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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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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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Arbitrage Scam Websites Targetted in Australian Crackdown

Posted by Aegist on September 23rd, 2008

The Sydney Morning Herald ran a story today (below) about the investigation being conducted by the Australian Competition and Consumer Commission (ACCC) into Australian websites making ‘too good to be true’ claims. Arbitrage Betting investment schemes, and the over-promising over-priced Arbitrage software companies were mentioned in the investigation, alongside other regular scams like anti-ageing rip offs, other get rich quick schemes, expensive ‘free’ mobile phone services, and genealogy rip offs.

No companies being investigated will be named until after the ACCC finds the company is in breach of trade practices – I look forward to seeing numerous companies which we have discovered and posted about here on SAG being named by the ACCC.

The full SMH article can be read here:

http://www.smh.com.au/news/biztech/watchdog-eyes-140-scam-websites/2008/09/23/1221935618431.html

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Profit From Differences and Progressive Trading

Posted by Aegist on May 14th, 2008

Profit From Differences (PFD Trading) and Progressive Trading (PT Trading…Progressive trading trading?) are two new terms created for sports arbitrage trading by a company trying to sell their own arbitrage alert software for sums in the order of €10000.

There has already been a bit of discussion over at Arbforum in a thread about several companies related to the PFD trading operation (read the thread here).

All I want to say here, is that we have received complaints from customers of several companies
who sell arbitrage software at these highly inflated prices (thousands of dollars/euro/pounds up front). The most common complaint is that the arbs are gone before they can place them, or that the profit is small at best, and that there is no way they will ever make back their investment. I have previously written on the dangers of purchasing arbitrage alert software – something which I consider to be a ‘service’ which is delivered over time; not a product which you buy once and take home with you – from companies who only offer the option to buy their software upfront without any need for ongoing fees.

See my original article on the Dangers of Large Upfront Payments for Arbitrage Alert Software.

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S.O.R.T Trading – Simultaneous Offsetting of Risk Technology (SORT Trading)

Posted by Aegist on March 29th, 2008

Sort Trading, or the ‘Simultaneous Offsetting of Risk Technology‘ Trading (SORT Trading for short of course…), is the latest name given to arbitrage trading by a series of four companies, all connected by a single ‘Independent’ review site. SORT Trading, the phrase, exists only within this tiny insular section of the internet. No one in the arbitrage trading community has ever heard of it, and I doubt anyone anywhere else has ever heard of it, because I am confident that the people behind these 5 websites fabricated the term ‘SORT Trading’ themselves entirely in order to set up these companies and the completely clean slate of positive reviews. No one searching for ‘SORT Trading’ would accidentally stumble across any information to help give them informed opinions, whereas if the companies used the more accurate phrase ‘Arbitrage Trading’, or even Surebetting, or Scalping, then any person reviewing the (rather expensive) opportunity being offered to them (over the phone by friendly helpful customer service people no doubt) would surely find LOTS of information. But by searching Google for “Sort trading” you don’t find anything other than 3 of the companies and the review site (and a couple of other ‘independent’ reviews on the open internet).

The SORT Trading companies are all connected by Sort Trading Guide (sorttradingguide.co.uk), and they are Baranstone, Kinsealy, 247-web, and SORT Traders. With the SortTradingGuide website the only obvious link between the four, you have to wonder why they are trying to look independent, and why the reviewer (goes by the name Gareth Reynolds, although the domain is registered to Geoff Andrews) doesn’t seem to know anything about Arbitrage Trading.

There are a few points to be made about this supposedly independent review:

1. ”Over the last 6-12 months a lot of companies have started to get involved in this highly lucrative SORT Trading industry, It would take me months to compare them all (and I have used most of them) so I’ll stick to the leaders in the industry.”

What other companies? Search Google for Sort Trading and you can’t find one – you just find this lot and a few pages they have created to shill for themselves. As I stated earlier in this article - SORT Trading as a term simply doesn’t exist outside of the fabrication of these companies and this reviewer.

2. ”The reason I put this website up was to make aware of the pitfalls of Sort Trading that were never available to a new traders, not to generate business for the Sort Trading industry.”

Yeah…and because you didn’t know about this site (SportsArbitrageGuide) or ArbForum, or any of the HUNDREDS of other websites on this topic which use recognised names for the process or arbitrage trading – and not to help make Baranstone look like a legitimate business.

As soon as you see the fact that this whole SORT Trading ‘industry’ exists only within this small circle of 5 websites, it is hard to think they are in any way independent. All 4 of the companies use the same style of website - 3 or 4 pages, and a contact form. They are short pages, with very little information, and just there to provide a storefront to refer people to from their phone conversations. The ‘Visual basic’, Java, Cisco, and Mac emblems add that extra flair of “We aren’t related – look, we use different systems!”

These 5 websites have just come out of the blue, created an entire industry name out of thin air (search google to verify this for yourself) and are trying to sell their software for …more than 5.5k euro. Much more. It varies from company to company, but I suspect that 3 of the companies are there just to make one in particular look legitimate.

Anyway, there is a discussion going on over at ArbForum about these websites, have a look at it:

SORT Trading ***SCAM*** SORT Trading

And if this is the first time you have ever heard the term “Arbitrage trading”, then welcome to the real ‘secret’ industry that they talking about on those “Sort trading” websites. Arbitrage trading is real, and it does work in much the way they explain it, but you don’t have to have tens of thousands of dollars to buy the software. For a more thorough guide of what arbitrage trading it, read through our guide here:

What is Sports Arbitrage Trading?

And just for a comparison, have a look at the real arbitrage trading companies who sell software and arbitrage alerts here:

Sports Arbitrage Trading Alert Services.

They are significantly cheaper than the thousands of dollars being asked for by these companies.

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