The Ponzi scheme PIPS (People in Profit System) is back in the news. Ketchikan accountant David Hanger, who alerted the Alaska media to PIPS early this year, reported last week that PIPS has imploded. If not imploding, PIPS was seriously injured Friday when the state Division of Banking and Securities assessed fines of $75,000 each against the nine PIPS principals.
However, PIPS investors in Ketchikan, estimated at up to 100 who meet occasionally, deny the implosion. In the words of one, "everybody is positive," even though they haven't received a withdrawal in up to 10 weeks. They did receive an e-mail last week from PIPS promoter Bryan Marsden saying that the slow pay on withdrawals is just a bubble caused by international regulations and the money will come through shortly.
The State of Alaska Division of Banking and Securities issued a cease and desist order May 20 against Marsden and his Pureinvestor.com. Included in the order to desist were Gary R. and Deborah M. Westoby in Tillamook, Ore., Jollypipster in Las Vegas, Nev., and Torben Ole Jolnaes in Hornslet, Denmark and their companies. They had 15 days to protest the order but nobody did, so the state ordered the fines August 12.
The state of Texas also issued a cease and desist order on promoting the program. Alaska and Texas officials and are working with attorney generals in other states and with federal agencies, including the Securities and Exchange Commission, on the scheme. Alaskans with information on PIPS or Marsden are urged to contact Mark Davis, securities administrator at the Division of Banking and Securities at (888) 925-2521 or by e-mail at firstname.lastname@example.org.
Ketchikan Daily News By Lew Williams
PIPS is promoted out of Malaysia by British scammer Marsden and his associates, several of whom have suddenly resigned, we learned this week - his second in command Gary Nichol and his trust manager Warren Webb, who was supposed to straighten out the withdrawals mess.
Marsden has a record of promoting pyramid schemes, named for Charles K. Ponzi, a 1920s scammer. It's a scheme where investments made by new investors pay off those who invested earlier. The company does not invest in anything that earns it money. It lasts only as long as new money comes in from new investors faster than it goes out to older investors. The PIPS scam hit hard in Ketchikan and in the Mat-Su and Fairbanks areas.
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.
Marsden also promises earnings of 2 percent per day on investments. An accountant tells us that means the money doubles every 36 days, or $1,000 becomes $100,921.55 in 233 days - less than one year! The more conservative state order just describes the "2 percent plan" as a "fraudulent investment," in addition to not being registered with the state.
It is a worldwide scam. Participants report that 42 countries were represented at the PIPS world convention in Hawaii last year and some are planning for the next convention in Portugal, to be held if reports of imploding are inaccurate. However not all of the world is happy.
Seventeen investors in London put 300,000 pounds into PIPS, Hanger reports, but recovered only 40,000 pounds. It appears that Marsden uses 15 percent of what he collects to "salt his mine," 5 percent for administrative purposes and uses 80 percent for purchases for himself and his wife, such as a luxury car, a new house, a lot of property and maybe one or two Malaysian politicians. At least that is what one disgruntled investor claims.
A former Alaskan living in California keeps track of PIPS. He says that some big investors in the United States were upset enough with Marsden to go to Malaysia to confront him. They also contacted the Malaysian Central Bank and are considering a suit in that country.
In Kell, Ireland, a group of investors added to the scam They encouraged their neighbors to invest. The way it works also works against Marsden. PIPS has its own money system called PicPay, where one dollar of PicPay is worth one dollar in U.S. currency. Marsden has paid withdrawals to earlier investors in PicPay dollars. The PicPay recipient, discovering that he or she won't receive real money, recruits a new investor into the PIPS program, accepting real money from a new investor for a membership. The good money is pocketed and new investor's membership is paid to Marsden in his own PicPay!
PIPS has allowed people to set up merchant accounts, like eBay. They buy a $10 ring or necklace and advertise it on the PIPS merchant Web account for 300 PicPay. Then they sell the PicPay they receive for the merchandise at a 67 percent discount to an eager, bargain-hunting PIPS investor for $100. Nice return on a $10 necklace and a way to get dollars out of Marsden's "bank."
PIPS has become a training ground for scammers. Or as accountant Hanger says, "PIPS in not a Ponzi scheme. PIPS is a Ponzi franchise, and the franchisees have been going hog wild!"
However, Ketchikan PIPSters say they are happy. Anyone else should contact the state Division of Banking and Securities.
Lew Williams Jr. is former publisher of the Ketchikan Daily News.
© 2016. All Rights Reserved. | Contact Us