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Sports Arbitrage Investment Scams

Posted by Aegist on July 8th, 2010

If you have been approached by an arbitrage trading company which is looking for investors, do not give them any of your money. Companies which can promise to make you the returns typically claimed by these types of companies (5% will never need to seek out public investors. End of story. So any company which is cold-contacting members of the public looking for investors is without doubt a scam.

I am going to re-state the above point again so that you can understand it – because this is the only argument that should be needed. If a company can promise you a return higher than a high interest bank loan, then why would they need your money? Paying you such a high premium is an unnecessary expense when they could just get a bank loan, or get some money from friends to get it started and then grow their own capital exponentially until they have more than enough money and no need to share it with anyone.

If a company can make 10% profit each month (and most promise more than this) on an uncapped volume, then you do NOT need investors. Ever. Arbitrage trading can make about 10% return per month, per trader, up to a limitted volume – thus it won’t compound past a certain amount. Companies soliciting investors publicly are trying to get a lot more than the trading limit of an arbitrage trader can handle, and promising to pay out more than a team of arbitrage traders can make.

Scam Companies LOOK REAL

This is so important. They LOOK real. They don’t print “We’re a Scam” on their brochure or their website. They imply that they are supported or affiliated with respectable companies. They claim to be licensed and verified as reliable (they are con men! They LIE!). Their websites and brochures often look really really good. They have really nice sales people who really take care of you and try their best to help you and talk to you about their grandmother who is sick and relies on their pay check to get her medication….

None of that matters. It can all be faked. It can all be made up. What cannot be faked though, is the fact that any company promising to make you high returns on an arbitrage investment never actually needs investments from the public. So don’t fall for the glitz and the polish – stick with the logic.

Scammers Use Shills

A shill is someone who pretends to be a customer or potential customer of the company in question but is in fact an employee or owner of that company. Shills are also sometimes known as sock puppets. The important thing to learn about these shills is that they aren’t always obvious. They don’t just come in and say “I’m a customer, and I like this company” – they use numerous strategies (and often several identities) to acheive a result. For example:

• A genuine person will ask for information on a scam company, and after a series of warnings by regulars and experienced members, a shill will say “I’ve read through all of this thread but have decided to give it a try anyway. I know its a risk, but I am willing to take it. Wish me luck!”. The purpose of this type of shill post is to make it sound like the ‘risk’ is worth the potential ‘reward’, confusing the other readers into thinking that the risk is only a small chance, and that the reward might actually be realised. The fact is that the risk is virtually100%, and the potential reward is a red herring – it doesn’t exist!!
• Most commonly, shills will simply report that they have been able to withdraw money from the company without troubles. They invested money, their investment grew, and they have been using it like a bank account. How great for them. Too bad it is all made up, and they are just saying it to make it sound like people are making money, and YOU are missing out!!!! Don’t fall for it.

Some Arbitrage Scams are Ponzis, Some Aren’t

It is worth noting that some companies claiming to do arbitrage trading for your profit are in fact Ponzi Schemes which take investments in for a fixed period in order to enable them to actually pay out some of their members. They aren’t actually trading for you, what they are doing is using the growing pool of investment funds to pay the small percentage of people who reach the end of their investment period who request a withdrawal. These people are then so excited that they made so much money on their investment that they often happily re-invest the money, and more importantly, happily tell everyone they know how much money they have made and how great an investment it is. These people aren’t technically shills, but they have the same effect. They create positive buzz around the ponzi scam which brings in more money, which allows the scammers to eventually close up shop and disappear with much more money than they would have been able to get without this positive buzz.

The scams which aren’t ponzis though, are typically just outright theft. They claim to pay you back your money, but when it comes to the crunch, they just delay payments for a while before ceasing all communication.

There is No Rush

A side note worth making here, is that for every company that has contacted you, there seems to be 3 or 4 others actively trading who haven’t contacted you, and more companies to follow. So if for insane reason you aren’t immediately convinced by what I have said here, remember that despite what these slick salesmen say, there really is no rush. They will take your money in a week or two weeks or a month or two if they are still around. In fact, using a time buffer is a great way of seeing some of their lies. If they claim to be accepting no more deposits after this week (or anything else like that), then wait for a week and watch them change their story.

