Saturday 25 July 2015

To live and die in the age of market fundamentalism

Future generations will view our current system of exponential debt and deliberate market manipulation as farcical in hindsight. Mainstream economics has abandoned any semblance of rational thought, and instead embraced what is best labelled as market fundamentalism. The core tenet of market fundamentalism is that markets are efficient no matter what, even if they are deliberately ramped by forcefed debt-driven inflows. Since markets are unmanipulable, we should deliberately ramp them as high as possible. The promise offered by the gospel of the bubbleheads is alluring; if everyone puts all their money in the stock market index and leaves it there, over thirty years the money will grow thirtyfold. According to the bubbleheads, this thirtyfold increase in wealth will come without effort, with the long time frame eliminating risk too. Individuals, pension schemes and governments all enthusiastically converted to market fundamentalism based on this promise.

But if everyone puts their money in the stock market, expecting to cash out thirtyfold down the track, where exactly will those gargantuan amounts of money come from? The market fundamentalists never say, as there is no rational response to this question, instead referring to "faith" and "belief". At best, the bubbleheads invoke the coming of magic robots, technology that will somehow increase productivity and median incomes at some ill-defined point in the future. To support their absolutely nonsensical assertions, market fundamentalists point to the observed thirtyfold increase in markets over the previous several decades.

However, there was a very simple reason for the previous thirtyfold increase in markets, one that is taboo to mention for market fundamentalists, namely an exponential increase in debt forcefed into markets. In a debt based monetary system, the money created by increased debt will inevitably find its way into financial assets. After all, where else would newly created money end up? New transmission sources for debt-fuelled ramping of markets have emerged - margin lending for individuals, stock buybacks for companies, and quantitative easing for governments. As debt has increased, so has the market cap and power of financial institutions, with banks and big corporations tied ever closer to government, in what is effectively a fascist system. One of the main drivers of forcefed inflows to markets over the last several decades, that is seldom recognized even by the rational, is the creation of a private sector pension system.

Fittingly, one of the first places such a system was implemented was Pinochet's Chile, at the behest of Milton Friedman. By law, a portion of employee pay is forcefed to financial intermediaries, with a large proportion then put into stock markets. This has several effects. It provides an immediate massive boon to financial intermediaries, causing resources to be diverted from actual enterprise into the financial sector. The emergence of powerful financial intermediaries increases income inequality, creating a boy's club that set each other's wages, as assets are controlled by these intermediaries. Furthermore, the stream of forcefed market inflows provides a boon for those already owning financial assets - the first entrants to the pyramid scheme - as the inflows temporarily ramp prices. So everyone's happy! Except when it eventually comes time to cash out the promised thirtyfold reward, at which point the outflows cause the markets to tank. But by that point Friedman is long gone, jetted off after taking a healthy fee. And of course, the inevitable crash is blamed on the market gods by the bubbleheads. The solution? More debt and an even higher proportion of incomes fed to financial intermediaries, of course.

The core assumptions of market fundamentalism are completely ridiculous when clearly stated, which is why bubbleheads so often resort to obfuscation and jargon. Expressed in plain English instead of Latin, their creed is laughable. For example, according to market fundamentalism, the size of a given market has no impact on its expected return. So if you ramp a $1 trillion market to $2 trillion, using mandated pension inflows or other government intervention, this will magically make the companies comprising said market twice as profitable, with twice as high cashflows and dividends. Why on earth would that be the case? Because markets. According to the fundamentalists, the structure of the market has no impact on its efficiency either. So if you have a handful of financial intermediaries setting prices, with these institutions incentivized to keep prices up, prices will still be magically efficient and not manipulated. Because markets. Neither does the composition of the market matter. If the index gets filled with China Waste Corporation and Panorama Synergy fraud schemes and turned into a wretched hive of scum and villainy, this will have absolutely no negative effect on expected returns according to market fundamentalists. Because markets. The most ludicrous tenet of all, however, is that debt levels do not directly ramp markets. So if you double the world's money supply, and markets correspondingly double, this means you are truly twice as wealthy.

Human history is the tale of how 1% control and leach off 99%, and through the millennia, only the titles of the 1% controllers change. The witch doctors, high priests, fund managers and banksters have one thing in common, namely no objective empirically provable skill. As a statement of fact, psychics cannot empirically prove their purported powers. In exactly the same way, scientific studies show that fund managers cannot predict the future and achieve risk-adjusted market beating returns after fees, cannot invest any better than a random chimpanzee. This is not a "belief", it is a simple statement of fact. Yet to this day, the sheeple 99% persist - grotesquely - in yielding to a 1% that is provably lying. Perhaps this is in their nature, to be endlessly shorn and slaughtered through the ages. And what of those unfortunate few that understand the prevailing scam of their time? In Teotihuacan before the fall, in the last days of Rome, or during the current global debt ponzi. Cursed with helpless prescience, spat upon by gods and mortals alike, you are raped and driven insane.

Thursday 2 July 2015

The China Waste Corporation fraud scheme

Investorlink Group is an Australian criminal organization specializing in intermediating international securities fraud and market manipulation, as described previously in this blog post. The company mainly helps with the listing and deliberate ramping of Chinese fraud schemes on the Australian stock exchange. Such fraud schemes need no actual assets or operations before revaluation by the criminal cartel into ASX-entities valued at billions of dollars. Investorlink recently helped launch yet another revaluation fraud on the ASX, by backdoor-listing and ramping China Waste Corporation (CWC.AX).

China Waste Corporation purportedly is an environmentally friendly waste management company, through its interest in Cayman based shell company Harvest Champion and its subsidiary China Urban Mining Holdings Limited. But as the prospectus for the backdoor-listing admitted, none of these companies actually have any operational history whatsoever, merely "planning" and "aiming" to conduct business. According to the prospectus, the only asset held by these companies was purportedly $3m cash, to be acquired by issuing 628m shares of CWC in the listing.

A small investment cartel now controls almost all CWC shares and manipulates its share price. According to disclosure documents, the top twenty shareholders hold more than 97% of shares. Immediately after listing, the "market" cap of CWC was set at $230m by the criminal cartel controlling its share price. According to the ASIC, this was not market manipulation at all, but rather a magical market mystery. According to ASIC, the overnight transmogrification of $3m cash into a $230m asset was just a wonderful occurrence, a miraculous event that needs not be investigated by the regulator. More recently, this blatant fraud scheme has been ramped to a "market" cap exceeding $300m, and ASIC still does nothing about it.

There are several uses for inflated ASX shares. The criminals freely admit one purpose of these ridiculous listings is to gain "credibility". But is "credibility" something that ASIC should be willing to sell? Furthermore, manipulated shares can be used as collateral for borrowing, or used by criminal fund managers to misstate fund performance and fraudulently extract performance fees. Deliberately inflated smallcap shares can also be used to defraud the significant investor visa program, whereby corrupt Chinese officials and other criminals can buy permanent residency in Australia. Recent changes to this program have been designed to provide a boon to organized crime syndicates such as Investorlink.

Saturday 18 April 2015

Migme and the Foxconn revaluation fraud

Most new listings on the Australian market are now revaluation frauds rather than genuine enterprises, and are listed for the sole purpose of creating a manipulable "market" price. Investment cartels commonly hold 90% or more of outstanding shares of such schemes and control their price. After ramping the share price, the inflated asset can be used to pad the books of investment cartel members, used to raise debt, or packaged into financial products and offloaded on granny investors.

