Webwatch
July 6th, 2007, 03:00 PM
I'm starting to become a fan of GK over on the CEP forums and just in case the CEP forum never returns or some of GK's posts go missing I just thought I would copy over His/Hers latest post of extreme clarity.
So it makes sense i'll put an earlier post in that gets referred too.
Source: http://www.colonendparenthesis.net/forum/viewtopic.php?t=3591&start=105
{Posts copied in the interest of fair dealing}
Michael:
It is not your "facts" but your application of them to this situation which qualify as "pure speculation". Your "facts" and their applicability to this case are "your opinion". I believe you would need far more information about the current situation to compare your "facts" to, before the relevance of your "facts" could be known. Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.
I am sure that GK will admit that there have been MANY informal SEC investigations that have produced NO charges whatsoever. Couldn't those "facts" be applied to this situation as well?
Your application of facts, in a negative manner, to this situation is why some people here may perceive you as being "negative".
I happen to enjoy most of your posts, your cleverness in making your points can be quite entertaining.
Peace, Ron
By the way, even an experts opinion is still just an opinion, not fact. GK's assessment of this situation and even which laws or regulations may apply, without having all of the facts, is simply her "opinion" and, with no disrespect intended, considering the paucity of verifiable "facts" available concerning CEPs situation, GK's opinion is of no more value than anyone else's. We do not have a strong enough reference point to start with to know which past cases compare most closely to CEPs situation.
No attacks and no flames just my perspective on the current discussion.
Much peace and good health to you all, Ron
GoldKitty's informative response:
Ron
I probably wrote the equivalent of a book but, I am going to attempt to address your “opinions” and “pure speculations” that you have set forth, and I guess we can agree that your opinions are also of no more value than mine, except I can state facts, set forth examples, and I have first hand experience on my side. My opinion is that you are putting forth a lot of hearsay instead of facts. I think we have a very strong reference point to start with and, since, let’s face it; CEP is really being investigated to determine if they are running a ponzi scheme, we have many cases to compare the CEP situation with, it’s just too depressing to discuss them all. You just have to do some research Ron you can find the cases.
First I would like to comment that I am very familiar with the two agencies you referenced and how they operate; namely the SEC and the Department of the Treasury (the IRS). This gets me to your statement where you state that one of these attorneys you spoke with said, “Every one of them also told me that, given the limited facts at hand, their first recommendation would be to freeze ALL transactions in and out and co-operate as fully as possible.” Could you please ask that same attorney for the names of these corporations that did virtually shut down operations because of an SEC informal investigation? I guess that since this would be their advice they would be able to provide some precedent cases that can back up this advice? We have never been shown actual investment statements so we really don’t even know if CEP is in possession of any money to distribute. Yes, I do agree that CEP should cooperate, which they are.
Yes, as I have stated in the past, all incoming monetary transactions must cease, but transactions out, no I disagree. If the SEC wanted CEP to totally cease operations they would go through the proper legal channels and get a court order. Do you really think this scenario took place: Ms. SEC Investigator: I would advise you to halt all operations. CEP: Okay we will do just that. Ms. SEC Investigator. Okay we will take you at your word on this if you promise. CEP: Okay we promise. Ms. SEC Investigator: Good-bye and have a nice day. These people don’t play around. If they wanted CEP to halt operations that would make them do it through a court order. If a C&D order gets issued, the Receivers and any specialty firms they bring aboard, are going to get the first cut of whatever is left. Investors might get some money, but it will take at least a few years. Can people wait that long?
CEP already violated the “no transactions out” policy. There is the case, of the $5,000.00 payment was made that goes against this policy. Yes, I know everyone is going to say, “But, Cynthia was a candidate for CEP Gives Back”. Since, I could not find any evidence that suggests that CEP Gives Bank is a legal and registered charity; a charity that has in place By-Law and Committees that determine what circumstances warrant assistance, with a concurrence amongst themselves as to whether monies should be given to a particular candidate, rather than just one person unilaterally making the decision, CEP Gives Back is more than likely a line item on CEP’s books and records. I could go into the whole “charity” thing, but I won’t on this post. Have there been other payments that were not publicly acknowledged? Who knows? I am assuming that salaries are being paid, out of what I assume to be monies generated from CEP investments. So, what we really have here is a case of selective payments and the SEC would be fine with that, but not with investors receiving payments?
