going to point out that *IF* the ratio of winners:losers is really 1:1 like you BELIEVE it is (and it doesn't matter here if we're talking # of contracts or people), *THEN* your small sampling of half a dozen investors that you personally know is a STATISTICALLY INSIGNIFICANT number, you can't draw any reliable conclusions from such a small sample (again, go read about 'confidence intervals')...


BUT, *IF* there are just a few dozen PEOPLE that the receiver has judged to be worth offering a settlement incentive, *THEN*, your sampling of your 'winners' MIGHT be more significant....

You can't have it both ways, either your knowledge of a few insiders is significant or it isn't and I didn't read that the receiver was offering the incentive to 1000 people... so, do you see how you've contradicted yourself and ignored evidence (the receiver's incentive)? Belief is dangerous....

Well, now, I HAVE gone back and tried to see how CLOSE I can come to a 1:1 winner:loser ratio in the model by adding a second factor to flatten out the growth curve toward the end and still end up with 31,000 contracts and (somewhat match the $130M sales in the last year or so, I'd forgotten about that). The closest I can get is about a 1:5 winners:losers ratio without becoming too ridiculous on the flattening (actually going negative growth)... so, I DO have to admit that, as grimreaper pointed out a while ago, my model didn't account for the flattening and it DOES help to increase the number of clawback-exposed 'winners', but not significantly.... oh well, the reality may have been much messier than my silly model anyway...

[grimreaper]

It was 'belief' that got 2400 victims into this mess.... anytime in life you hear yourself say
"I believe", you should think to yourself "be careful"... because, unfortunately, belief often leads to unjustified certainty... and such certainties are the root of a lot of evils in this world...

In the end...none of us know the ratio at this point do we? Your opinion and *model* is also a *belief* isn't it? You seem convinced the MAX ratio of winners:losers is 1:5..that's a belief.
I believe somewhere between 3:5 and 1:1 is the case. We have taken our positions and now we just have to wait it out until the receiver reveals the true picture.

[Judge Roy Bean]

None of the models or more touchy-feely theories attempt to deal with the recoverability factor: Of the population of alleged winners, what percentage of the extant "winnings" can be extracted without spending more in the effort than will be recovered?

[The Observer]

None of the models or more touchy-feely theories attempt to deal with the recoverability factor: Of the population of alleged winners, what percentage of the extant "winnings" can be extracted without spending more in the effort than will be recovered?

I regret that I ever mentioned modeling a Ponzi scheme. My intent was not to recreate what happened with NAS. That would be impossible given the little information we have. What I wanted to demonstrate was the geometric spiraling that goes on in Ponzi scams in general, why the longer the scam runs the need for investors goes up dramatically, and why you cannot have a ratio of net winners to net losers as 1:1. And as you pointed out, no model is going to predict recovery of the losses. I think such a model could demonstrate why recovery would be extremely limited, but even then you would could only have a range of recovery predicted.

You are exactly right that the real issue of recovery boils down to the cost vs. equity in the asset. But that has been remarked on before by me and others over the last year or so. Despite the facts and reality of debt collection, there are some here who simply refuse to accept the truth of that formula and insist on believing otherwise. You can go back through this thread and seen instances of these people being forced into a corner to agree that recovery is going to grim, only in the next breath start talking about "significant" monies out there for the taking, "1000 net winners", and "millions of dollars" being hidden by Joel and Ed.

All you can do at that point is realize is this is another instance of people sticking their heads into the koolade barrel rather than accept the reality before them. Someone above mentioned "belief" as being the prime motivator here, they would be correct. Some people just want to believe in the ridiculous. Which is why Ponzi scams keep happening over and over and over and over and over....

[Tednewsom]

You can go back through this thread and seen instances of these people being forced into a corner to agree that recovery is going to grim, only in the next breath start talking about ... "millions of dollars" being hidden by Joel and Ed.