In general though, just remember that there is no rush. Many of these companies exist, and many more will come. Take you time, read what the Australian government says in all of its warning, and what all of the experienced arbers say on ArbForum, and just consider what it will feel like to lose all of your investment.

Understanding Arbitrage Helps Avoid Scams

One of the easiest ways to immunise yourself against arbitrage scams, is simply to understand arbitrage. When the experienced arbers call ‘scam’ against investment companies on the forums it is usually because the company claiming to ‘do arbitrage’ are publicly displaying their ignorance of arbitrage on their own websites. They show daily returns on total trading capital (often showing multiple trades each day), or they show $10,000 bets with bookmakers that only accept $500 bets. These sorts of details mean nothing to the average person, but to an experienced arbitrage trader, they are dead give away’s that the company in question has never done arbitrage itself and is a complete scam.

If you aren’t interested in spending 6 months or more getting experience in arb trading yourself, then you should give the experienced arb traders on arbforum and other arbitrage forums the benefit of the doubt when they recommend against investing in an arbitrage investment company.

History Repeats Itself

This has happened over and over again already. So many of these arbitrage investment scams have been created, have scammed people out of many thousands of dollars each, then run off in to the night. Some of them have been chased by media crews, some have been put in prison, some have been harrassed by ex-victims. But most of them get away with it and start up a brand new company and do it all over again – and this time, they use all that they learnt on the previous run and do a better job!!

Important Links and Warning

Australian Competition and Consumer Commission Document on Sports Investment Scams

Sports Arbitrage Schemes on ScamWatch.gov.au

ACCC Article on Sports Arbitrage Scams

Queensland Police Arbitrage Scam Investigation

Scam Section on ArbForum.Co.Uk

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Gold Nuggest Invest and Pegasus Group Australasia

Posted by Aegist on May 17th, 2009

Just another post about two more companies which have recently come to my attention – GoldNuggetInvest and Pegasus Group Australasia. Gold Nuggest Invest is actually a typical HYIP, and it’s connection to arbitage is probably only in claim. What they offer is clearly absurd, and only possible in the realm of Ponzi – they promise a risk free 6% return per WEEK. Yeah right. This sort of investment scheme is common in the world of ‘HYIP’s and anyone reading this who finds themselves considering ‘investing’ in such a scheme, then please spend some time reading about what HYIP’s are and their history. You will quickly find that there is a long history of getting people in only to disappear with all of their money. Most important thing to know about HYIP’s, is that every single one of them has had a loud cheersquad proclaiming how great their HYIP is and how they have been paid and how much money they have made etc. This in no way means that the HYIP is not a ponzi – in fact it is the one thing common between all Ponzis, because without new investors, there is no way for the ponzi to continue paying out the old investors.

Someone emailed me about GoldNuggetInvest to ask me if I thought what they claimed was possible, and in that email they indicated that their investigation had not found any negative information on them.  I know how easy it is to research someone and only find positive feedback and good news about them – but this information is not helpful. This is why whenever I start researching a company or investment scheme, the first thing I do is google the companies name with the word Scam or Rip Off after it. I find this tends to very quickly and easily highlight any complaints about the company you are investigating. Don’t just trust the good news, and the links provided by the promoters of the company – go looking for the dirt directly. I will have to write an article on this topic alone I think…

I have also been recently contacted about Pegasus Group Australasia. This company operates out of Brisbane QLD, and sells arbitrage software for $16,000. I have not seen the software myself, but the person who I spoke with about it said that they company offered to discount the package to the low low price of $9200, and even better than that, offered to accept only $2300 upfront and have the rest paid off from their trading profits.

I don’t know how good the software is, it could be the best on the market (they all claim to be, this one might as well claim it too), and my basic complaint will remain the same as it always has. An alert software is a SERVICE. It is an ongoing commitment of resources. It requires continual adjustments, upgrades and attention to detail. Bookmakers change, betting markets change, sports change…everything is in flux. In order for there to be an incentive for a company to continue to provide assistance, support, and continual upgrades and improvement to their software to get through all of these changes, there simply MUST be an ongoing service fee associated with the software – single upfront fees are not viable business models.