Next, you indicate that the three likely purposes to the investigation are: 1. Fraud. 2. Money Laundering and 3. SEC Registration.
My opinion is that the SEC is not investigating whether CEP is/was legally required to be registered with the SEC. THAT FACT HAS ALREADY BEEN ESTABLISHED. CEP SHOULD HAVE BEEN PROPERLY LICENSED AND REGISTERED. BY CEP’S OWN ADMISSION, THEY ARE GUILTY OF THIS. THE INVESTIGATION INTO THIS MATTER IS OVER. If CEP passes the asset validity test, they would move into the next phase of proper registration.
Money Laundering? Money Laundering is a criminal offense. The SEC would not be investigating possible money laundering violations. The IRS Criminal Investigations Division conducts money laundering investigations. The SEC does not conduct criminal investigations.
Fraud. This is where, in my opinion, the focus of the investigation is. I believe the SEC’s main focus is on examining and corroborating all of CEP’s purported investments and their respective returns. Now, in my opinion, if the investment balances include investments in surf sites (advertising sites), coast sites (advertising sites) or HYIP’s, that piece of the investment portfolio would be disallowed. They are probably reconstructing all financial information as of 5/18/07 to determine if CEP has the necessary assets to satisfy all investor liabilities and what is the likelihood that these investments will generate sufficient returns into the future.
You state: “The big question - At what point, if any, was the acceptance of investments by CEP, without being registered, a violation? Can this violation be corrected? Will the SEC allow Trevor to correct it?”
My response: It was a violation from day ONE. You cannot just offer and sell securities. Whatever capacity you offer them in, proper paperwork needs to be submitted and approved by the SEC before the offer even takes place.
You state: “If Trevor were to try and issue payments or refunds, the SEC would almost surely issue a C&D order and turn this into a formal investigation. In all likelihood it is the transactions themselves that are being investigated, since the transactions occurred when CEP was not registered but legally may have been required to be registered.”
My response: I disagree. Issuing payments or refunds is not going to cause the SEC to issue a C&D order. What is going to cause the SEC to order a C&D order is if they determine that investments that were purported to exist, do not exist. They are not looking at transactions. THEY ARE ATTEMPTING TO VALIDATE THAT INVESTMENTS EXIST.
You state: “If Trevor were to try to move any money or issue any payments (refunds included) the SEC would simply freeze the assets with a C&D order and start a Formal investigation and this whole ordeal could become a nightmare that could last for years and none of us would ever see a penny even after it was over.”
My response: I disagree (and I am going to quote your own words) and your "facts" and their applicability to this case are "your opinion". You are voicing “your opinion” on “pure speculation” and certainly not fact. The SEC just can’t make the decision to just “freeze” assets on a whim. There has to be EVIDENCE of fraud first. If CEP were to issue payments, that fact alone, does not indicate fraudulent activity is taking place. The SEC has to have a valid, legal reason and go through the proper channels to freeze assets. Also, the SEC needs approval to move an investigation from informal to formal. I don’t believe this will turn into a formal investigation that is going to last for years – It is my opinion that CEP will either be approved to continue or an enjoiner and C&D order will be coming. I don’t see a “formal investigation” in the future. I am guessing by the third week in August we might know something. The reality is that if CEP does not pay something to investors now, there is a real possibility that when all is said and done, we will not receive much.
You state: “It is not your "facts" but your application of them to this situation which qualify as "pure speculation". Your "facts" and their applicability to this case are "your opinion". I believe you would need far more information about the current situation to compare your "facts" to, before the relevance of your "facts" could be known. Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.”
My response: Ron in legal circles, we research cases, that contain FACTS, that are SIMILAR in nature to a case that we have before us in an effort to educate ourselves as to how matters progressed and what the ultimate resolution was. So, yes there are many instances where we research a case that appears similar in nature to one that is currently ongoing and we apply the facts and circumstances contained in that case to our case to get a idea as to the path we would most likely take. From this research we can make an educated guess as to what the ultimate resolution in our case will be.
You state: “Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.”