There is zero justification in economic theory for the assumption that an asset controlled by an investment cartel will trade at a "market" price. Efficient market theory explicitly assumes many buyers and sellers, none of which individually can move prices. But if 90% of the shares of an asset are held by a small group that is incentivized to keep prices up, then the asset will not trade at a market price, but rather at a systematically inflated cartel price. You may call this The Benway Theorem. Efficient market theory deals with the Platonic ideal of a market, a perfect imaginary market, whereas The Benway Theorem deals with markets as they actually are. An increasing number of stocks are held by small investment groups, this is simply an indisputable statement of fact. Efficient market theory does not take into account the rise of financial intermediaries or their incentives, nor does it even consider the control of information by said intermediaries, instead it just assumes an infinite number of perfectly informed traders.

The most egregious example of revaluation fraud was Fifth Element Resources (FTH.AX), previously described in this blog post. FTH recently announced its "voluntary" delisting from ASX, having taken the scam too far even by Australian standards. With all outstanding shares held by 13 entities, ramping the worthless company to a $155m "market" cap just made this fraud a little too obvious even for complicit moron regulators. But FTH almost made it into the All Ordinaries index. As a service to future criminals, ASX has explicitly spelt out the requirements of revaluation frauds. In the announcement, it was revealed that ASX had required FTH to create a spread of 300 small investors holding at least $2,000 worth of shares, but FTH was unable to raise even this $600,000 in dumb money. Criminals should take note of this and plan their future listed securities fraud accordingly.

The business of listing and market manipulation is now more profitable than any actual operations, with even the most catastrophically loss-making enterprise still having utility as a listed securities fraud. The latest and most laughable trend is the listing of companies that are either bankrupt or teetering on the edge of bankruptcy. Migme Limited (MIG.AX) is a newly backdoor-listed fraud scheme on the ASX, dual-listed on the Frankfurt exchange for good measure. Migme was created by agglomerating a dog's breakfast of worthless and consistently loss-making internet companies, some of which already had gone out of business. Migme purportedly is a social media platform, with aspects of multi-level marketing, diversifying into e-commerce with forays into online gambling, recently adding a music service. Migme does a lot of things except make money. Even its core operations has plunging revenues and widening losses, as detailed in its annual report. Between 2013 and 2014, revenue fell from $2.9m to $1.9m, while losses widened from $4.3m to a staggering $28.3m. But operational performance is irrelevant to Migme's utility as a securities fraud.

In a few months after listing in its current form on the ASX, Migme's share price was ramped to $1.06 by the investment cartel controlling its price. According to ASIC, this was not a ramp but rather a magical market mystery, an enigmatic but wonderful occurrence for which an explanation just cannot be found. The ramp brought this joke of a company to a $200m "market" cap, and Migme was included in the All Ordinaries index as a top 500 Australian company. Ladies and gentlemen, this is your Australian stock market, this is where your money goes if your pension fund buys the index. Migme.

The investment cartel controlling Migme has some interesting members. FIH Mobile Limited (PINX:FXCNY), formerly known as Foxconn International Holdings Limited and part of the Foxconn group, holds 20% of Migme shares. Foxconn is predominantly known for working conditions so horrendous it drives its workers to suicide. What is less known is that the Foxconn group cooks its books, using a bewildering array of crossholdings and related party transactions. The Migme ramp allows Cayman-incorporated FIH Mobile to pad its books by making reference to the "market" value of its holding, a level 1 input in terms of IFRS 13. According to Note 19 on page 75 of the FIH Mobile annual report, the "fair value" of its listed investments in associates was US$44m as at 31 December 2014, exceeding the carrying book value by US$9m. However, the vast majority of this US$44m is Migme shares, and in the absence of the ramp, FIH may have been forced to impair the carrying value of its associates.

Friday 17 April 2015

RBA and the trillion dollar question

Having helped create a truly grotesque debt-driven asset bubble, the proceeds of which have already been spent, the RBA bubbleheads and their media cheerleaders are getting visibly nervous. The banksters now hope for a "soft landing" for property and bank stocks. This betrays a fundamental lack of understanding of the basic mechanics of a bubble. Simply put, the current price of property is based on what is perceived as guaranteed future capital gains, and were the expectation of said capital gains to disappear, prices would collapse.

Expected future price rises are the only reason buyers are willing to pay current prices, in the very definition of a bubble. Since the current price of property is dependent on continuing unsustainable price rises, a soft landing is impossible. Bubbles can only ramp up or collapse, it is in their very nature. This is easy enough for a child to understand, but for those whose living depend on not understanding, naturally this is all incomprehensible.

The talking beards of the media sometimes advocate increasing the supply of "housing" as a solution. But it is not demand for "housing" that drives the bubble, it is demand for capital gains, demand for admission to the state sponsored pyramid scheme, to get rich without effort or risk. Say the government sold a product with a guaranteed 10% return, and people could borrow at 5% to "invest" in said product. The demand for this product would be infinite, people would rationally borrow as much as possible to "invest", to the point of collapsing the economy.

The key question for determining the size of the Australian property bubble is simple. Beyond all the verbiage, beyond the smoke screens and deflections, there is a key metric that is never ever discussed. This is the question the dourfaced bubblehead at the RBA should be forced to answer:

What long-term future growth rate is priced into current property prices?

The size of the bubble is directly determined by how much this expected future rate of growth in prices exceeds the future rate of growth in net rental incomes. The banksters would of course never give a straight answer to this simple question, it would be unthinkable even to pose it.

Monday 2 March 2015

Revaluation fraud using sham internal transactions

If fraud is tolerated, it will inevitably spread across an economic system, crowding out actual enterprise until there is none left. This is the true systemic cost of allowing fraud to fester, and comes in addition to direct costs in terms of money lost and lives destroyed. In Australia, circular investment and revaluation scams have been allowed to gradually take over the entire economy. The only viable form of business in Australia now involves fraud, as only fraud schemes can promise sufficient returns. Pie cannot be sold profitably in Australia, only pie in the sky need apply.

One form of revaluation fraud uses sham internal transactions between related parties to enable revaluation of an underlying asset. The upwardly revalued asset is then used to raise money from investors or lenders. This form of fraud has spread literally everywhere in Australia, from almond farms to restaurants to funds management. All that is required is an asset, the value of which is derived from a payment stream, and two related parties controlled by the criminals.

Let's say a criminal cartel has attained control over defunct almond farmland, which is valued with reference to how much it can be rented out for. The cartel creates two entities, A and B, with A paying B for the privilege of using the farmland, and with B owning the farmland in question. Since both A and B are part of the cartel, the cartel is essentially paying itself. Crucially, the more the cartel pays itself in sham transactions, the higher it can revalue the farmland asset. The fraudulently revalued asset is then used to perform capital raisings or for borrowing, with the proceeds used for even further fraud and to pay off the criminal cartel operators.

Of course, wealth can't really be created by paying yourself. If that were the case, you could become rich by sitting at home sipping Brawndo, paying yourself a million dollars for every batin'. But in the idiocracy of Australia, such farcical fraud schemes are hailed as the height of innovation. No journalist or analyst dare call it for what it is, namely fraud. In the example above, the longevity and success of the almond farm fraud is completely independent of actual operational performance, and instead solely relies on the cartel's ability to raise neverending funds from victims based on fraudulent performance metrics. In reality, it is but a poorly disguised Ponzi scheme.

The Blue Sky Alternative Investment fraud is organized in exactly this way, with the Blue Sky "fund manager" getting inflated payment streams from various "alternative funds" under its control, and then "investing" in these funds circularly. The Rural Funds Group is another recently listed fraud scheme using this method, deriving almost all its "income" by paying itself, as shown in its fraudulent financial statements. Another perhaps more bizarre example of this scam involved a presenter of the Australian cooking show MasterChef.

In August 2014, an article in The Age newspaper about the struggling MasterChef restaurateur revealed what was euphemistically labelled an "unconventional property-based business model". According to the article, the restaurateur and his business partners acquired the properties which their restaurants occupied. The group then charged "its own restaurants high rents, which increased the value of the buildings and subsequently allowed the company to secure more debt." Sound familiar?