If the company offering the software is a good company, then you should feel absolutely no pressure and no rush, because they should be around for a long time. If they are not, then you have saved yourself a lot of lost money, and if they are, then you don’t need to rush into purchasing their software. If they claim to be only taking in a few customers before closing their doors, then you should be skeptical of that claim, because they are basically saying that they are going to stop all of their cashflow! What will keep them in business after they stop taking new customers???? What incentive do they then have to maintain the software for their old customers???

Singe upfront payments for arbitrage alert software simply don’t make fiscal sense.

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WTS (World Trade Systems) Arrests Made

Posted by Aegist on March 9th, 2009

Finally, some ‘good’ news on the Arbitrage investment scam scene. Police have arrested the director of WTS and investigated 4 of their staff members. It is also suggested that more arrests are going to be made in other scam operations in the gold coast.

This is a great result for the members ripped off who have invested so much time into lodging complaints with ASIC and the police and doing everything they could to bring about justice to the scammers. However, even with this great result for justice, it still seems unlikely that anyone will be getting their money back.

WTS was first heavily discussed on ArbForum back at the end of 2007 – strong warnings against investing were given there at that time: WTS On the gold coast again. This shortly followed the article I wrote offering general advice to steer clear of any such operations : Investing in a Sports Arbitrage4 Investment Fund – Some advice. I simply point this out in case there are any other new scams operating, and people are investigating them now, and wondering whether – ‘maybe this one is different…?’. It isn’t. The general warning I wrote in August 2007 is just as true now as it was then – read it, and heed its advice. Avoid arbitrage investment scams. If they worked, they wouldn’t be asking for your money.

The current discussion on ArbForum is surrounding the arrests: WTS arrests finally – others to come. You can also find a link to the news article published in the Sunday Mail in the second post on that thread.

And lastly, I don’t think I have linked to this site before, so don’t forget to check out Sports Arbitrage Scams if you are investigating your own little scam…

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A Current Affair go after Suncity Equities and Investments Scam

Posted by Aegist on October 23rd, 2008

A Current Affair (ACA) have just run a second story on Arbitrage Investment Scams operating out of the Gold Coast – this time focussing on Suncity EI. They ran a story about 4 months ago on the same topic, but focussed their attention on Kent Woodhouse (AFL Arbitrage) – I wrote a short article on that at the time, and you can see it here.

This second installment on this topic was almost identical to the first story, just with different names and stories. There was the same amount of chasing people through offices, and down the street, all while talking to the poor victims of these scammers about how much money they have lost.

I have to admit that I find it a little odd that at no point have ACA contacted either myself, or anyone at ArbForum. You cannot look into this field and not accidently find yourself either here, or on arbforum – combined we have far more information on arbitrage trading, and these arbitrage investment scams than anywhere else online. Yet I still haven’t heard anything from them – which is particularly odd when you consider that I actually contacted ACA (and Today Tonight) myself about these scams over 6 months ago myself – well before they ran the first story.

I guess they aren’t interested in actual information – they just want the hard fast ‘fear’ and ‘hype’ associated with the story. I understand that. The story is too complicated to bother with details when all you really want is for people to know “Arbitrage Companies Bad – avoid at all costs”. It isn’t completely true, but for the most part it is probably the easiest message to get out to the mass public in a useful way.

Their breif clip of someone from the ACCC talking about these scams as “just gambling” was very much like what they said in the first story they ran too. Again, I would like to highlight the fact that what these companies actually do with your money is virtually irrelevent – the scam is that they won’t pay it back as promised. They are Ponzi Scams, and they don’t actually do anything with your money – neither arbitrage, nor gambling.

Anyway, let this stand as YET ANOTHER warning to all of the people who regularly contact me wondering whether they should invest money in company X, Y or Z. Hopefully the answer will be blatently obvious by now…

Here is the ACA Clip:

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Risk Free Profit has disappeared – More money left owing.

Posted by Aegist on October 18th, 2008

This is a topic which I unfortunately have some history with. Risk Free Profit created the software SureBetPro and distributed it through an MLM network – quite clever really because it really took advantage of peoples desire to make easy money on several different levels at once.