My response: I disagree with you. It absolutely establishes relevance. It is called precedence. If you have a case before you that contains similar facts and circumstances to the one you are litigating, 9 times out of 10, the end result of your case will be the same as the case you are researching and that is NOT PURE SPECULATION, THAT IS A FACT. I think a reasonably intelligent individual can ascertain that there are undeniable relevant facts with respect to CEP that are presented from which an individual can reasonably form a valid and intelligent opinion that is based on much more than pure speculation.
You state: “I am sure that GK will admit that there have been MANY informal SEC investigations that have produced NO charges whatsoever. Couldn't those "facts" be applied to this situation as well? “
My response: Yes, there have been many SEC informal investigations that have not resulted in charges. These companies are legally registered companies and not one of them, decided to just cease operations until an informal investigation was concluded. Have I found one that is similar in nature to what I believe is going on with CEP that has not resulted in charges? No, I could not find any. Will CEP be any different? We have to wait and see – the jury is still out on that one.
You state: “I am sure that, by now, all documentation and other paperwork are in the hands of the attorneys and/or the SEC and there is very little that Trevor can do besides "sit around waiting for the phone to ring".
My response: Your opinion and pure speculation.
Here are some recent cases that have resulted in charges:
The following one has some similarities to CEP:
SEC vs. Wallenbrock & Associates – Defendants, Larry Toshio and Marty Akira Munesato
INITIAL SEC COMPLAINT: On January 28, 2002, the Securities & Exchange Commission filed a complaint against J.T. Wallenbrock & Associates, Larry Toshio Osaki, Van Y. Ichinotasubo and Citadel Capital Management Group, Inc., seeking legal and equitable relief for violations of the federal securities laws by the defendants. The Commission alleged in its complaint that the defendants were offering and selling unregistered securities promising a 20% return (for each three month period). All three companies: (1) Village Capital Trust Limited, (2) J.T. Wallenbrock Associates and (3) Citadel Capital Management Group, Inc. came under receivership, had their assets confiscated and were subsequently dissolved.
END RESULT FOR OSAKI: On December 16, 2005, in Los Angeles, CA, Larry T. Osaki was sentenced to 240 months (20 years) in federal prison and ordered to pay $145,000,000 in restitution to investors who were defrauded through an investment scheme that was really a $250,000,000 ponzi scheme. After the SEC filed its complaint and cease and desist order Osaki relied on advice that he could resume operations by registering in Belize or Canada. He proceeded to register Village Capital Trust, Limited in Belize, and mistakenly thought that the USA could not touch him. Of course, the DOJ came after him and indicted. The Judge at sentencing was particularly bothered by the Belize connection and really threw the book at him, despite the fact that he suffers from Leukemia.
END RESULT FOR MUNESATO: On April 16, 2007, in Los Angeles, CA, Co-Defendant, Marty Akira Munesato was sentenced to 36 months in prison for his involvement in a multi-million dollar Ponzi scheme. In addition to prison time, Munesato was ordered to pay $7,100,000 in restitution to the victims of the scheme. Marty A. Munesato was an employee of J.T. Wallenbrock & Associates. Munesato was the computer programmer who devised and managed the computer systems necessary to run the scam and the individual who ran operations for the Belize division out of California.
A few other examples are:
On April 12, 2007, in Richmond, VA, James E. Brown, Jr. was sentenced to 151 months in prison. It was determined that Brown was operating a multi-million dollar Ponzi investment scheme. More than 350 investors, including individuals, small businesses and churches invested more than $8.3 million. (SEC complaint in 2003)
On May 22, 2007, Gary L. McNaughton was sentenced to 63 months in prison and ordered to pay $6.9 million in restitution. McNaughton was a youth assistant at the Church of the Open Door in Elyria, OH. He used his church position to sell worthless securities, which promised investors a return on their money of between 10 to 35 percent, but in reality he was operating a ponzi scheme. (SEC complaint in 2004)
(Just a side note, if anyone thinks that Charis Johnson of 12DP is just going to walk away from the big mess she created, I think you are sadly mistaken. Give it two to three years before the DOJ comes after her).
In closing, you state: “Your application of facts, in a negative manner, to this situation is why some people here may perceive you as being "negative".
My response: Your opinion and pure speculation. My opinion is that this is a very serious situation and to approach it with a “polly anna” type of philosophy is not doing people any favors.