Saturday 14 February 2015

Property valuation and the bubble economy

The story of how the global debt ponzi started is surprisingly simple. In western democracies, a majority realized that, in addition to voting themselves into the treasury's coffers, they could vote themselves into their children's pockets too. This was done by deliberately inflating the price of property using debt, with one generation hijacking housing and ransoming it back to the next. Property is a significant determinant of a nation's wealth, its price movements considerably impact consumption, it underpins pensions and retirement plans. Most significantly, property underpins the banks and other financials, so inflating property prices artificially boosts stock prices too. The property bubble thus created a thousand further bubbles, metastasizing and eventually coming to threaten the entire real economy.

The price of property is always claimed to be set by a "market". In reality, a nation's property prices can be deliberately moved by changing tax laws, by restricting land and infrastructure supply, by repressing interest rates and changing lending rules. In reality, there are plentiful ways to manipulate property prices, that have nothing to do with "markets" or supply and demand for a place to live. In Australia, a prime example is the tax deductibility of losses incurred on so-called investment properties, in effect a government subsidy to property speculation. These are deliberate policies to ramp property prices, put into effect by political majority, creating a bubble economy that gradually has come to engulf other actually productive areas of society. As financials make up an increasing proportion of the economy, with more people and time spent, this constitutes an enormous drag on the actually productive.

The valuation of property is also surprisingly simple, and as always comes down to cashflows. Since the long term cashflows of property are much more stable than those of shares, calculating the fair value of property is in fact easier than valuing most shares. In the long term, average net rental cashflows follows average income closely, and in the very long term both are expected to converge with inflation. Just as the value of a stock is the sum of all future dividends discounted at an appropriate risk-adjusted rate, so the value of property is the sum of all future net rental cashflows discounted appropriately. Property value is thus equal to starting net rental cashflow, divided by the discount rate less the expected growth rate in net rental cashflows.

The rent that is or could be charged on a property, less all expenses and maintenance, is what determines value. Increases in the fair value of property can only be driven by a matching expected increase in net rental cashflows, any increase in price beyond that is a burgeoning bubble. Assume a model where the average property price at Year 0 is $100,000 and the net rental cashflow is 8,000, with both prices and net rental cashflows increasing by 3% annually. Over 30 years, price increases to $242K and net rental cashflow increases to $19K, with net rental yields constant at 8%.

In this model economy at equilibrium, long term property price growth equals long term net rental cashflow increase. (The model assumes constant increases each year purely for presentational ease, the conclusions are independent of this assumption. Also, note that a long term model of property prices need not include variations to the central bank interest rate, since in the long term the sum of central bank rate movements is zero.) But 3% capital gains are no fun and generate no bankster bonuses, no boom times or popping champagne corks, just boring sustainable growth. Assume instead that a political majority aided by banksters, a stealing generation if you will, decide to implement policies to deliberately inflate the price of property at a 7% growth rate. This growth is of course financed by debt, aka money created out of thin air.

In this scenario, net rental cashflows and the fair value of property remains the same, but property prices rise to $761K in Year 30, sending net rental yield down to 2.6%. Anyone buying property in Year 30 is paying $242K for the actual property, and a further $518K for a ticket to the state sponsored pyramid scheme that has been created. In Year 30, two thirds of property prices constitute a down payment to the government sponsored pyramid scheme. The only reason anyone is willing to pay $761K in Year 30, after years of unsustainable increases in price, is the expectation of further increases. In time and with enough "benevolent" intervention, future expected price increases become priced into the market, and the bubble fuels itself.

This is most clear in Australia, with more than 50% of house purchases going to property "investors" (actually leveraged speculators on the government sponsored pyramid scheme). The majority of these property "investors" incur running losses on their "investment", and are thus without question making the purchase based on expected future capital gains. This is an acknowledged fact. Meanwhile the presstitutes and analysts tie themselves into knots trying to explain why this is not at all a textbook bubble, when an asset is bought solely on the expectation of further rises. The latest explanation is the most humourous: it is not a bubble because Australia has many "coastal cities". Such a non sequitur could only pass as intelligent comment in an idiocracy, it proves not only the idiocy of the commenter but also the stupidity of the society that promotes said commenter to a position of power.

But how can bubble economists admit that lowering rates and changing tax laws boost asset prices, yet simultaneously claim prices are set by an efficient market? This is solved by circular thinking and the so-called wealth effect. Bubble economists believe that if we ramp up asset prices by lowering rates, the higher prices will inexorably lead to higher economic activity (the wealth effect), with the fair value of this increased economic activity perfectly matching and justifying the increased asset price. So if we ramp shares/property, this increases future cashflows for shares/property, so that the initial ramp was just a fair value movement by an efficient market. The initial manipulation of the market was therefore not manipulation. Because of efficient markets and the wealth effect, markets are essentially non-manipulable, therefore we should manipulate them as high as possible (this power should of course be yielded to only the most prudent and benevolent central bank bubbleheads). This is not meant as parody, this is what bubble economists actually profess to believe. If their premise were correct, i.e. if markets with absolute certainty always were and always will be perfectly efficient, their logic would be flawless. If you knew a car's speed gauge was perfectly correlated with vehicle speed, and could not for any reason ever be incorrect, it would make sense to try and move the car by pushing on the speed gauge with your finger.

Both political parties, all "respected" economists and every mainstream economic journalist fully support the bubble economy that western democracies have descended into. To challenge the bubble paradigm is to invite ridicule and revulsion. In Australian media it is forbidden to say that we have a bubble, likewise the bubblehead of the Reserve Bank and other banksters would never admit there is a bubble, regardless how grotesquely prices become detached from reality and cashflows. (At most they are permitted to say there is maybe a risk of future overheating.) Realistically, 2007 was the point of no return, the time when the west could have abandoned the bubble economy and dismantled the expanding beast of finance and debt-fuelled asset bubbles, but instead decided to inflate an even bigger bubble to cover up the losses that would have been necessary to face, if true price discovery had prevailed. The bubble has gone so far now that no politician could ever propose dismantling it. The campaign slogan "I'll crash house prices! (But it's necessary for our future)" is not likely to be popular.

Tuesday 25 November 2014

ZipTel Limited listed securities fraud

ZipTel Limited (ZIP.AX) is a revaluation fraud currently masquerading as a lossmaking telecom minnow. Backdoor listed on the ASX in July 2014. the entity previously operated as a lossmaking mineral exploration company, and before that as a lossmaking sportswear company. According to its annual report, ZipTel had $556K in turnover and a $3m loss in the 2014 financial year. Whatever. As a revaluation fraud, operational performance is utterly irrelevant to Ziptel. The primary purpose of ZipTel is to provide a manipulable "market" price, which can be ramped for the benefit of insiders. Since listing, manipulating ZIP has created unrealized profits of around $18m for the investment cartel setting its price.

In July 2014, ZipTel raised $5m at $0.20 per share from an investment cartel including K2 Asset Management. In October 2014, ZipTel was shilled on a notorious pump-and-dump website affiliated with the criminal organization of which Michael Featherstone is a part. The investment cartel then ramped ZIP to $0.45, deliberately manufacturing millions in unrealized paper profits. The criminal operators of K2 Asset Management charge real cash fees based on such fraudulently engineered unrealized "profit". This planned fraud was the purpose of listing ZipTel in the very first place.

According to ASIC, this is not a ramp but a magical market mystery, an amazing coincidence for which there just can be no explanation. Investors just happened to rush in at that moment, the investment cartel led by K2 just got amazingly lucky, and no market manipulation occurred. If you are stupid enough to believe such a preposterous stance, you should invest with the next Nigerian prince that contacts you with a great opportunity.