They were fixed enough to drop two million into the Fuel Doctor con. Somehow I don't believe (damn, that word again!) The Boyz were desperately gambling with their last pennies on that one.

[The Observer]

They were fixed enough to drop two million into the Fuel Doctor con. Somehow I don't believe (damn, that word again!) The Boyz were desperately gambling with their last pennies on that one.

But see, this is where you start conflating issues and distorting the story. Was it $2 million? Or was it $1 million?

And no one ever said it was impossible for Ed and Joel to have the change to invest in Fuel Doctor. We know for a fact that they did. No one else did not say that Ed and Joel were living on pennies due to their skimming. All that has been said that Ed and Joel could not have taken out a majority of the fund invested, as some would like to maintain, because the mathematics of the situation would require that a majority of the funds were needed to keep the marks satisfied.

In light of your contention that these two criminals had stashed money, I asked if that were true, then why didn't Ed and Joel run with their ill-gotten gains, instead of staying here and facing the music? In light of your explanation that they were idiots, I then asked if they were so stupid how could they stash and hide assets and keep a scam going for 19 years? Then you brought up a mob connection and that Ed/Joel were taking one for the team while the mob ran off with the stash. How many times are you going to keep this cycling through?

[Tednewsom]

How many times are you going to keep this cycling through?

Oh... as often possible until there are enough hard facts to properly figure things out.

In light of your contention that these two criminals had stashed money, I asked if that were true, then why didn't Ed and Joel run with their ill-gotten gains, instead of staying here and facing the music?

Indeed. And why not immediately deny everything, or instantly lawyer up? Are we to assume that two successful con men were simply too old and tired to continue? And that they both agreed simultaneously that the jig was up and there's no use fighting it? Nah. Makes no sense.

Then you brought up a mob connection and that Ed/Joel were taking one for the team while the mob ran off with the stash.

That's one explanation which explains their behavior. I'm not saying it's the only explanation, but it does explain a couple of things: why stretch the game out past the point of usefulness? Why knock yourself out for years and be content with a modestly affluent lifestyle? And where did all their dough vanish?

In light of your explanation that they were idiots, I then asked if they were so stupid how could they stash and hide assets and keep a scam going for 19 years?

I don't think I ever used the word "idiots," did I? I truly can't recall. Crooks, yes. Con men, grifters, thieves, criminals, embezzlers, yeah, a number of times. Maybe even jerkwads, heartless bastards, no-good sons-of-bitches, depending on the phase of the Moon. But not idiots. I don't think.

No, they weren't damned fools, and I have expressed perverse admiration for their achievement, creating and milking a criminal enterprise for nearly two decades. Yes, it was relatively unimaginative, since the same grift has been done again and again, but it floated for 17 years. I'd say that's a successful grift from the standpoint of longevity. So, no, they were not stupid (in general).

worried's meticulous (if necessarily simplified) spreadsheet two pages back calculates the total skim to be $36,500,000. That $36,500,000 does not appear to be anywhere. It certainly wasn't in the company account, which was less than a half million total. (I expect the company accounts never had a large balance for more than a few days. And I still think the receiver & the SEC should name the bank as a co-conspirator. But anyway.) The company owned no property (as far as anyone knows), its "securities" consisted of a couple hundred old ATMs. Wishner and Gillis did not (again, as far as anyone has found) live the life of royalty and conspicuous consumption. They lived well, but not overly extravagantly. Assuming they were 50/50 partners, that's $18,250,000 apiece. Invested and spent wisely, that's enough to let their grandchildren retire.

I suppose we can dismiss this and surmise that they were both so altruistic and concerned about their customers that they started dipping into their own ill-gotten gains and paying out the monthly dividends from their own pockets, for the sheer pleasure of keeping their leaky boat afloat. That would render worried's spreadsheet moot, because in the end, there was no "skim" to the grifters. They were nice guys who spent every dime they stole just to make people happy. All $36,500,000 of it.