PIPS: an illegal ponzi scheme by AG from Alaska

[ycchen]

More bad news for PIPS and its supporters. I wonder how PIPS diehard supporters going to respond to this consumer alert issued by the Attorney General of Alaska? :cool:

http://www.law.state.ak.us/pdf/consumer/pips-alert-042705.pdf

State of Alaska
Department of Law

David W. Márquez
Attorney General
P.O. Box 110300
Juneau, Alaska 99811-0001
NEWS RELEASE

FOR IMMEDIATE RELEASE: April 27, 2005
CONSUMER ALERT:

People In Profit System (“PIPS”) is an illegal Ponzi Scheme

(Juneau) - Attorney General David Márquez warns Alaskans against investing in an
illegal Ponzi scheme that has surfaced in Alaska, called the People In Profit System
(PIPS).

PIPS has been reported in Ketchikan, the Matanuska Valley, and may be in other parts
of the state. Under this scheme investors are asked to “loan” $450 to the company.

From this payment, $25 is kept as an account set-up fee, with the remaining $425
characterized as a “loan” to the company for 180 days. PIPS agrees to repay the
investor with interest under a schedule depending on the type of plan the investor
chooses. The interest payments on your loan can be as high as 5000%, with a $450
loan returning about $8,800 in 24 months.

“Everyone should be aware of these Ponzi schemes because they are essentially
investment fraud,” said Márquez. “If it sounds too good to be true, it usually is.”

Because of their deceptive nature Ponzi schemes violate the state’s consumer
protection act. If a scheme appears to constitute a fraudulent securities offering it will
be reviewed as a possible violation of the Alaska Securities Act. In that case the state
Department of Commerce, Community, and Economic Development’s Division of
Banking, Securities, and Corporations could issue a cease and desist order.

"It is important to educate Alaskans about these schemes," said Governor Frank H.
Murkowski. "Too often the perpetrators of these scams prey on those who simply want
to get ahead. Knowledge is the key to preventing a vulnerable investor from becoming
a victim.”

In a typical Ponzi scheme, the operator promises high financial returns or dividends that
are not available through traditional investments. Instead of investing victims’ funds, the
operator pays “dividends” to initial investors using the principal amounts “invested” by
subsequent investors. The scheme generally falls apart when the operator flees with all
of the proceeds, or when a sufficient number of new investors cannot be found to allow
the continued payment of “dividends.”

Initial investors who paid into the PIPS system may in fact receive high returns. This is
not an indication that the investment is legitimate. Ponzi schemes rely on the “success”
of early investors in hopes that these people will advertise the scheme to others so the
base of new investors will grow. Sooner or later, the scheme must fail because it is
statistically impossible to continue the scheme.

If you have any information on PIPS or if you want additional information on Ponzi
schemes, please contact Assistant Attorney General Ed Sniffen with the Department of
Law’s consumer protection section at (907) 269-5200. Additional background
information about Ponzi schemes is also available online at the State of Alaska, Division
of Commerce, Community and Economic Development securities section “Schemes
and Scams” page: http://www.dced.state.ak.us/bsc/schemesandscams.htm.

[ycchen]

PIPS on Channel 2 news.

http://www.ktuu.com/CMS/templates/master.asp?articleid=13127&zoneid=4

Web-based ‘investment’ opportunity a Ponzi scheme
by Maria Downey - Thursday, April 28, 2005

Anchorage, Alaska - There’s a warning from the state attorney general's office and the Better Business Bureau about an illegal Ponzi scheme that's operating around the state, including Ketchikan and the Mat-Su Valley.

It's called People in Profit System, or PIPS, a Web-based scheme originating out of Malaysia, which incites people to work in their local areas to rev up support and investments.

According to the attorney general’s office, under the scheme, investors are asked to loan $450 to the company with promises of interest payments as high as 5,000 percent.