The ZipTel ramp was sufficiently obvious as to constitute prima facie evidence of market manipulation. In a functioning market, regulators would immediately start investigating this blatant fraud, analysts would publicly deride it, newspaper articles would express outrage over this flagrant scam attempt. In a functioning market, the ramp would never even have taken place. But Australia does not have a functioning market, because every component of a working market has been removed. The media and analysts that in a functioning market are tasked to expose such fraud are either owned or controlled by the criminals. The regulator is a sick treasonous joke, only concerned with covering the tracks of the criminal community of which it has become an integral part.

Saturday 22 November 2014

TTG Fintech and Investorlink $1.4bn securities fraud

TTG Fintech Limited (TUP.AX) is a $1.4bn revaluation fraud masquerading as payments clearing business. TTG listed 4m CDIs at $0.60 on the ASX in late 2012, using the services of Investorlink Securities, a company which specializes in intermediating international securities fraud. The purpose of this listing was not to raise capital for a business, and the share was never intended to be truly priced by a market. On listing the top 20 shareholders held 95% of the 635m CDIs on issue and a cartel controlled the price. The purpose of listing TTG on the ASX was to create a listed security with a manipulable "market" price set by a cartel but legitimized by ASIC. Purchasing an ASX listing "adds credibility", as openly admitted by the criminals themselves. The inflated shares can be used collateral for loans, or included in scam funds for unrealized fake "profits". Some are directly sold to small investors.

According to its FY2014 annual report, TTG Fintech had turnover of RMB0.8m in FY2014 and RMB16m in losses, which at current exchange rates corresponds to a $160K turnover and $3m loss. In the 2013 financial year TTG reported a $3.4m loss on a $210K turnover. But this is irrelevant to TTG's true purpose as a revaluation fraud. The investment cartel initially gave TTG a ridiculous $642m "market" cap and then ramped the share to its current ludicrous $1.4bn "market" cap, with these numbers guaranteed by Australian regulators to be unmanipulated. For sure, it is not ASIC's role to take action against poor shares (a straw man argument the dregulator trots out with wearying predictability). It is, however, ASIC's duty to take action against manipulated shares.

It has become common practice for market manipulating criminals such as TTG and Investorlink to issue shares at headline prices to insider associates, in flimsy attempts to justify ramped prices. The criminal insiders are first quietly issued a large amount of shares at a low price. Later and in conjunction with share ramps, the insiders are issued few shares at a higher price in a publicized sham capital raising. This higher HEADLINE price and ramp is used to attract victims, while the criminals' actual weighted cost of shares is much lower. The most blatant recent case of this market manipulation was the Panorama Synergy scam, where criminals first were issued 347m shares at $0.003, later buying 20m shares at a $0.36 in a sham capital raising designed to provide justification for a ramp. In the case of TTG, the company issued 1m CDIs at $3.05 in July 2014, to provide justification for an openly manipulated "market" price. The shares were issued to a third party comically described as "unrelated to TTG, its Directors or any substantial shareholder".

According to ASIC, this is not a ramp and a revaluation fraud but rather a magical market mystery, a fantastic occurrence for which a logical explanation just cannot be found. ASIC and the ASX have approved TTG and given their guarantee it is not a manipulated securities fraud.

Saturday 20 September 2014

The Linktone circular investment scam

MNC Media Investment Ltd (MIH.AX) is a criminal listed investment company that uses a maze of sham transactions with related parties to generate fraudulent results. Formerly known as Linktone (LTON), the company was delisted from NASDAQ in early 2014, purportedly to reduce the costs of SEC reporting obligations. Since Australia is vying to become an international center of fraud and money laundering, Linktone was naturally welcomed with open arms to the ASX. In September 2013, Linktone listed 24m CHESS Depositary Interests (CDIs) under the ticker LTL, corresponding to 240m ordinary shares. Being a revaluation fraud, Linktone CDIs did not actually trade on the ASX, but were merely set at a predetermined "market" price, legitimized and guaranteed by ASIC as unmanipulated. Incorporated in the Cayman Islands, MNC Media Investment conducts its purported business through dozens of interconnected subsidiaries in China, Hong Kong, British Virgin Islands and United Arab Emirates, all buying and selling themselves to each other.

MNC Media Investment has a long proud history of circular sham transactions between related parties. PT Media Nusantara Citra Tbk (MNCN), owned by PT Global Mediacom Tbk, bought 58% of MNC Media Investment in 2008, through its subsidiary MNC International Limited. In 2012, MNC International Limited sold its entire stake to Global Mediacom International Ltd, a wholly-owned subsidiary of the aforementioned PT Global Mediacom Tbk. Global Mediacom, described as "the largest and the only" integrated media group in Indonesia, sold MNC Media Investment to itself.

MNC Media Investment uses euphemistically named "short-term investments" to carry out its fraudulent circular investments, with such "short-term investments" ballooning on its balance sheet from $1m in 2006 to $89m in 2014. In 2010 MNC Media Investment bought $20m of secured notes from PT MNC Sky Vision, a subsidiary of PT Global Mediacom Tbk. In 2011, MNC Media Investment purchased 357m shares of PT Global Mediacom Tbk, which when sold in 2012 resulted in a $28m "profit" listed as "other operating income". MNC Media Investment used the proceeds to purchase 708m shares of PT Bhakti Investama, the holding company of PT Global Mediacom Tbk, 53m shares of PT Media Nusantara Citra Tbk and 65m shares of PT Sky Vision Tbk. These circular "investments" subsequently led to unrealized "profits". MNC Media Investment's cash flow from operations has been steadfastly negative, with $11.3m torched in 2010, $11.9m vaporized in 2011, $5.3m misappropriated in 2012 and $7.1m lost in 2013.

After several months of inactivity, the criminals decided to ramp MNC Media Investment in September 2014, doubling the "market" price in a straightline ramp on little volume.

According to ASIC, this is not a ramp and MNC Media Investment is not a circular investment scam. Instead, this is all a fabulous magic market mystery, and any granny investor that loses money in such a scam has no recourse to the law, but only themselves to blame.

Saturday 13 September 2014

Conman Michael "Mick" Featherstone under investigation

Michael "Mick" Featherstone is a corrupt former Gold Coast police officer and self-confessed criminal, who with impunity has run various fraud schemes for decades. A dirty cop, Featherstone was suspected of planting drugs on suspects, stealing confiscated cash and forming alliances with bikie gangs. Despite (or perhaps because of) this he rose through the ranks of the rancid Gold Coast police force, at one point heading the Surfers Paradise Criminal Investigation Branch. Questioned by the 1997 Carter corruption inquiry regarding police involvement in the drug trade, Michael Featherstone was allowed to retire from the police force at age 33. Featherstone then started running cold-calling fraud schemes, protected by his links within the police force.

Featherstone is involved with a myriad of boiler room pyramid schemes, dodgy gambling syndicates, predictive software scams and other "investments", stealing millions of dollar from the gullible. After this blog detailed how Featherstone associates were listing a circular investment scam on the ASX (with ASIC's blessing of course), Featherstone started bombarding Google with take-down requests. In Australia, the criminals decide what information you are allowed to access, so the blog posts were blocked for Australian readers. This censorship can be bypassed by adding "/ncr" to bypass the automatic country redirect, allowing Australians to read the banned posts.

Michael Featherstone's criminal activities were common knowledge in the area, but he was untouchable due to his connections. Anyone asking questions was first politely told to shut up, and then had their lives threatened if they persisted. Featherstone's criminal activities, spanning decades, were openly protected by the putrid Gold Coast police force. A well-known criminal, Featherstone was "photographed socialising with senior serving officers, was endorsed online by a Brisbane inspector and even gave a speech at a recent send-off for a high-ranking Gold Coast officer".

