Bidify abandon the US, move operations to Europe
When we last checked in on the MLM business side of Bidify, the company had undergone several compensation plan revisions and finally settled on what was still a primarily affiliate-funded ROI scheme.
Slightly different from Zeek Rewards model, it was seen more as a grey area that worked loopholes in that the possibility for affiliates to get paid on retail customers was present.
Due to the way the overall compensation plan had been structured and the type of affiliates the company had already attracted (mostly Zeek Rewards refugees), that scenario was highly unlikely.
Sure enough Bidify’s v2.0 compensation plan changes flopped with the company failing to gain any ground on attracting genuine retail customers to it’s Bidsson penny auction business.
Bidsson’s former CEO Albert Liske publicly declaring the company to be a Ponzi scheme didn’t help either. Nor did the February 11th “amicable resolution” reached between Liske and Bidify, the details of which were never made public.
Since then Bidify has struggled to gain any attraction and as I understand it business operations have ground to a complete halt. Seemingly looking to reinvigorate things came the unexpected press release yesterday announcing that Bidify were
getting ready for the full launch of everything we have been working really hard on for the last months.
Both sites will be taken down for MAJOR UPDATES the 3rd of June, and will stay offline until we go live.
Details of what Bidify management have been up to haven’t been released yet but one additional tidbit of information was made public today:
Bidify are abandoning operations in the US.
Here is the first MAJOR CHANGE that will happen. We are moving all operations to Europe.
Why?
It simply makes more sense for us to manage and operate the company out of Europe. After all, the management and ownership of the company are all Europeans.
The above official explanations of course then reaises the obvious question: “So why open a virtual office in the US to begin with?”
Since its inception, Bidify has only maintained a virtual prescense in the US. And this was done primarily to ease concerns at the time of prospective affiliates worried about joining a company based offshore.
This was back in the Zeek Rewards heydays mind you and the landscape of the MLM niche Bidify operate in has changed considerably. Due to the questionable legal status of Ponzi points based revenue-sharing compensation plans, the last few MLM companies still risking the plan are now all based offshore.
And now Bidify can be added to the list.
Aside from labelling the move as “beneficial”, Bidify declined to comment any further on the move:
We could of course speak for hours about all the benefits of moving to Europe, but we will keep it short and sweet for now.
They have however asked what’s left of their affiliate-base to
stay tuned for tomorrows update, where we will explain how this change will affect old and new Affiliates in a positive way.
So uh, stay tuned for that I guess.
Pretty sad the level of PR in that statement sounds like it was a high school advertising report. Sounds desperate and sounds 1 or 2 guys out of their garage running things.
Guess fraudy needs more money and his linda helin stooge partner have been scheming what they can do to steal more cash from whomever they can.
The fact that they are still there having a go speaks a lot. History shows most pack up operations and flee into the night.
Its a tough call to perform up to expectations when under regulator pressure, member pressure and in house turmoil. These guys are talented enough and could actually do a reasonable come back given that they have stuck with it for this long.
It seems these guys really wanted to create a great program however the zeek incident and timing changed all that.
I for one look forward to what they will come up with. Just to see what the reaction is, as this will give us an interesting gauge of where market place sentiment is at the moment.
After several prominent QC’s have given their opinion on various alleged ponzi style scheme’s it appears all MLM network style programs need to get their house in order and prepare for the onslaught of pencil pushing public servants chasing the industry like they chase terrorists.
If I’m reading between the lines, they’re basically going to try and restart Zeek Rewards as is but this time offshore.
Zeek Rewards had no customers, which is the problem Bidify seem content to ignore in the pursuit of new investors.
Given the current climate of the MLM revenue-sharing niche, 40% being paid back to old investors is still going to kill the attraction of the old Zeek compensation plan for new investors.
How could you actually attract customers only ?
In an MLM penny auction that pays out affiliates based on how much they invest?
You can’t.
The premise is that affiliates are buying bids to give away as samples. This generates their Ponzi points.
Over time they have more and more bids to dump which negates any notion that retail customers are going to spend any of their own money. Thus affiliates keep recirculating their own money amongst themselves until enough affiliates are withdrawing a weekly cash amount that depletes the funds affiliates put in.