“What they are doing is they're taking money from other investors who are buying into this scheme, so it builds on itself,” says Assistant Attorney General Ed Sniffen. “The early investors get paid by subsequent investors. Sooner or later, there aren't enough investors to pay everybody, and the operator walks away with a lot of cash and millions of people get harmed.”

So far, there have been no arrests in the scheme.

But the attorney general’s office says that all Ponzi schemes are illegal and anyone who knowingly participates can be charged with a crime.

[sisco50]

Wow Up to 5000 percent now? I wonder where they got their misinformation from? Surely not from "Ingognitus" of TF or those CLOWNS at TG. Yes, that must be it because they are always bragging about sending letters to the AG of all the states and spreading their misinformation to anyone ignorant enough to listen. Also quite comical as half of those CLOWNS have a PIPS account as well. One tends to wonder what that is all about. :)

[Arzel]

What misinformation are you referring?

[ycchen]

The interest payments on your loan can be as high as 5000% sisco50, if you read the quote carefully, you will find that 5000% is not the interest rate.

So, to earn 5000% interest simply means $425 x (50 +1) = $21675.

How long will PIPS member takes to earn $21675 interest (or 5000%) based on one time investment of $425 with 2% daily interest, compounded?

The answer is approximately 200 days.

You can use the following HYIP calculator to verify the result.
http://aurumgames.com/calculator.php

[sisco50]

That's interesting. Too bad that the program does not work that way. (That is what is called misinformation.) If it did, I would be rich by now. LOL

[ycchen]

Then, shows us the correct information on how long will it takes for the initial investment (or loan) will reach 5000% (50 times).

[sisco50]

Then, shows us the correct information on how long will it takes for the initial investment (or loan) will reach 5000% (50 times).

Why would I want to do that? I am not soliciting, supporting or defending. I am just pointing out that there is a lot more misinformation out there than facts. Would be great if people bashing a program would first find out how it works before sending out letters misrepresenting the facts. I know that is asking far too much so I do not expect it. :)

[69mike]

wow, this post is very interesting....

AG in Alaska has declare PIPS a ponzi....

Must not be salmon season right now....lol

took time to find something to do i guess....

ok i know sisco50 & ycchen will post.... I want other people's input!
or is there just 2 people in this forum!....lol

guys i'm joking.... don't bash me! ;-)

69mike

[ycchen]

More news on this ponzi.

http://www.juneauempire.com/stories/052205/sta_20050522014.shtml
State orders Ponzi scammers - foreign and domestic - to stop marketing to Alaskans

ANCHORAGE - State banking officials issued a cease and desist order Friday to a private investment club after finding that its get-rich-quick scheme is illegal.

The state Division of Banking and Securities ordered organizers Friday to stop marketing the scheme to Alaskans.

The scheme, called the "People in Profit System," or PIPS, asks members for a "loan" of $450 and agrees to repay it with interest under various schedules, depending on what plan the investors choose.

The club says it invests the money in various businesses and promises far-fetched interest payments, with a $450 loan returning as much as $8,800 in two years.

Regulators have determined that PIPS is a Ponzi scheme, where money from new investors is used to pay off early investors. They warn Alaskans who buy into it that they are bound to get burned when the scam ultimately collapses.

The division has determined that PIPS is selling securities and ordered it to stop selling them to Alaskans until they are registered with the state, said state securities administrator Mark Davis.

The division sent the order to nine people, with addresses in Malaysia, Denmark, Oregon and Nevada. If they do not deny the state's claims within 15 days, the temporary order will become permanent, Davis said.

The division also found that the PIPS "2 percent plan," where investors are promised a 2 percent return on their investment per day, is a fraudulent investment that is being sold through misrepresentation, Davis said.

However, it's very unlikely the order will stop PIPS from pitching its plan to Alaskans, said Ed Sniffen, an assistant attorney general who works in the consumer protection unit in Anchorage.

Because the group appears to be based in Malaysia and transacts most of its business over the Internet, there's little Alaska officials can do to stop it. Also, while officials have deemed it illegal for PIPS to sell its securities in Alaska, it is perfectly legal for Alaskans to buy them, Sniffen said.