In September 2014, it was revealed that Michael Featherstone was under investigation from the Queensland's Crime and Corruption Commission (CCC). Referring Featherstone to the CCC, officers openly admitted that it was unfeasible to have the rank police conduct this investigation, given Featherstone's connections and the current level of corruptness within the force.

After Featherstone's offices were raided and investigations began over his links with fraudulent investment schemes, his criminal associates started distancing themselves from him and one fled overseas. And what about that ASX-listed fraud scheme that brought Mick to this blog? It is still in full operation, with ASIC's blessing. The fraudsters now instead use their corrupt corporate lawyers to spam take-down requests, in all likelihood misappropriating shareholder funds for this purpose. Naturally, there has been absolutely no mention of the Michael "Mick" Featherstone case in the Sydney Morning Herald, the largest "newspaper" in Australia.

Thursday 11 September 2014

The van Eyk circular investment scam collapses

van Eyk runs a circular investment cartel, with its listed and unlisted funds "investing" in each other instead of in actual assets, as first exposed by this blog post in November 2013. This related party fraud has been used to inflate management fees, overstate assets and control "market" prices. The cartel includes the listed van Eyk Blueprint Alternatives Plus (VBP.AX), in which cartel funds Blueprint Balance, Blueprint Capital Stable and Blueprint High Growth "invested". According to its latest annual report, these related parties held 67% of units in VBP as at June 2014. These three van Eyk funds also "invested" in the Blueprint International Shares Fund, which in turn "invested" money with related party hedge fund Artefact Partners, linked to current and past cartel members.

In August 2014, it was revealed that Artefact Partners had not invested as mandated, but instead funneled entrusted funds to an illiquid property fund, in all likelihood a related party of the Artefact criminals. This was in direct contravention of fund disclosure statements, constituting an open and direct act of fraud. Cartel associate Macquarie Investment Management was forced to suspend redemptions on the four van Eyk funds, in its capacity as responsible entity. The rats then started fleeing the sinking ship, with van Eyk's asset consultant team exiting under undisclosed circumstances. Investor outflows led Macquarie to terminate a further nine van Eyk cartel funds, and class action lawyers started to circle the disintegrating fraud scheme. Without related parties to fix its "market" price, VBP went bidless.

By engaging in transactions designed to benefit themselves, to the detriment of unitholders, the cartel directors breached their duty of care and committed fraud. The circular transactions and related party "investing" between van Eyk funds was criminal, regardless of any small print included in product disclosure statements. Past and present cartel directors are all jointly guilty of this fraud. The fingerpointing between the criminals predictably commenced quickly. Laughably, the managing director of van Eyk claimed he had "no idea" why Artefact would engage in related party fraud. Could it be for personal gain perhaps? After all, this is the exact same reason he himself committed securities fraud, so perhaps some self-reflection is in order.

Over the years, the van Eyk cartel criminals have siphoned millions of dollars from granny investors, by circularly "investing" in related party intermediaries instead of real assets. Even if the van Eyk funds are shuttered, this is no way means no money has been lost. If not for the fraud, every small investor in van Eyk funds would have had higher returns over the years, and they should be reimbursed after forensic accounting. This will of course never happen. ASIC protected the van Eyk cartel for years, and still protects numerous other related party fraud schemes following the exact same template. Most significantly, the implosion of the $800m circular investment scam received next to no mainstream media attention, despite its monumental implications. This debacle will be swiftly and silently swept under the carpet.

Tuesday 9 September 2014

The Panorama Synergy ramp

Panorama Synergy (PSY.AX) is a listed securities fraud with links to corrupt politicians and convicted share manipulators. After issuing 347m shares at $0.003 in October 2013, bringing total number of outstanding shares to 474m, Panorama Synergy was ramped to $0.46 in sharply delineated steps over the next few months. This 15,000% ramp brought the company's "market" cap to $218m in September 2014. Before raising capital, Panorama Synergy had a net asset deficiency of $400K.

Purportedly a technology company, Panorama has had negative earnings and cash flows for the past ten years. According to its latest annual report, Panorama Synergy's assets comprise of $1.2m in newly raised cash and a licensing agreement with the University of Western Australia (UWA) for certain microelectromechanical devices. Although Panorama regularly uses misleading phrases such "the company's patented technology", Panorama does not actually own these patents, rather UWA does.

The purported basis for Panorama's "market" cap of $218m is a five-year licensing agreement with UWA, entered into in January 2014. Assuming that Panorama is not a blatantly manipulated listed fraud (which it is), the market value of this licensing agreement is therefore close to $218m. The natural question is then how much Panorama paid for this priceless licensing agreement? If UWA did not receive fair compensation for this invaluable licensing agreement, but rather gave it to a related party at lower than its market value, then UWA officials are guilty of fraud.

The Karam family has had previous business dealings with the Obeid crime family, as shown by ICAC hearings, although they later had a falling out over the botched Australian Water Holdings scam. (CORRECTION: This post originally and incorrectly stated that the company secretary of Panorama Synergy testified for ICAC. This is a different Anthony Karam.) Another director, Jeff Braysich, was convicted of share manipulation in 2007. The conviction was later overturned on a technicality. The scheme Braysich was convicted of used wash trades, i.e. sham trades between related parties, to fake market prices. Such wash trades could, for example, be used for ramps.

Sunday 6 July 2014

HFA Holdings Limited and Bernie Madoff

HFA Holdings Limited (HFA.AX) is a revaluation fraud with a long sordid history, including involvement with Bernie Madoff through its US subsidiary. HFA was listed by fraudulent investment scheme MFS Limited (later rebranded as Octaviar), that collapsed in 2008 owing more than $2.7bn, having destroyed the lives of thousands of granny investors. Later the carcass of the fraudulent "cornerstone investor" provided a feeding frenzy for maggot liquidators. The HFA criminals then blamed their woes on "bad publicity".

In 2011, the trustees of Bernie Madoff's defunct business launched lawsuits to claw back funds from investors in feeder funds to the Madoff ponzi. HFA subsidiary Lighthouse Investment Partners LLC was sued for $11,162,251, as shown in this complaint. Having learned their lesson about the dangers of "bad publicity", the HFA criminals suppressed this information from being reported in mainstream Australian media. Australian media just pretended this did not happen, despite it being highly pertinent information for any reasonable person attempting to form a view of the HFA business. In Australia, the criminals decide what information you are allowed to access.

The top 20 shareholders control 90% of HFA and manipulate its share price. Being a listed securities fraud, HFA exhibits the standard pattern of long-term catastrophic shareholder value destruction, interspersed with sharp engineered ramps to benefit insiders. In January 2014, Apollo Global Management announced it was looking to exit its convertible note investment in HFA. HFA was then ramped 30% by the investment cartel, as part of a prearranged deal.

According to ASIC, none of this is market manipulation because market manipulation simply does not exist. ASIC need do nothing about share ramps, because share ramps do not exist.

Section 17.6 on page 35 of the 2013 HFA annual report describes the "relationship between remuneration policy and company performance" with inadvertent humor. The company performance justifying payment of USD$4.6m to its criminal management, taken directly from the remuneration report, is shown below.

But operational performance is entirely irrelevant to HFA's utility as a vehicle for securities fraud. HFA is yet again being used in revaluation fraud targeting granny investors. After the prearranged January 2014 ramp, investment cartel associate IOOF Holdings Limited (IFL.AX) immediately started buying millions of HFA shares at around $0.95. To pay back Apollo, HFA raised $16m at $0.90 by issuing shares to the investment cartel. Since the "market" price of HFA now has been brought to $1.12, millions of dollars in fraudulent unrealized profits have been manufactured, creating vast fees for the fund manager investment cartel controlling HFA's share price. The deliberately pumped HFA shares have been dumped on granny investors, packaged in products issued by IOOF Holdings and other cartel associates.