So it makes sense i'll put an earlier post in that gets referred too.
Source: http://www.colonendparenthesis.net/forum/viewtopic.php?t=3591&start=105
{Posts copied in the interest of fair dealing}
Michael:
It is not your "facts" but your application of them to this situation which qualify as "pure speculation". Your "facts" and their applicability to this case are "your opinion". I believe you would need far more information about the current situation to compare your "facts" to, before the relevance of your "facts" could be known. Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.
I am sure that GK will admit that there have been MANY informal SEC investigations that have produced NO charges whatsoever. Couldn't those "facts" be applied to this situation as well?
Your application of facts, in a negative manner, to this situation is why some people here may perceive you as being "negative".
I happen to enjoy most of your posts, your cleverness in making your points can be quite entertaining.
Peace, Ron
By the way, even an experts opinion is still just an opinion, not fact. GK's assessment of this situation and even which laws or regulations may apply, without having all of the facts, is simply her "opinion" and, with no disrespect intended, considering the paucity of verifiable "facts" available concerning CEPs situation, GK's opinion is of no more value than anyone else's. We do not have a strong enough reference point to start with to know which past cases compare most closely to CEPs situation.
No attacks and no flames just my perspective on the current discussion.
Much peace and good health to you all, Ron
GoldKitty's informative response:
Ron
I probably wrote the equivalent of a book but, I am going to attempt to address your “opinions” and “pure speculations” that you have set forth, and I guess we can agree that your opinions are also of no more value than mine, except I can state facts, set forth examples, and I have first hand experience on my side. My opinion is that you are putting forth a lot of hearsay instead of facts. I think we have a very strong reference point to start with and, since, let’s face it; CEP is really being investigated to determine if they are running a ponzi scheme, we have many cases to compare the CEP situation with, it’s just too depressing to discuss them all. You just have to do some research Ron you can find the cases.
First I would like to comment that I am very familiar with the two agencies you referenced and how they operate; namely the SEC and the Department of the Treasury (the IRS). This gets me to your statement where you state that one of these attorneys you spoke with said, “Every one of them also told me that, given the limited facts at hand, their first recommendation would be to freeze ALL transactions in and out and co-operate as fully as possible.” Could you please ask that same attorney for the names of these corporations that did virtually shut down operations because of an SEC informal investigation? I guess that since this would be their advice they would be able to provide some precedent cases that can back up this advice? We have never been shown actual investment statements so we really don’t even know if CEP is in possession of any money to distribute. Yes, I do agree that CEP should cooperate, which they are.
Yes, as I have stated in the past, all incoming monetary transactions must cease, but transactions out, no I disagree. If the SEC wanted CEP to totally cease operations they would go through the proper legal channels and get a court order. Do you really think this scenario took place: Ms. SEC Investigator: I would advise you to halt all operations. CEP: Okay we will do just that. Ms. SEC Investigator. Okay we will take you at your word on this if you promise. CEP: Okay we promise. Ms. SEC Investigator: Good-bye and have a nice day. These people don’t play around. If they wanted CEP to halt operations that would make them do it through a court order. If a C&D order gets issued, the Receivers and any specialty firms they bring aboard, are going to get the first cut of whatever is left. Investors might get some money, but it will take at least a few years. Can people wait that long?
CEP already violated the “no transactions out” policy. There is the case, of the $5,000.00 payment was made that goes against this policy. Yes, I know everyone is going to say, “But, Cynthia was a candidate for CEP Gives Back”. Since, I could not find any evidence that suggests that CEP Gives Bank is a legal and registered charity; a charity that has in place By-Law and Committees that determine what circumstances warrant assistance, with a concurrence amongst themselves as to whether monies should be given to a particular candidate, rather than just one person unilaterally making the decision, CEP Gives Back is more than likely a line item on CEP’s books and records. I could go into the whole “charity” thing, but I won’t on this post. Have there been other payments that were not publicly acknowledged? Who knows? I am assuming that salaries are being paid, out of what I assume to be monies generated from CEP investments. So, what we really have here is a case of selective payments and the SEC would be fine with that, but not with investors receiving payments?
