ATM LEASEBACK SCHEMES-- any insight?

[Tednewsom]

The plot sickens.

[Judge Roy Bean]

... But at least we know, right now, there are a couple of eager, energetic, and hopefully savvy, lawyers snooping around looking for that money now in addition to the Receiver.

I would suggest all you really know is a law firm has taken on a cause. I would also temper that with the fact that less than 10% of civil suits ever reach trial - and the record for class actions is even more dismal.

[Gregg]

Adding to what the Judge says, I would also posit that this is just a form of greenmail by a law firm against an FDIC insured bank who will surely not want to draw any more attention than they have to from any number of regulators.
If that turns out to be the real truth, remember that the lawyers get 1/3, a lead plaintiff gets a substantial amount, and everyone else often gets a coupon to save X amount on their next ponzi scheme.

[notorial dissent]

What the Judge and Gregg says is quite true. Class actions are hideously expensive and the pay outs for the class can be minuscule. IF it can be proven that the bank people were involved, then it would be in everyone’s best interests if the Receiver moved against them as at that point he would also have the SEC, Comptroller, and probably Treasure looking in as well and behind him. Again IF it can be proven that the bank officers, and probably by extension the bank were also involved in the scam, even if the bank itself were actually an innocent party, the Receiver’s reach would probably be further and cheaper than a law suit, which could take years to even get to court. This could also add to the Receiver’s ability to trace money that has otherwise disappeared. Guess we’ll see. I also can't help feeling that there will be some further criminal indictments coming on the bank people, since that is a whole other great big kettle of smelly fish.

[worried]

I appreciate what everyone is saying. It's good to not get hopes up unreasonably high, but at the same time, I've just been trying to not give up completely. I still sniff around and come up with tidbits and hare-brained ideas to post (and email to people)...

Now... other than the briefest mention in a Receiver's report months and months ago of "looking into" the possibility of going after CNB, we haven't seen or heard anything about this until the complaint was filed (and posted... thank you!). When Joel and Ed were sentenced, the judge did mention the 'help' that Joel and Ed had supplied helped to reduce their sentence (in addition to their age). Did Joel and/or Ed tell the authorities about being extorted by the banker?? According to the Receiver rebuttals to Joel/Ed's pre-sentence reports/positions, Joel and Ed didn't really help much at all, and there was no mention of this extortion going on for years in anybody's pre-sentencing positions. Did they NOT say anything about the banker, and why not? Pure altruism, "honor among theives"?

[Judge Roy Bean]

... Did Joel and/or Ed tell the authorities about being extorted by the banker?? According to the Receiver rebuttals to Joel/Ed's pre-sentence reports/positions, Joel and Ed didn't really help much at all, and there was no mention of this extortion going on for years in anybody's pre-sentencing positions. Did they NOT say anything about the banker, and why not? Pure altruism, "honor among theives"?

If they had alerted "the authorities" to the banker's alleged extortion, an investigation would be underway (or completed by now).

[notorial dissent]

I expect there are some pretty good reasons, at least for them, that the "boys" didn't mention their silent partners at the bank.

[worried]

Is there any reason Joel/Ed's lawyers would have advised them to NOT report the banker? (assuming they told their own lawyers about the banker)...

I would have thought that Joel/Ed could have helped themselves in the sentencing phase by trying to shift some blame on to the banker. That would have been a MUCH more plausible effort than most of the rest of the crap in their presentencing arguments for leniency. But, that's just what *I* would think, I'm not a lawyer myself, that's why I ask here...

Thinking a little more along those lines... whether J&E told their own lawyers about the banker or not. I can only think of two reasons for neither of them to say anything about the banker: fear or gratitude. I think they showed PLENTY of gratitude by giving the banker an extra few hundred thousand dollars (if that's all). I'm pretty sure their lawyers, their families, even themselves would have considered that more than enough "gratitude". They all would have considered the banker to have made his own decision to get involved and took the risk knowingly.... so all I have left is "fear"... of who? a banker? That doesn't seem right. Unless the banker has other, worse dirt on J&E and/or their families (knowledge of other undiscovered mis-dealings)?

[Gregg]

No one has mentioned that the whole "the banker held us down and made us do it and then wouldn't let us tell anyone about it" story might be just that, a story. It doesn't come to light the result of an unbiased and candid investigation, but in the form of a pleading in a lawsuit.

Its the version that the other side, without rebuttal, has assembled in the way that most helps their case. Again, I can't stress enough how skittish banks get about lawsuits that might lead to them having to answer any questions that could find there way to one of their regulators. If only two words of the complaint are true they might settle to keep two more from getting into the public record.

I think its at least as plausible as the story that the story is grossly distorted from whatever truth might be its genesis. I'm curious to see how the bank responds, and what kind of discovery each side wants.

[Tednewsom]

Indeed.

The connection with a couple of bank officers is a can't-win PR nightmare for the bank. If they were active in the scam, the entire bank and possibly its various branches will be seen as crooked, or at least populated by crooks. If the bank paints the two execs as dupes, it's just as bad. That would indicate the bank was stupid enough to hire naive idiots to manage the bank's affairs.