IOOF Holdings and the rest of the HFA investment cartel are engaged in premeditated securities fraud. What is the real difference between Bernie Madoff and the HFA investment cartel? There is but one: Bernie Madoff is in prison.

Saturday 5 July 2014

Hill End Gold Limited to join LionGold and Blumont cartel

Hill End Gold Limited (HEG.AX) is a related party revaluation fraud masquerading as a gold explorer. Like other manipulated shares, Hill End Gold features long-term shareholder value destruction interrupted by sharp manufactured ramps designed to benefit insiders.

After burning through millions in shareholder funds, the Hill End Gold criminals were seemingly approaching the end of the line, with ASX querying the company's ability to continue operating. As part of its response, Hill End Gold cited a "liquid" holding in related party Bassari Resources Limited (BSR.AX). In March, Hill End Gold had announced it was increasing its stake in related party Bassari by converting a loan at $0.008, bringing its total holding in the company to 14.7%. Starting in June, Bassari was then ramped to $0.021.

According to ASIC, this was not a ramp because market manipulation does not exist, and therefore ASIC will do exactly nothing about it. As always. Bassari of course follows the standard pattern of manipulated shares, namely catastrophic long-term shareholder value destruction interspersed with short-term ramps designed to benefit insiders.

In June, the bellends at Hill End then announced they were selling their gold projects to LionGold Corp Ltd (A78.SI), part of the Blumont investment cartel, naturally with the consideration mainly in the form of LionGold scrip. The Blumont cartel uses crossholdings, revaluations and share ramping beyond NTA to create tremendous synthetic leverage, as first described by this blog post. Assume Company A and Company B each has $50 of real assets and a 50% shareholding in each other. Moving price-to-book from 0.75 to 1.5 quintuples the share price of both companies.

This is yet one more example of the Singapore-based criminal investment cartel making inroads on the Australian "market", while regulators in both countries twiddle themselves. The disastrous losses already suffered by victims of the Blumont cartel lie squarely at the feet of the complicit regulators, as do any further losses created by allowing these criminals to continue operating.

Thursday 3 July 2014

The Macquarie Atlas Roads Group revaluation fraud

Macquarie Atlas Roads Group (MQA.AX) is an ASX-listed revaluation fraud masquerading as a toll road operator. An investment cartel headed by Macquarie controls the "market" price of MQA, and has ramped the stapled security in order to fraudulently obtain inflated management fees. The top 20 shareholders own 91% of MQA and control its share price. This revaluation fraud is the true purpose of MQA, the real reason for its creation and existence. At heart, MQA is no different from Fifth Element Resources.

Like other such scams, MQA is structured in a Byzantine maze of related parties, crossholdings, loans and sham transactions. MQA's annual report is deliberately deceptive, packed with accounting fraud designed to obscure a very simple business model. MQA's assets generate $49m of cash flows, of which the criminal managers absorb a base fee of $18m. After this 37% fee, the remaining $31m is available for distribution to victim investors. If MQA's share price was not openly controlled by a cartel, it would have collapsed. Instead it was ramped to a $1.6bn market cap, packaged in financial "products" and dumped on granny investors.

As a result of the ramp, the criminal managers entitled themselves to a staggering $58m "performance fee". No magical unicorns or leprechauns need be presumed to explain this straightline ramp. The explanation to this mystery is depressingly simple. A small group of criminals had the power to move the share price, and would benefit handsomely from doing so. So they did.

It is highly likely that the investment cartel that ramped MQA during the past year explicitly discussed their fraud in company emails and on recorded telephone lines, including the exact endpoint of their ramp. Macquarie is a criminal organization that considers itself above the law. But since ASIC operates a zero enforcement policy, this will never be investigated and the criminals will die as free rich men.

Tuesday 1 July 2014

The Fifth Element Resources Limited revaluation fraud

Fifth Element Resources Limited (FTH.AX) is a newly ASX-listed revaluation fraud masquerading as a gold explorer, as noted by this blog three weeks ago. The share price of FTH is openly manipulated, having been ramped from $0.20 to $2.30 in a month on no news. Prior to the ramp, an insider purchased 20m shares at $0.01 and the company conducted a sham related party capital raising of 20m shares at $0.20.

FTH has not fallen in price a single day of its existence, a track record as "perfect" as that of the Democratic Front for the Reunification of the Fatherland. According to ASIC and the mainstream media, this is not the result of a blatant market manipulation, but rather a marvellous but inexplicable magic market mystery. ASIC does nothing about market manipulation, allowing FTH to continue "trading" and attracting new victims, because according to ASIC market manipulation does not exist.

A revaluation fraud can be based on any type of business, or indeed an empty shell, as the real point of the scam is the manipulation of "market" prices. The purported underlying business is irrelevant. After manipulating purported "market" prices higher, ramped shares can be dumped on granny investors using fund manager associates. Alternatively, the ramped ASX-listed asset can be used to borrow against, with the proceeds then used for further manipulation. Throughout this, the operators and associates of such schemes collect real cash fees based on unrealized paper profits generated by themselves.

The problem for ASIC is that it has allowed this fraud to fester unchecked for decades, the cancer spreading to the point where its removal may not even be possible. It is not that the stock market tail is wagging the dog, the dog has been completely consumed, leaving nothing but a twitching rotting tail. The ASX is not a market with some elements of fraud, it is a fraud with some elements of market. There is no categorical difference between Fifth Element Resources or Intueri Group Limited (IQE.AX) or Veda Group Limited (VED.AX), they are on the same brownscale of fraud.

Most new Australian IPOs are now revaluation frauds, with investment cartels controlling the "market" outcome according to prearranged deals. Most IPOs in Australia are explicitly performed to create a controllable "market" price, not to raise money furthering an actual productive business with utility for society. Such scams commonly have the top 20 shareholders holding 95% of the shares outstanding.

Saturday 28 June 2014

The Independent Investment Research scam

Independent Investment Research Pty Ltd is a new scam backed by the Australian listed investment company cartel and its associates. Having chosen a deliberately misleading and deceptive brand name, the company provides commissioned research reports for listed and unlisted fraud schemes. After paying IIR to pump their scheme, criminals can quote "Independent Investment Research", while burying disclaimers in small print. This obviously sounds better than quoting "Commissioned Investment Research". IIR has intentionally and semantically sidestepped legal requirements to clearly disclose the nature of commissioned reports.

According to the Australian Competition and Consumer Commision (ACCC), it is illegal for businesses to make claims that are "likely to create a false impression". According to ACCC, businesses need to assess the "overall impression" of their claims, and "can't rely on small print and disclaimers as an excuse for a misleading overall message". ACCC has explicitly stated that “manufacturers cannot hide misleading claims in their brand names” in regards to water branding. However, consumer protection does not apply to financial products, the domain of the congenitally tardy ASIC. Due to the regulator's zero enforcement policy, most types of financial crime have effectively been legalized in Australia, including pump-and-dump schemes and price fixing. Ignoring the law, ASIC has unilaterally decided to allow fraud and the perversion of free markets.

IIR is used by various revaluation and pump-and-dump schemes that are so fraudulent they are usually avoided even by the moron mainstream media. These include previously exposed ponzi US Masters Residential Property Fund (URF.AX), revaluation frauds Sunbridge Group Limited (SBB.AX) and Disruptive Investment Group Limited (DVI.AX), as well as the criminal Australian listed investment company cartel. Managed Account Holdings Limited (MGP.AX) is one of the most recent cartel revaluation frauds covered by this "independent" investment research. Cartel member Argo Investments Limited (ARG.AX) recently bought a 9.25% stake in MGP for $0.12 per share. The loss-making MGP was then listed and immediately ramped to $0.25 by ARG and other related parties of MGP. ARG can now claim unrealized profits of 108% on its investment, that it created itself, based on which its criminal directors can charge real cash fees.