Hundreds of Alaskans already have bought into the PIPS plan, and many of them have reported making good money from it, Sniffen said.

[Arzel]

Because the group appears to be based in Malaysia and transacts most of its business over the Internet, there's little Alaska officials can do to stop it. Also, while officials have deemed it illegal for PIPS to sell its securities in Alaska, it is perfectly legal for Alaskans to buy them, Sniffen said.


That is the main problem with these scams. They base themselves outside the US making it very difficult to do anything about them.

It shoud make it more obvious then ever though that any business that feels it needs to be based in Malaysia or Belieze or many of the other tax haven countries is a huge red flag, basically saying.

"We are based here because this was we can TAKE ALL YOUR MONEY AND THERE IS NOTHING YOU CAN DO ABOUT IT! Have a nice day. :)"

[sisco50]

"ANCHORAGE - State banking officials issued a cease and desist order Friday to a private investment club after finding that its get-rich-quick scheme is illegal."

"The division has determined that PIPS is selling securities and ordered it to stop selling them to Alaskans until they are registered with the state, said state securities administrator Mark Davis"


Well this is interesting. State banking officials find that a scheme is illegal but they can continue selling the scheme when they register with the state. LOL I would love to know how they found it to be illegal. But that's ok because once you register with the state it is no longer illegal? LOL The rest of that post doesn't make much sense either as they seem to have their programs mixed up a bit. :)

[Arzel]

"ANCHORAGE - State banking officials issued a cease and desist order Friday to a private investment club after finding that its get-rich-quick scheme is illegal."

"The division has determined that PIPS is selling securities and ordered it to stop selling them to Alaskans until they are registered with the state, said state securities administrator Mark Davis"


Well this is interesting. State banking officials find that a scheme is illegal but they can continue selling the scheme when they register with the state. LOL I would love to know how they found it to be illegal. But that's ok because once you register with the state it is no longer illegal? LOL The rest of that post doesn't make much sense either as they seem to have their programs mixed up a bit. :)

Try reading it again.

They are selling unregistered securites, which is illegal. They believe PIPS to be a Ponzi. If PIPS were to register their investment securites then it could be determined exactly how the money is being made, and whether they are legal.

The post makes complete sense, I don't know what you are reading.

[sisco50]

Thank you. I have read it again. I am sure you are right. But I am also sure that it should have been written differently.

[creativeconsult]

sisco50 & ycchen:


I truly believe your interest in uncovering ponzi and fraud are real and sincere. Are there any current investment ventures that you two think provides a legitimate return for an investor.

Any HYIP is about risk and timing. If youi are able to capture the right time you will benefit. PIPS has not collapsed yet and still considered paying.

PIPS is not a United States entity and states they are not registered or do they sell securities. They solicit people to loan them money. As any loan it can default.

Those who are unable to lose are warned not to risk any funds they are unable to lose.

[sisco50]

sisco50 & ycchen:


I truly believe your interest in uncovering ponzi and fraud are real and sincere. Are there any current investment ventures that you two think provides a legitimate return for an investor.

Any HYIP is about risk and timing. If youi are able to capture the right time you will benefit. PIPS has not collapsed yet and still considered paying.

PIPS is not a United States entity and states they are not registered or do they sell securities. They solicit people to loan them money. As any loan it can default.

Those who are unable to lose are warned not to risk any funds they are unable to lose.

You are pretty much correct on all counts! :)

As far as legit returns go you can always play the stock market. I did and found it to be quite the rip for the most part. Unless you have the time to handle your own trades on a timely basis, you will end up having some broker churning your account for you. It's easy to lose $35K in a weeks time. lol Makes one wonder about legit investment ventures.

I do not promote, refer, defend, recommend, etc. any HYIPs. They are all the same. Some just last longer than others. Most are scams from launch. Some try to come up with a program that may seem viable for the long run, but I don't know of any at the moment worth trying. Some MLMs hang in but the only people making any money are a few at the top. Keep looking and maybe you'll come across one worth talking about. :)

[concerned]

Are there any current investment ventures that you two think provides a legitimate return for an investor.