OK, brain-teaser. How many con victims keep the knowledge of a con to themselves? Versus how many get so enthusiastic, they can't wait and corral their friends and colleagues into investing in this Can't Lose deal? Especially when you make a bump of a grand or two every time one of your personal suckers plunks their money down, and even perhaps a continuing percentage in your customer's "profits" ala a MLM scheme?

And further: is their a soul as pure as this, who would not offer to their boss a chance to get in on a perfect money-making scheme, thereby currying favor with the boss and even maybe nabbing a promotion because their superior is so happy with his newly-found "20% annual return"?

Point? How high does the infestation go? Were there only the two little termites in the tree?

My guess: the two known crooks will retire to spend more time with their families, getting a healthy severance package and an unsubtle warning to keep their mouths shut if they know what's good for them.

[worried]

A separate, similar complaint was filed back in January:
http://media.wix.com/ugd/f30c02_10d264a ... e252a4.pdf

The complaint linked to a few posts ago came out just a few weeks ago. The 'original(?)' complaint doesn't name any particular person as a defendant, just the bank. The March complaint is pretty personally focused on a banker and his wife and her sister, as well as the bank.

Both complaints lay out the argument that the bank itself must be liable based on the fact that a novice could look at the checks coming in and going out and see that it was a ponzi, AND, the government has been mandating procedures that make it impossible to not notice a Ponzi being run out of a bank account. To not see the ponzi would be at best gross failure to follow mandated procedures (as well as probably falsifying documentation of having done so). The March complaint goes a little farther in reporting(speculating?) that the bank manager himself was purposely shielding the account from scrutiny, etc. and even extorting Joel & Ed for many years. The January complaint doesn't go quite that far but does mention the 'bank' acting as a 'reference' for some skittish investors and "helping to insure that checks didn't bounce".

Interesting differences in complaints. Interesting that there is more than one (the Jan complaint isn't quite as much fun to read).

Here's a link to a story about a bank being held responsible ($72M) for "ignoring signs of wrongdoing" in a Ponzi case:
http://www.bizjournals.com/columbus/new ... 5m-as.html

I have to add that the reason I still 'like' the March complaint is not just for some of the colorful language, but the fact that the banker himself being a recipient of checks explains the reopening of another bank account and sending out more checks even after the SEC/FBI had clamped down on everything. Now, Gregg, has cautioned that at least some or most of that story could be made up (to fit the evidence I suppose), and I've read Gregg and others give warnings about 'reload scammers'. All advice that shouldn't be ignored. But, if the banker WASN'T getting checks, then I'm left with that question again of why reopen a bank account and send out more checks.... just sayin'...

[Tednewsom]

I read the whole complaint. Dayum! The banker was crooked, ain't no doubt about it-- but his WIFE!?!? Jeezus! Boy, she must've hit the ground running when they snaked their way into the NASI gig. She's been a major league grifter for years! And her sister was a fellow scammer.

Sounds like the makings of a cool LAW & ORDER episode. Except the only one left is SPECIAL VICTIMS UNIT. Okay... let's say the banker and his grifter wife get wind of the child prostitution ring that Ed and Joel set up to launder the ATM dough...

[worried]

I said it was fun to read didn't I?

You know, I'd still like to know how NASI and Fuel Doctor got paired up. I remember reading in one of the Receiver reports that Mark Soffa was getting paid by NASI as if he owned ATM's, but, in his own words, he didn't actually own any. This is similar to what is claimed about the banker. Was Soffa extorting Joel/Ed as well? After all, the Fuel Doctor device may be quackery, but what's illegal about that? False advertising? who cares... Did Soffa hear about the ATM scam and force them to 'loan' FD money both from NASI and from their personal accts? And then ask for continuous income?

Or... is the Fuel Doctor device/company simply a front for a money-laundromat that Joel/Ed were using (and others?). But, how did J/E find a convenient money-laundromat that happened to be headquartered around the corner? The money-laundering classifieds? Did Soffa put a sign in the window "money-laundering service available"? They could have been next door to each other in the same building and gone 40 years without talking to each other unless there were some reason for one of them to look for the other. Either Soffa was squeezing them, or laundering money for them... wow, I'm getting to be an expert on this stuff!

[Tednewsom]

Odd, serendipitous, possibly coincidental observation:

About a half mile from the old NASI offices, there's a corner gas station / garage / mini mart. On a quick trip to the area a month ago for a script meeting, I noticed a crude sign on the periphery of the parking lot: "Fuel Doctor." It didn't look new. Maybe it was a synchronistic use of the same words by the owner of the gas station. There was no elaboration or explanation on the sign, no mention of the "plug it in your cigarette lighter" nonsense. The mini-mart manager claimed no knowledge of "Fuel Doctor" or why the sign was there. "You talk to owner. Maybe he know. Not here now. Maybe tomorrow come ask."

[Gregg]

Odd, serendipitous, possibly coincidental observation:

4 of the 5 Watergate Burglers were in Dallas the day JFK was shot, as was Richard Nixon (although Nixon left in the morning before the shooting...or so he and TWA say...)