The commissioned cartel research report for MGP mentions "independence" 53 times. Before even admitting to be a commissioned report in small print, "independence" is mentioned 13 times. Later in the Independent Investment Research report, the disclaimers start getting downright humorous. On the last page, IIR reveals it may:

  • Receive payment for the report
  • Have a direct or indirect interest in recommended securities
  • Buy or sell recommended securities
  • Effect transactions that are "inconsistent" with its recommendations
  • Infect your computer with viruses

Showing true panache, IIR caps this off by huffily proclaiming that its recommendations are "under no circumstances" ever influenced by any of this. Well, OK then.

Friday 27 June 2014

The Wilson Foundation's "charitable" fraud

The Wilson Foundation marks a new nadir even for the sociopathic criminals running the Wilson Asset Management (WAM.AX) scam. Although the WAM criminals have stolen millions from granny investors through revaluation and accounting fraud, they have now sunk to a new unforgivable low point. In a despicable bid to reach new victims, the WAM criminals are starting a fraudulent "charity" designed to further their self-interest. Fraud is bad enough, but fraud in the name of charity is truly vile.

The Wilson criminals have taken over the defunct Australian Infrastructure Fund Limited (AIX.AX), planning to repurpose it and perform yet another one of their never-ending capital raisings. The key point (as always) is that this will increase funds under management for WAM and its associates. Jimmy Savile engaged in ostensibly "charitable" acts that allowed him access to new victims. In exactly the same way, the WAM sociopaths are attempting to lure new victims to the fraudulent and inflated listed investment company sector, by making claims of "charity".

WAM claims their new scam involves no self-interest, and that no fees will be charged by participants. This is an outright lie. WAM will own a significant stake in the proposed "charitable" fund. Subsequent upward revaluation of the fund will create unrealized profit for WAM, from which the sociopaths will charge real cash fees. The WAM directors stand to personally make millions from their "charity". They conveniently omit to disclose this.

Moreover, money entrusted by gullible victims to the "charitable" fund will increase funds under management of the cartel. Higher funds under management increases the investment cartel's ability to ramp chosen assets, creating yet more unrealized profits to charge fees from. There is absolutely nothing "charitable" about this fraud. If the Wilson sociopaths really wanted to give to charity, they could very easily do so in a way that would not financially benefit themselves. But these sociopaths cannot even understand the concept of charity without self-interest, cannot comprehend selflessness or love. Pity them, for they are not fully human.

How can the Wilson fraudsters even be allowed to use the word "charity" in their scam? Simple. There is no regulation of the word "charity", just as there is no regulation of "investment". A scheme can literally have fees of 100%, and still legally call itself an "investment". Customers of sausage enjoy more consumer protection. To use the word "sausage", there are set limits on how much canine feces the manufacturer can use. But in Australian financial crime, there are no limits and everything is permitted.

Thursday 26 June 2014

ClearView Wealth abuses share buybacks to distort market pricing

In theory, share buybacks create value for shareholders by reducing number of shares outstanding and thus increasing cash flows, earnings and dividends per share. Such a theoretical value-adding buyback involves companies buying their shares at the lowest price attainable to achieve a long-term reduction in shares outstanding. In reality, this is almost never the case. "Increased EPS" is instead used a flimsy pretense to justify buybacks that are performed to directly move share prices. As an entirely accepted commonplace occurrence, criminal directors ramp "market" prices on which executive bonuses and options are awarded.

In Australia, companies have predictably taken this to ludicrous lengths. Criminal directors use share buybacks to ramp their price to predetermined and preannounced levels, breaching fiduciary duty by not seeking the lowest price possible. Companies alternate share issuing with share buybacks, with no reduction in shares outstanding achieved, or issue even more shares than they buy back. Companies will even perform share buybacks and share issuance at the same time, unequivocally admitting they are attempting securities fraud. Euphemisms such as "supporting the share" and "capital management" are commonly used for this securities fraud. In one of the most blatant cases of such fraud, ClearView Wealth Limited (CVW.AX) revealed a capital raising and buyback in the very same ASX announcement.

ClearView openly admitted it was going to attempt securities fraud, in a public announcement, and then proceeded to do so. ASIC of course did nothing whatsoever about this, in line with its zero enforcement policy. When companies perform buybacks explicitly to move market prices, due to the directors' "belief" that the share is undervalued, there is absolutely no justification for this in economic theory, it is open fraud. According to standard finance textbooks, what ClearView did is known as "share manipulation".

But how can Australian regulators, financial media and analysts condone companies explicitly admitting the deliberate distortion of market pricing? Simple. The dregulators, presstitutes and analysts simple assume market efficiency, that prices by definition are unramped and fair, and that higher prices thus always are better. According to ASIC, due to market efficiency share prices cannot be ramped, and so ASIC needs take no action when share prices are ramped.

Criminal listed investment companies commonly announce buybacks explicitly to ramp share prices to parity with NTA (or even beyond). Due to costs, the fair going concern value of listed investment vehicles is lower than NTA, and there is zero justification in economic theory for such vehicles to move their share price above their fair market value. Every director that has performed such a share buyback has not only breached their fiduciary duty to shareholders, but has also demonstrably distorted market prices and committed share manipulation.

If companies are allowed to set their own "market" prices with fraudulent buybacks, they no longer can be considered legitimate listed enterprises priced by a market, but are instead correctly referred to as listed securities frauds. The success of a company that sets its own "market" price is not determined by operational performance or fundamentals. Instead, the longevity of such a scam depends solely on the company's continual ability to raise capital to fund its price fixing. A listed company that sets its own "market" price is a ponzi.

Wednesday 18 June 2014

The Queensland Bauxite Limited pump-and-dump

Queensland Bauxite Limited (QBL.AX) is a pump-and-dump scheme masquerading as a bauxite explorer. This blog first mentioned the QBL pump-and-dump two weeks ago in a post detailing various ramps orchestrated by Wholesale Investors and Proactive Investors. Since then, the cartel has continued roping in victims with ASIC's blessing and complicity, aided by the homunculi of Australian financial media. No matter how openly manipulated a share is, no matter how obviously ramped by criminals, Australian "journalists" are willing to spruik it. There is literally no scheme too fraudulent. On 13 June, The Motley Fool published a despicable "article" pumping the scam, claiming QBL was "set to soar".

The porcine shill who wrote this "article" should be ashamed of himself. At best, he is a complete moron, and at worst he is a criminal associate of pump-and-dumpers. The Queensland Bauxite securities fraud is operated by veteran share manipulators associated with Merlin Diamonds and the mysterious Gleneagle Securities. Before attaching his name to this pump-and-dump scam forever, The Motley Fool shill should have done some basic due diligence. The cartel ramped QBL from $0.010 to $0.059 in a couple of weeks, performing a complex array of leveraged transactions.

On June 18 QBL then collapsed by 58%. This had absolutely nothing to do with a "market" outcome. The price of QBL had been deliberately ramped by a cartel. Small investors got suckered in as an effect of the ramp, but were not the cause of it. Of course, such small investors can expect zero recourse to the law, because ASIC has effectively legalized pump-and-dump schemes and other revaluation frauds in Australia.


The QBL criminals pulled this exact same scam as recently as 2010. Guess Motley Fools have short memories as well as zero accountability. According to ASIC and the Motley Fool, these are just inexplicable magical market mysteries, and not deliberate ramps at all.