Next, you indicate that the three likely purposes to the investigation are: 1. Fraud. 2. Money Laundering and 3. SEC Registration.
My opinion is that the SEC is not investigating whether CEP is/was legally required to be registered with the SEC. THAT FACT HAS ALREADY BEEN ESTABLISHED. CEP SHOULD HAVE BEEN PROPERLY LICENSED AND REGISTERED. BY CEP’S OWN ADMISSION, THEY ARE GUILTY OF THIS. THE INVESTIGATION INTO THIS MATTER IS OVER. If CEP passes the asset validity test, they would move into the next phase of proper registration.
Money Laundering? Money Laundering is a criminal offense. The SEC would not be investigating possible money laundering violations. The IRS Criminal Investigations Division conducts money laundering investigations. The SEC does not conduct criminal investigations.
Fraud. This is where, in my opinion, the focus of the investigation is. I believe the SEC’s main focus is on examining and corroborating all of CEP’s purported investments and their respective returns. Now, in my opinion, if the investment balances include investments in surf sites (advertising sites), coast sites (advertising sites) or HYIP’s, that piece of the investment portfolio would be disallowed. They are probably reconstructing all financial information as of 5/18/07 to determine if CEP has the necessary assets to satisfy all investor liabilities and what is the likelihood that these investments will generate sufficient returns into the future.
You state: “The big question - At what point, if any, was the acceptance of investments by CEP, without being registered, a violation? Can this violation be corrected? Will the SEC allow Trevor to correct it?”
My response: It was a violation from day ONE. You cannot just offer and sell securities. Whatever capacity you offer them in, proper paperwork needs to be submitted and approved by the SEC before the offer even takes place.
You state: “If Trevor were to try and issue payments or refunds, the SEC would almost surely issue a C&D order and turn this into a formal investigation. In all likelihood it is the transactions themselves that are being investigated, since the transactions occurred when CEP was not registered but legally may have been required to be registered.”
My response: I disagree. Issuing payments or refunds is not going to cause the SEC to issue a C&D order. What is going to cause the SEC to order a C&D order is if they determine that investments that were purported to exist, do not exist. They are not looking at transactions. THEY ARE ATTEMPTING TO VALIDATE THAT INVESTMENTS EXIST.
You state: “If Trevor were to try to move any money or issue any payments (refunds included) the SEC would simply freeze the assets with a C&D order and start a Formal investigation and this whole ordeal could become a nightmare that could last for years and none of us would ever see a penny even after it was over.”
My response: I disagree (and I am going to quote your own words) and your "facts" and their applicability to this case are "your opinion". You are voicing “your opinion” on “pure speculation” and certainly not fact. The SEC just can’t make the decision to just “freeze” assets on a whim. There has to be EVIDENCE of fraud first. If CEP were to issue payments, that fact alone, does not indicate fraudulent activity is taking place. The SEC has to have a valid, legal reason and go through the proper channels to freeze assets. Also, the SEC needs approval to move an investigation from informal to formal. I don’t believe this will turn into a formal investigation that is going to last for years – It is my opinion that CEP will either be approved to continue or an enjoiner and C&D order will be coming. I don’t see a “formal investigation” in the future. I am guessing by the third week in August we might know something. The reality is that if CEP does not pay something to investors now, there is a real possibility that when all is said and done, we will not receive much.
You state: “It is not your "facts" but your application of them to this situation which qualify as "pure speculation". Your "facts" and their applicability to this case are "your opinion". I believe you would need far more information about the current situation to compare your "facts" to, before the relevance of your "facts" could be known. Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.”
My response: Ron in legal circles, we research cases, that contain FACTS, that are SIMILAR in nature to a case that we have before us in an effort to educate ourselves as to how matters progressed and what the ultimate resolution was. So, yes there are many instances where we research a case that appears similar in nature to one that is currently ongoing and we apply the facts and circumstances contained in that case to our case to get a idea as to the path we would most likely take. From this research we can make an educated guess as to what the ultimate resolution in our case will be.
You state: “Simply a "similarity" between the situation surrounding your "facts" and the current situation as it appears, does not establish relevance.”
