Pharaoh
Brigadier General
- Messages
- 20,304
CRE Capital Corporation wasn't one of those cheap web-based HYIPS. This company had a real office in the US. They wouldn't accept money from individuals. If you wanted in, you had to form your own company and make a contract with them. They even told investors, oops, I mean investment companies, that they planned to have a stock offering soon and would let those lucky few in for only a few dollars per share. An outside auditing firm had supposedly confirmed that this stock would be worth $40-45 per share.
Contracts were month to month, and the return was 10% per month. This was backed up by claims that their traders averaged far higher returns than this. They claimed to have a HUGE cash reserve fund that would allow them to keep paying investors in the unlikely event that their their incredibly successful traders had a bad month or two. These super traders were allegedly specialized in trading the USD/JPY.
Still, the warning signs were all there. A brand new company (website created in July of 2008). Claims of investment returns that were far too good to be true (10% per month, every month). Alleged trading gurus that could produce these miraculous results, but with no track record. Investors were recruiting friends and family members to join in the money fest. It all screamed Ponzi, but most people didn't take the time to investigate.
My fellow FPA member NG12 shares my suspicious nature. He thought something seemed wrong with this and checked with the FPA. It seems that CRE wasn't registered with the NFA or CFTC. When NG12 asked about this, he was given a song and dance about how it wasn't necessary, since they only had contracts with companies, not individuals. Of course, forming a sole proprietorship or an LLC is easy for someone to do if they wanted to invest . . . and the minimum investment was $100,000.
I can understand the temptation to join such a venture. Wow! Take out a second mortgage on my house at 4-8% annual interest and get 10% per month! Yaaay! Free money!!!! What I don't understand is how anyone could not realize that this was at least a little suspicious (it was actually a LOT suspicious). How could anyone even consider placing $100,000 with someone they don't know without either doing some personal research or shelling out a few thousand dollars to hire an investigator to do some deep digging for them.
One person even posted in the FPA forums that he'd visited the offices of CRE and had confidence in them. This person also didn't seem to care that CRE President James Ossie was the target of some lawsuits involving a real estate investment scheme that didn't work out to everyone's satisfaction. It's amazing what a nice office can do to lull some people into trusting someone. I'll bet that Charles Ponzi had a nice office too.
I take a certain amount of personal amusement in this, because Bob Gaubert, the guy who seems to be the VP of CRE Capital wrote to the FPA to complain that NG12 posted their confidential contract and that I had said that they might be a Ponzi scheme.
Guess what Bob? The SEC and CFTC just shut your company down today and froze all of its assents. It looks like your company's forex trading lost millions of dollars. It also seems that the SEC and CFTC think that you were paying people, er, companies their 10% each month from the money that new people invested. That is the very definition of a Ponzi Scheme.
In the end, it looks like about $25 million dollars was taken from about 120 people (or their personal companies they formed so they could invest). That comes to an average of about $200,000 per victim.
Think about it – if you want to risk $10 or $20 with some online investment scheme that's probably a scam, it won't destroy you. If you are thinking about turning over a LOT of money (maybe your life savings, maybe a second mortgage on your home) to someone, spend some time and a few dollars checking it out first. Sure, you may think you are a great judge of character, but con men are specialized in fooling great judges of characters. To risk $100,000 (or more) and spend less time checking it out than you do picking a new car is not a good idea. A lot of people fell for this because their friends and family members were getting their 10% back each month, every month. That's because new people kept falling for the scam and putting more money in. If the SEC and CFTC hadn't stepped in, sooner or later the supply of new investors would have dried up and the company would have disappeared with the remaining cash.
Of course, it could turn out that both the SEC and CFTC are wrong. Maybe CRE Capital was really making piles of money trading forex. Maybe it wasn't a Ponzi scheme. Maybe the Easter Bunny is real. Given that range of choices, I'll put my money on the Easter Bunny.
I'd like to thank the FPA for giving me the privilege of writing this article (or is it just that the Scam Investigators are slacking?). Even more, I want to thank NG12 for spotting this scam so quickly. I'm sure his timely warnings saved some people from losing money on this scam.