Tuesday 17 June 2014

The AMP Capital China Growth Fund fraud

AMP Capital China Growth Fund (AGF.AX) is an ASX-listed securities fraud masquerading as a Chinese bluechip fund. Using related party intermediaries, AMP has structured this scam so the fund manager absorbs almost all cash flows from held assets, leaving next to nothing for investor victims. Rigging the price of AGF with cartel associates including Select Investment Partners, AMP intermittently ramps AGF to create unrealized "profits". In the standard pattern of manipulated shares, AGF displays long-term catastrophic shareholder value destruction interspersed with ramps engineered to benefit insiders. This has absolutely nothing to do with a "market" outcome.

According to its annual report, AGF collects around $6.8m in dividends from its stock holdings in China A shares, of which it burns $6.4m, mostly as fees to the criminal managers. Given these ongoing costs, the going concern fair value of AGF to a small investor is around 7% of NTA. It is impossible for a director of such a scam to fulfil their fiduciary duty to investors, since this would mandate recommending they go elsewhere and avoid the swindle. Rather than get 7% of cash flows, investors could easily get 100%, and the sociopathic scum running these scams have a fiduciary duty to warn their investor victims about this.

AGF now functions as a listed securities fraud. By buying and then ramping AGF shares, criminal associate Select Investment Partners has created millions in unrealized "profits", fraudulently inflating its management fees and then dumping the deliberately bloated shares on granny investors through various funds. In the last month alone, Select Investment Partners has devoted millions to this fraud.

AMP and Select Investment Partners are perfectly aware of the fraudulence of their scheme. Since they deliberately engage in fraud, AMP and Select Investment Partners are criminal organizations. This is a simple statement of fact.

Morgan Stanley and the Galileo Japan Trust securities fraud

Galileo Japan Trust (GJT.AX) is an ASX-listed revaluation fraud masquerading as a Japanese real estate fund. Purportedly trading at a "market" price, in reality the share price of GJT is fixed by a cartel of fund managers consisting of Morgan Stanley, Macquarie Bank, Deutsche Bank and Allan Gray. After a "recapitalisation", this cartel deliberately ramped the "market" price of GJT, and then dumped the inflated shares on granny investors through various channels.

The criminals took $6m in direct fees from the "recapitalisation". They also charge real cash fees based on the unrealized "profit" they themselves engineered, with ramped GJT used as collateral for further fraud. This is not a matter of conjecture, it is a simple statement of fact. On June 12, Morgan Stanley received 4,791,489 shares of GJT as collateral. In the "recapitalisation", GJT raised money expressly for the purpose of reinstating distributions, since its held "assets" produce no actual cash flows whatsoever. There is a word for this too.

GJT was intentionally ramped until it was included in ASX300 index, allowing the criminals to unload some of the inflated shares on index funds mandated to blindly purchase such scams. This index inclusion fraud is now a common occurrence in Australia. The fund managers that pumped the price of GJT also dumped the shares on unwitting granny investors holding funds or life insurance products manufactured by the cartel. Given the immense arrogance of the criminals and tragicomical ineptitude of the regulators, it is highly likely the fund managers discussed their fraud in emails and recorded telephone conversations. They consider themselves untouchable.

The share price of GJT is openly manipulated by the cartel, to the point no reasonable person could even pretend a "market" determines its pricing. As a listed securities fraud, GJT follows the standard pattern of catastrophic long-term shareholder value destruction interspersed with ramps engineered to benefit insiders. Of course, according to ASIC this is just an inexplicable magical market mystery and not securities fraud at all.

This revaluation fraud  is just as criminal as a bag snatching, and there is certainly no moral difference. However, the scammed grannies have zero recourse to the law, since these criminals control the regulators, legal system and media.

Friday 13 June 2014

Fund intermediaries and credit creation

If fund intermediaries are allowed to disregard costs and fix their unit price at NTA, this will introduce a systemic source of overvaluation. The ongoing fair value of a fund to a non-controlling investor is equal to the NTA less costs as proportion of asset cash flows. For example, a fund that every year burns 20% of the cashflows generated by its assets has a fair value of 80% of NTA. Funds that set prices above this fair value during times of net investor inflows are deliberately defrauding their investors, as they could not support this price were there sustained net investor outflows. On an aggregate level, such fund intermediaries engage in a completely unregulated and unrecognized credit creation process.

Assume Fund A invests in Asset X, and has management costs equalling 20% of the cash flows generated by this investment each year. Since 80% of the cash flows reach the owners of Fund A, the fair value of the fund would as noted be 80% of NTA. Now assume instead Fund A invests in Fund B that invests in Fund C that invests in Asset X, with each fund manager taking 20% of received cash flows. Since 51% of the cash flows now reach the owners of Fund A, the fair value of Fund A is 51% of NTA. The remaining 49% of cash flows from Asset X are absorbed by the fund managers.

Fund A Fund B Fund C Asset X
Cashflow to owner 51% 64% 80% 100%
Cashflow to fund manager 13% 16% 20%

Despite the funds having fair values ranging from 51% to 80% of NTA, all three can fix their price and issue units at NTA, with all three claiming the full right to the same cash flow. In effect, this means the cash flows from Asset X are rehypothecated into 149%, since 100% of the cash flows are promised to investors and 49% absorbed by the fund managers in aggregate.

In aggregate, fund intermediaries and their price-fixing are a form of shadow banking and contribute to the credit creation process, since they create "assets" that can then be used as collateral for lending. In the example above, if Asset X was worth $1bn, the intermediaries have created a further $490m through deliberate fraud, conjuring $490m worth of collateral from thin air into the economy. If all fund intermediaries in an economy fix their unit price at NTA, the aggregate amount of credit creation this entails is equal to aggregate intermediary costs. In Australia, given the high total cost of fund intermediaries, this synthetic leverage has a significant - and entirely ignored - impact on credit creation.

Wednesday 11 June 2014

Lionhub Group Limited launches new revaluation fraud

International criminals increasingly use the Australian stock exchange to perpetrate revaluation frauds, creating phantom collateral they can borrow against, with the loan proceeds used for further fraud. Most recently, Singaporean criminals backdoor listed LionHub Group Limited (LHB.AX) on the ASX, taking over a dormant shell company in order to create a fake "market" price. After various sham related party transactions and a fraudulent capital raising, LionHub now has 757m shares outstanding and $6.5m cash in the bank. Although LionHub issued less than 5% of shares in the capital raising, the issue price of $0.20 implied a "market" value of $151m for the company.

Magically, the $6.5m in cash has been revalued to a $151m ASX-listed asset, guaranteed by ASIC to be unmanipulated. This fraudulent asset can then be used as collateral for debt, or be dumped on unwitting grannies by associated criminal fund managers. The top 20 shareholders own 95% of LHB, and after reinstatement to listing on June 12 the share price will be controlled by this cartel, creating a fake "market" value.

Shell companies for revaluation frauds are openly marketed in Australia by criminal enterprises such as Wholesale Investors, which also offer to ramp share prices and supply local sham directors and company secretaries. LionHub has connections to Sino Australia Oil & Gas (SAO.AX) and other related party frauds, sharing the same criminal associates. These manipulated frauds follow the standard pattern of long-term shareholder value destruction interspersed with sharp ramps engineered to benefit insiders.

ASIC and media alike regard the fraudulent ramps as magical market mysteries, enigmatic and wonderful occurrences for which there just can be no explanation. New revaluation fraud Fifth Element Resources (FTH.AX) issued 21m shares at $0.20 in a fraudulent capital raising, after which the share price was ramped to $0.95 in a month. Prior to the capital raising and ramp, an insider had purchased 20m shares at $0.01.

According to ASIC, this is not a ramp and FTH is not an openly manipulated share, because if it were ASIC would have done something. According to ASIC, this is all just a magical market mystery, and so ASIC lets it continue trading freely and attract more victims.