It was through the MLM approach to distributing their software that I, and many other people were introduced to the concept of arbitrage trading. SureBetPro (SBP) was the first arbitrage software I ever used, and if it wasn’t for Risk Free Profit (RFP), this website wouldn’t exist. In the beginning I defended RFP against numerous people who claimed they were a scam – the fact was that I was using SBP actively, and making money using it. The price they charged for the software was reasonable; $140 a month; no multi-thousand dollar bills like some of the modern scams, and the software did pretty much what it claimed to do (not brilliantly, but functionally all the same). So based on the fact that they had a reasonable product, being cleverly marketed, it seemed reasonable that they should be a legitimate company. Why rip people off and risk retribution, legal retaliation, and/or prison time when you can make legitimate profits? Well turns out that even the most reasonable looking situations can still result in way too many people being scammed out of their cash.

RFP ran a member only trading pool where members could invest $600 – $1000 for a limited period of time. Everything about this trading pool sounded perfect. It made no unreasonable promises; your profits were not promised, they were based on actual results. The amount you could invest was limited to a reasonable amount so that everyone could have a fair go. The investment was restricted to a specific time frame; no long term compounding issues. And there was even an incentive for the company to offer this – in order to claim any trading pool profits, you had to be a full time member of RFP – ie, you had to keep making your $140 USD payments every month without fail. So the pool looked like a clever tool to ensure their member base never shrunk…

But I was wrong. After a little over a year of running the trading pool the first round of payments started to be made. And they were made successfully. People happily posted their profits at various online forums, doing the usual HYIP fan-boy thing by cheering for RFP and proclaiming their faith in the goodness of RFP etc etc. Having the exact effect every Ponzi scheme could ever hope for – creating the illusion that this company is reliable and safe to invest in. More people surely invested significantly more money into the trading pool. Numerous people paid out in the first round undoubtedly put more money in for another turn. And it wasn’t long after this that RFP suddenly started having ‘Problems…’ with their payouts.

The list of reasons were bloody interesting actually. I think the first excuse was that their bank account froze their funds because of the massive movement of money out of international bookmakers – it flagged money laundering concerns. The bank supposedly froze their funds, and RFP had no option but to wait for the banks to resolve their concerns. Apparently the bank would hold the funds for 6 months before releasing them again. Yeah right, as if Banks have the right to just take money from their customers and hold them for arbitrary periods of time, just because they want to. Apparently RFP could do nothing about it, and had to swallow it – I mean, the members who were owed money had to swallow it.

Some time after that 6 month period passed, still no pool pay outs. I think it was at about this time that the US passed the safe ports act, and Neteller found itself in trouble with the USA. It was being investigated by the FBI, and it did actually have a lot of its funds frozen. RFP jumped straight onto this band wagon and started claiming that this was the new reason they couldn’t make payouts now – their money was trapped in Neteller by the US government. There was nothing they could do about it! Everyone would just have to keep on waiting. No mention was made of the previous ‘money frozen in bank accounts’ excuse of course…

At this stage over a year had passed since they had stopped making any sort of payment from their members only trading pool, and I had, like most other people no doubt, completely lost interest. I had stopped using SureBetPro many many months before hand (it had lost any competitive edge it may have once held, and I found other software better and cheaper on the market), and so RFP was of no interest to me. I’m sure there were a few other headline worthy excuses for why their members own trading pool money couldn’t be paid to those members – I wouldn’t be surprised if the current standing excuse was because the bank they had the money frozen in has just collapsed under the credit crunch and all of the money has been lost!

So anyway, for all of this time SBP has continued to be on the alert service listing page because it has continued to provide an arbitrage alert service. The dodgy operations of RFP have given me cause to warn people away from RFP and SBP for a couple of years now, but the alert service has continued working regardless – just without any sign of improvement, upgrade, or clearing of old junk (the damn software still has a filter in it for pointbet and several other LONG deceased bookmakers).

In the last couple of months though, it seems RFP has finally left us for good. A couple of people have contacted me letting me know that they can’t get on the RFP website. If you follow the link from the alert services it takes you to a default Apache page, and this has been the case with every other SBP link i can find online. However, if you go to http://www.riskfreeprofit.com, the website does still seem to be there. Historically, you can only register with RFP through a referral. Maybe RFP have simply cut off all of the old referral links but are still operating, but I’m not willing to try to register to find out

Whatever the actual case though, this is a long winding sad story of people losing money to a greedy company – like so many other stories on the internet.

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