Try stocks, bonds, securities regulated by FTC, mutual funds, IRAs, etc. Any of the things you mentioned are all different types of get rich quick schemes.

[chiggers410]

By all this chatter do you mean the $500 I got from PIPS is np good????

[Arzel]

By all this chatter do you mean the $500 I got from PIPS is np good????

Depends on your definition of good.

Since you already have the money, I guess you would say that is good.

Since the money you made from PIPS came from someone(s) else that will end up loosing $500 that is not good.

Since PIPS has been determined to be a Ponzi, you may in future be required to return your earnings for redistribution back to its original owners, which is good for the owners but bad for you.

[sisco50]

Depends on your definition of good.

Since you already have the money, I guess you would say that is good.

Since the money you made from PIPS came from someone(s) else that will end up loosing $500 that is not good.

Since PIPS has been determined to be a Ponzi, you may in future be required to return your earnings for redistribution back to its original owners, which is good for the owners but bad for you.

Please reveal exactly who has determined that PIPS is a ponzi. I would really appreciate this priviledged information. If you are talking about the few C & D s that some state AGs issued then you may want to look into it further. In the mean time, I am very curious about who has made the determination that you speak of.

[Arzel]

Please reveal exactly who has determined that PIPS is a ponzi. I would really appreciate this priviledged information. If you are talking about the few C & D s that some state AGs issued then you may want to look into it further. In the mean time, I am very curious about who has made the determination that you speak of.

How high up must you go before you accept the truth?

I can accept people coming here and saying I am full of BS and that XYZ is not a ponzi or matrix, but when several state AG come out and publically state that PIPS is a ponzi, that is good enough for me.

Regardless of what you believe, one aspect of my post is quite apt.

Now that PIPS has been identifed as a Ponzi by several state AG's, anyone that now knows this information and continues to invest in PIPS runs a great future risk.

As with Charles Ponzi, there were investors that knew what was going on, and invested and made claims on investments after the nature of the business was questioned. These members were later required to forfiet their earnings for redistribution back to the rightful owners. The same would hold true for PIPS. Now PIPS is apparently off-shore, so it may be difficult to go after them directly, but if this proceeds as I believe it will, US govermental agencies will go after individuals in the US and take possesion of money and property earned through the PIPS Ponzi. And if individuals in the US are found to be promoting PIPS as well they could be held liable for that as well.

[sisco50]

How high up must you go before you accept the truth?

I can accept people coming here and saying I am full of BS and that XYZ is not a ponzi or matrix, but when several state AG come out and publically state that PIPS is a ponzi, that is good enough for me.

Regardless of what you believe, one aspect of my post is quite apt.

Now that PIPS has been identifed as a Ponzi by several state AG's, anyone that now knows this information and continues to invest in PIPS runs a great future risk.

As with Charles Ponzi, there were investors that knew what was going on, and invested and made claims on investments after the nature of the business was questioned. These members were later required to forfiet their earnings for redistribution back to the rightful owners. The same would hold true for PIPS. Now PIPS is apparently off-shore, so it may be difficult to go after them directly, but if this proceeds as I believe it will, US govermental agencies will go after individuals in the US and take possesion of money and property earned through the PIPS Ponzi. And if individuals in the US are found to be promoting PIPS as well they could be held liable for that as well.

Try not to take it so personal! It was and still is a valid question. I have run into this same scenario at several other sites as well and no one can answer this question . Why? Because of the plain and simple truth of the matter. The few states AGs that issued a C & D are doing what comes natural for a politician. They are playing the CYA game. Nothing more, nothing less. :) There has been no investigation by any state's AG of PIPS in Malaysia and there won't be. A toothless C & D is just that and nothing else. Last time I checked, there was a jurisdiction issue. Not likely to change. :)