Ketchikan Daily News By Lew Williams
The state of Texas has issued a cease and desist order. The attorney general of the state of Hawaii is investigating, as are Alaska officials. And the Australian Securities and Investment Commission gives it the 2005 "Pie in the Sky" award.
The "it" is PIPS, known as the People in Profit System, or sometime as Pure Investor, promoted out of Malaysia by British scammer Bryan Marsden. He has a record of promoting pyramid schemes, called Ponzi schemes for 1920's promoter Charles K. Ponzi.
The PIPS scam has hit hard in Ketchikan and in the Mat-Su area. Unofficial sources estimate participants in Ketchikan at more than 100 because at least five businesses have been identified as having participants. One local promoter is alleged to have signed up 50 friends for PIPS, for which he probably gets a commission. He claims receiving payments although the PIPS Web site fails to list any payment until the end of five years.
Information on PIPS is easy to obtain from 32,000 entries on Google.
Marsden says people can participate in PIPS with an entry fee of $175, then contribute $25 a month for five years. After five years ($1,675 paid in) the investor will be paid $87,017.47 in cash and $9,323.30 a month for life. The entry fee for those entering through their employer is slightly less but the employer collects the money, contributes to the plan and sends the money to Malaysia!
Marsden claims to hold PIPS forums in 19 languages, giving it a worldwide reach. We have reports of it scamming in Oregon and Canada. The Guardian and the Economist newspapers in the UK recently ran articles warning on such pyramid schemes.
PIPS claims more than 80,000 members so in five years, with no expenses deducted, $134 million should be paid in. The problem is that to pay everyone their cash in five years PIPS will need $7 billion and to make the monthly payments for just the first year will take another $9 billion. Big money, and as the Texas State Security Board charges, Marsden and his partners provide no source of income to turn that $134 million into billions.
There are Web sites on PIPS and other MMF (Make Money Fast) programs. One calls itself the Hall of Humiliation, to which those who have been taken can enter their complaints. One contributor says that Marsden guarantees 2 percent per day earnings. In that case $1,000 invested with interest compounding becomes more than $100,000 in less than one year and if the $100,000 continues with PIPS it would exceed the 2005 U.S. federal budget in less than three years.
The Australian Securities and Investment Commission figures that earning 2 percent every trading day would result in 14,000 percent earnings in one year! How? Marsden offers no proof of trades or investments or of producing anything, nor did he in three earlier scams.
Marsden is expanding. He now asks people to send him their mortgages. They won't have to make another mortgage payments, he promises, and he will pay off the mortgage in two years - for a price. The Alaska Division of Banking, Securities and Corporations was looking into the Networth Club based in Portland, Ore., also promoting a two-year mortgage pay off. It had operators throughout the Northwest, Texas and the Southeast U.S. but has folded.
Alaska investigators also warn against the "Original Dinner Party," started in Canada and now booming in Seattle. It is a pyramid scheme also known as "Women's Empowerment Network," "The Dinner Club" and "The Breakfast Club." The Missouri attorney general shut down those operations in Missouri.
Marsden also is into a lottery, allegedly for tsunami relief. For each $5 ticket, the entrant picks a series of numbers, just like many state lotteries. The only problem is that he hasn't had a winner in several drawings. So he just increases the promised prize and keeps collecting $5 entry fees. Better than working.
The Alaska Division of Banking & Securities has assigned Quinten Warren to investigate PIPS. He needs specific information from individuals, groups or companies who have been taken by the scam. He can be reached at (907) 269-8132 or by e-mail at email@example.com.
The state hasn't been lax in uncovering scams and questionable promotions. The Alaska Sale of Business Opportunity Act is now in effect. So beginning April 4, according to the attorney general's office, those involved in the sale of business opportunity programs or work-at-home schemes that cost $250 or more must register with the Department of Law and post a $75,000 bond.
Alaska's Department of Law is part of a nationwide effort to crack down on fraudulent schemes. The Federal Trade Commission, the Department of Justice, the U.S. Postal Inspection Service and enforcement agencies from 14 states have charged more than 200 operations with violating consumer protection laws or engaging in fraud.
Alaska's Department of Law has an information brochure for consumers on the sale of business opportunities in Alaska.
The old cliché holds true: "If it sounds to good to be true, it is."
Lew Williams Jr. is former publisher of the Ketchikan Daily News.