You can see this happening live with JubiRev at the moment.
So the product represents no value to the retail public in that they wouldnt pay for it? How does this Bid thing get around the lottery laws?
It doesn’t. Zeek Rewards who pioneered the whole MLM/Ponzi points hybrid model were shut down by the SEC for being a $600M affiliates paying affiliates Ponzi scheme.
The companies using the model today do so in the hope the SEC won’t shut them down too. Bidify’s strategy appears to be “run off to Europe and hope for the best”.
Need to look at it from the money flow POV.
Affiliates should only profit when bids are SOLD to customers who buy the bids to be used. That creates real profit for the company, the way it was meant to be.
A company can generate “fake” profits by having the affiliates THEMSELVES buy the bids, then pay them out of that revenue. That’s what Zeek did. It died a horrible death and brought down 1 million people with it.
So which way is Bidify going?
That wouldn’t have been any problem?
If affiliates had actually PAID for the bids with real money, and Zeek had calculated a profit from that, the profit share would have been fully backed up with money.
Zeek used monopoly money to SIMULATE reinvestments and daily profit, and reported an imaginary profit each day to keep people happy.
A: New investors paid money IN (filling up Zeek’s cash balance), and got monopoly money to play with.
B: Compounding monopoly money 100% for 90 days or more (while paying SOME money in as member fees and other fees).
C: Started to withdraw 20% of the daily monopoly “profit” as cash (draining Zeek for cash), reinvesting the remaining 80% monopoly money (growing the monopoly money balance slowly).
In the middle part of the game, it was solely about monopoly money being paid out as “daily profit”, reinvested and compounded 100%.
Zeek had 3 billion monopoly money owed to the investors, and $225 million in cash reserves to support payouts in cash. It was enough to keep most people happy until the shutdown.
Egads of course real money was paid for the bids.
RVG as a company could have, and probably did generate real profits for a very short period of time…. though it was never legal. Its core business had two parts; a wildly profitable MLM component which marketed and sold bid packages, and a marginally profitable penny auction site.
If the bid packages had provided the purchaser with only a method of participating in the auctions then the company would have been legal. (nothing wrong in selling bid packages) But the bid packages conferred more “benefits” than that. They included the right to share in profits of the company itself.
This means that RVG was also marketing and selling participation certificates…..which by definition are securities.
Enter the SEC.
Lots of people unknowingly issue and deal in securities and the SEC does nothing. The sin that could not be forgiven was that early bid pack purchasers were “participating” in profits that when initially allocated were non existent and thereafter could only come from the sale of more bid packages to later purchasers, who in turn could only participate if even later purchasers were found and on and on to infinity or collapse.
This of course describes a ponzi.
Upcoming on 6/5/2013 is a Hearing on the Gilmond-King Motion to dissolve the RVG Receivership. The motion is premised on the notion that the SEC has no jurisdiction over the activities of RVG. Good luck ladies.
Participation Certificates = a security ?
Explain a participation certificate.
Please
and thank you
The following happens to be excerpted from the California Corporate Codes because I have been working with them, but it is consistent with Federal Codes and those of other States as well. You can look up specific State or Federal Codes if desired and you will find that they are all pretty consistent. Investopedia provides many examples if you are curious to know more.
Here is what California says: Code 25019. “Security” means any note; stock; treasury stock; membership in an incorporated or unincorporated association; bond; debenture; evidence of indebtedness; certificate of interest or participation in any profit-sharing agreement; ETC..for another half a page.
The SEC looks at substance over form, so it is not necessary that an actual “certificate” be issued. It can also be evidenced by a contract, marketing materials, an entry on the company books or the behavior and expectations of the parties…whatever constitutes an agreement of the parties that the SEC considers a “participation in any profit-sharing agreement”
Hoss
I wonder if that applies to a member who through performance of personal sales become eligible for say a Global bonus which is a share of total sales. Most MLM companies offer this type of binus in various forms.
I must defer to Oz or Chang. They are familiar with such intricate considerations.
What I would say is this. The definition of securities is so broad and expansive that nearly all MLM companies fall under the purview of the SEC or Department of Corporations or one agency or another. As such all MLMs conduct business permissively.