Needless to say, the FPA Scam Investigations Committee agrees with me that this qualifies as a scam.
The Official FPA Scam finding against CRE Capital
The thread that NG12 first posted about CRE
Contracts were month to month, and the return was 10% per month. This was backed up by claims that their traders averaged far higher returns than this. They claimed to have a HUGE cash reserve fund that would allow them to keep paying investors in the unlikely event that their their incredibly successful traders had a bad month or two. These super traders were allegedly specialized in trading the USD/JPY.
Still, the warning signs were all there. A brand new company (website created in July of 2008). Claims of investment returns that were far too good to be true (10% per month, every month). Alleged trading gurus that could produce these miraculous results, but with no track record. Investors were recruiting friends and family members to join in the money fest. It all screamed Ponzi, but most people didn't take the time to investigate.
My fellow FPA member NG12 shares my suspicious nature. He thought something seemed wrong with this and checked with the FPA. It seems that CRE wasn't registered with the NFA or CFTC. When NG12 asked about this, he was given a song and dance about how it wasn't necessary, since they only had contracts with companies, not individuals. Of course, forming a sole proprietorship or an LLC is easy for someone to do if they wanted to invest . . . and the minimum investment was $100,000.
I can understand the temptation to join such a venture. Wow! Take out a second mortgage on my house at 4-8% annual interest and get 10% per month! Yaaay! Free money!!!! What I don't understand is how anyone could not realize that this was at least a little suspicious (it was actually a LOT suspicious). How could anyone even consider placing $100,000 with someone they don't know without either doing some personal research or shelling out a few thousand dollars to hire an investigator to do some deep digging for them.
One person even posted in the FPA forums that he'd visited the offices of CRE and had confidence in them. This person also didn't seem to care that CRE President James Ossie was the target of some lawsuits involving a real estate investment scheme that didn't work out to everyone's satisfaction. It's amazing what a nice office can do to lull some people into trusting someone. I'll bet that Charles Ponzi had a nice office too.
I take a certain amount of personal amusement in this, because Bob Gaubert, the guy who seems to be the VP of CRE Capital wrote to the FPA to complain that NG12 posted their confidential contract and that I had said that they might be a Ponzi scheme.
Guess what Bob? The SEC and CFTC just shut your company down today and froze all of its assents. It looks like your company's forex trading lost millions of dollars. It also seems that the SEC and CFTC think that you were paying people, er, companies their 10% each month from the money that new people invested. That is the very definition of a Ponzi Scheme.
In the end, it looks like about $25 million dollars was taken from about 120 people (or their personal companies they formed so they could invest). That comes to an average of about $200,000 per victim.
Think about it – if you want to risk $10 or $20 with some online investment scheme that's probably a scam, it won't destroy you. If you are thinking about turning over a LOT of money (maybe your life savings, maybe a second mortgage on your home) to someone, spend some time and a few dollars checking it out first. Sure, you may think you are a great judge of character, but con men are specialized in fooling great judges of characters. To risk $100,000 (or more) and spend less time checking it out than you do picking a new car is not a good idea. A lot of people fell for this because their friends and family members were getting their 10% back each month, every month. That's because new people kept falling for the scam and putting more money in. If the SEC and CFTC hadn't stepped in, sooner or later the supply of new investors would have dried up and the company would have disappeared with the remaining cash.
Of course, it could turn out that both the SEC and CFTC are wrong. Maybe CRE Capital was really making piles of money trading forex. Maybe it wasn't a Ponzi scheme. Maybe the Easter Bunny is real. Given that range of choices, I'll put my money on the Easter Bunny.
I'd like to thank the FPA for giving me the privilege of writing this article (or is it just that the Scam Investigators are slacking?). Even more, I want to thank NG12 for spotting this scam so quickly. I'm sure his timely warnings saved some people from losing money on this scam.
Needless to say, the FPA Scam Investigations Committee agrees with me that this qualifies as a scam.
The Official FPA Scam finding against CRE Capital
The thread that NG12 first posted about CRE