Don't read too much into it. I had heard of Fuel Doctor long before I heard of NASI, both have been around for quite some time, and of the two, Fuel Doctor had far more public visibility.

[Tednewsom]

OK, you got me. That explains the sign at the mini-mart.

[worried]

I finally noticed on page 10 of the 'march complaint' (linked to on the previous page): http://www.hbsb.com/wp-content/uploads/ ... 8.16-1.pdf,

Fuel Doctor had an account at CNB which was monitored by Fitzwilliam, who knew NASI transferred stolen funds to Fuel Doctor.

Fitzwilliam is the banker. The above quote includes the unproven allegation "who knew NASI transferred stolen funds to Fuel Doctor", but the rest of that sentence sounds like plain facts. My suspicion is that the banker is the one who introduced Joel/Ed to Fuel Doctor. I don't remember seeing any money flowing FROM Fuel Doctor to Joel/Ed, or anyone else. Yet, Joel and Ed were both shareholders in Fuel Doctor and also gave personal loans to FD, as WELL as a $1M loan/line-of-credit from NASI totalling a couple $million. But not ONE DOLLAR return on investment back to NASI or Joel/Ed. So, who benefited from that money given to FD? Who else 'loaned' money to FD and where did it go? It didn't go towards making new quack gizmos, they supposedly have more than enough of those somewhere in China in a warehouse. It didn't go to marketing in recent years, there WERE apparently some Fuel Doctor NASCAR sponsorships, but they appear to have been dropped now (if they were real in the first place).

I think the banker needed more and more money to flow through Fuel Doctor to somewhere, the 'where' is the question... Did it go to pay off other people that had their hooks in the banker and/or his gem of a wife? Did the banker successfully hide it somewhere? It didn't go back to NASI or the boys, so THEY weren't using FD as a laundromat, somebody else was...

I suppose if the complainants successfully argue that CNB, the bank itself, is liable for losses (just like the story about the bank in florida I linked to earlier), it won't matter where the money went, except to law enforcement types who like to find criminals...

[Tednewsom]

I think my derided theory of heaven-knows-how-far-back becomes a bit more reasonable in view of the information in the 2nd action. Based on Gillis' statements in interviews and personal pitches to customers, that he & his partner so loved their thriving business so much that they bought one ATM for every one they sold, basically, they were giving away free monthly money to themselves out of the kitty in amounts equal to the payout to any given customer.

I'd say that theory dovetails with the actions described in the 2nd claim, that Fitzwilliam et al received "free" ATM contracts, essentially stock dividends worth thousands of dollars a month without paying anything for the privilege.

If these payouts (NASI to Gillis, NASI to Wishner) were made in the same manner as all other payments to several thousand customers (however flaky their accounting procedures), they issued checks to themselves. So far there seems to be no evidence of this, though; no smoking gun of monthly checks paid in both guys' names. And on paper, the only funds to them appears to be their salaries.

Given the overlapping shell games of moving money back and forth (NASI to Fuel Doctor, NASI to the trailer company, Fuel Doctor back to Wishner & Gillis in the form of shares in the company; NASI to the banker, the banker to whomever; NASI to the trailer company, ditto), I think it's likely that funds circled back to Wishner & Gillis which are magically off the books-- under other other names -- either friends, family members, or simply fictitious aliases. Make sense?

[Gregg]

Nope. Not yet. Maybe a boatload of money went to Fuel Doctor, where it was immediately pissed away on infomercials and or stolen by the crooks running that company. Still no evidence of any money coming from Fuel Doctor to NASI and since this complaint, which at least convinces me it originates with someone who knows a pretty good version of the truth, doesn't allege any money flowing that way, its another reason for me to DOUBT it happened.

Maybe, Joel and Ed just got took.

[Tednewsom]

That I would find hard to believe. Karmic, perfect, symetrical, hysterical... but hard to believe.


Two experienced grifters with a complex, sustained con rolling in profits in the multiple millions, taken by a clump of amateurs selling stinkweed juice in a bottle as high end cologne... ohhhh... no, no... sorry... as much as I love every episode of LEVERAGE, I don't see it.

Seriously, it's also inconsistent with subsequent behavior and incidents. We know the trailer scam played the same sort of shell game with funds, even though it actually had a legit product/service. We know neither Gillis not Wishner tried to mitigate their crimes by rolling over on Fuel Doctor("Sure, we did a few bad things-- but look what THESE crooks did to US!"); that might've knocked a couple years off their sentences, but nope, not a peep. And we can deduce by the absence of facts that Gillis & Wishner never seemed to have disagreements with the Fuel Doctor team. No arguments, no threat to pull out, roll over on them, demand a bigger chunk, nothing. It therefore appears to be a happy investment. They supply the working capital, the other team runs the con, Gillis & Wishner get their skim.

My take: they recognized a good con. Gillis would recognize a shell game in an instant. The Fuel Doc gang outlined the scheme, The Boyz saw the potential, and bankrolled it for a piece of the action. And Fuel Doctor IS a good con. Sure, the gizmo is a useless piece of shit, but the con is terrific.