My response: I disagree with you. It absolutely establishes relevance. It is called precedence. If you have a case before you that contains similar facts and circumstances to the one you are litigating, 9 times out of 10, the end result of your case will be the same as the case you are researching and that is NOT PURE SPECULATION, THAT IS A FACT. I think a reasonably intelligent individual can ascertain that there are undeniable relevant facts with respect to CEP that are presented from which an individual can reasonably form a valid and intelligent opinion that is based on much more than pure speculation.
You state: “I am sure that GK will admit that there have been MANY informal SEC investigations that have produced NO charges whatsoever. Couldn't those "facts" be applied to this situation as well? “
My response: Yes, there have been many SEC informal investigations that have not resulted in charges. These companies are legally registered companies and not one of them, decided to just cease operations until an informal investigation was concluded. Have I found one that is similar in nature to what I believe is going on with CEP that has not resulted in charges? No, I could not find any. Will CEP be any different? We have to wait and see – the jury is still out on that one.
You state: “I am sure that, by now, all documentation and other paperwork are in the hands of the attorneys and/or the SEC and there is very little that Trevor can do besides "sit around waiting for the phone to ring".
My response: Your opinion and pure speculation.
Here are some recent cases that have resulted in charges:
The following one has some similarities to CEP:
SEC vs. Wallenbrock & Associates – Defendants, Larry Toshio and Marty Akira Munesato
INITIAL SEC COMPLAINT: On January 28, 2002, the Securities & Exchange Commission filed a complaint against J.T. Wallenbrock & Associates, Larry Toshio Osaki, Van Y. Ichinotasubo and Citadel Capital Management Group, Inc., seeking legal and equitable relief for violations of the federal securities laws by the defendants. The Commission alleged in its complaint that the defendants were offering and selling unregistered securities promising a 20% return (for each three month period). All three companies: (1) Village Capital Trust Limited, (2) J.T. Wallenbrock Associates and (3) Citadel Capital Management Group, Inc. came under receivership, had their assets confiscated and were subsequently dissolved.
END RESULT FOR OSAKI: On December 16, 2005, in Los Angeles, CA, Larry T. Osaki was sentenced to 240 months (20 years) in federal prison and ordered to pay $145,000,000 in restitution to investors who were defrauded through an investment scheme that was really a $250,000,000 ponzi scheme. After the SEC filed its complaint and cease and desist order Osaki relied on advice that he could resume operations by registering in Belize or Canada. He proceeded to register Village Capital Trust, Limited in Belize, and mistakenly thought that the USA could not touch him. Of course, the DOJ came after him and indicted. The Judge at sentencing was particularly bothered by the Belize connection and really threw the book at him, despite the fact that he suffers from Leukemia.
END RESULT FOR MUNESATO: On April 16, 2007, in Los Angeles, CA, Co-Defendant, Marty Akira Munesato was sentenced to 36 months in prison for his involvement in a multi-million dollar Ponzi scheme. In addition to prison time, Munesato was ordered to pay $7,100,000 in restitution to the victims of the scheme. Marty A. Munesato was an employee of J.T. Wallenbrock & Associates. Munesato was the computer programmer who devised and managed the computer systems necessary to run the scam and the individual who ran operations for the Belize division out of California.
A few other examples are:
On April 12, 2007, in Richmond, VA, James E. Brown, Jr. was sentenced to 151 months in prison. It was determined that Brown was operating a multi-million dollar Ponzi investment scheme. More than 350 investors, including individuals, small businesses and churches invested more than $8.3 million. (SEC complaint in 2003)
On May 22, 2007, Gary L. McNaughton was sentenced to 63 months in prison and ordered to pay $6.9 million in restitution. McNaughton was a youth assistant at the Church of the Open Door in Elyria, OH. He used his church position to sell worthless securities, which promised investors a return on their money of between 10 to 35 percent, but in reality he was operating a ponzi scheme. (SEC complaint in 2004)
(Just a side note, if anyone thinks that Charis Johnson of 12DP is just going to walk away from the big mess she created, I think you are sadly mistaken. Give it two to three years before the DOJ comes after her).
In closing, you state: “Your application of facts, in a negative manner, to this situation is why some people here may perceive you as being "negative".
My response: Your opinion and pure speculation. My opinion is that this is a very serious situation and to approach it with a “polly anna” type of philosophy is not doing people any favors.