So long as a company generally abides by the spirit of the laws and conduct business in good faith the SEC has no cause to intervene.
heavy sigh…
I see Global Bonuses differently. Ponzi points are affiliates directly putting money into the scheme, and then withdrawing a daily ROI, paid otu of new affiliates putting money into the scheme and the re-invest of existing affiliates.
A few percentages of company wide sales volume paid out as a bonus to those who qualify in the upper levels of the comp plan is different. How much of the bonus paid has no bearing on what you yourself pumped into the scheme (via product purcahses or otherwise).
The relationship between what an affiliate (or those they recruit) put into the scheme and that as a basis to determine their daily ROI is what nails it as a Ponzi.
Ok i see, then its of to the QC Monday morning, just call me, Cat herder. Thats what it feels like dealing with legal opinions and govt officials.
Google ” howey test” if you want the definition of a security used by the sec.
Profit sharing is not enough by itself to qualify as investment contract – it is a 4 pronged test.
And if something is a security that does not automatically mean a company can’t sell, it simply means the company must do it according to the correct procedures. For example, a registration statement (which is a term for a specific legal document/process) is usually necessary.
That “wildly profitable MLM component” idea is flawed. The idea is constructed, and it doesn’t reflect the reality. It reflects how the affiliates tried to comfort themselves.
I am impressed with the Brains trust here, just want to let you know its helpful when going into discussions with QC’s because you can alert them to these terms, which can save time and money because they dont have to discover them.
So thanks a lot people.
Selling a penny bid for a buck is very profitable. RVG sold about 600 million of them and there was a seemingly endless supply of buyers. Selling bids is a GREAT business. Unfortunately the profit sharing will kill ya.
Uh, you know Zeek wouldn’t have sold those bids without the attached revenue-sharing Ponzi right?
The attached Ponzi made the bids a net loss (>100% payout on the cost of the bids over 90 days), so claiming selling bids was profitable makes as much sense as claiming the ROIs were sustainable.
i say this with caution, I liked adsurfs daily, view the websites deal. I am sure they could have done it another way because people were reporting that they were actually getting good business and a lot of exposure from the web page rotator.
Surely they could have done a paid to click or something better than the ROI model they had.
I recognize that what I wrote is an unorthodox way to look at RVG. Its not what your accustomed to and it may not hold up to every analytical tool in your box, which is OK because it does not need to.
Conceptually, looking at RVG as a legitimate and profitable bid selling enterprise is just a way to get a clearer view of the distorting effects the revenue/profit sharing program had.
Yes, of course. See next post
Uh. previous post
What is a QC? Quality Control?
Queen’s Counsel I believe is the acronym being used here. It’s the highest level of lawyer (barrister?) in some legal systems.
Got it thanks.
RVG as a company sold people (customers) who also became affiliates (promoters) a product (the bids) for a dollar each. From the company’s point of view each sale was nearly pure profit…. multi millions of dollars of profit reduced only by some relatively minor marketing and typical business expenses.
The auctions themselves contributed very little net revenue, BUT marketing and selling bids did. Lots of it. That was the real business of RVG.
Bottom line, the affiliates spent money on bids and urged others to do so.
However, an affiliate’s comfort came through the belief that the Auctions were immensely profitable, so profitable in fact that these customer-promoters were willing to purchase bid packs from RVG just so they could give them away in the hope of ultimately sharing in the anticipated vast profitability and predicted growth of penny auctions.
As we both know the Auctions were not profitable.
So, I ask you, while Zeek Rewards was in business, what did RVG share with its affiliates if there was no profit from the auctions?
Your answer will probably be something like, “their own money” or “they redistributed the affiliate’s cash”…… both of which are true and why we identify it as a ponzi, but a ponzi can take place within or concurrently with a business that sells things, such as vitamins, or vacations or auction bids. Therefore;
My answer to what did RVG share with its affiliates if not profit from the auctions, would be (from a purely economic or business perspective) is that customers/affiliate/promoters shared in the profits of the “MLM component.” That is, the component of RVG that marketed and profitably sold bid packs. It had to be thus because there was no other substantial revenue source.
was it not true that many 1000’s of dollars were bid on such items like an Iphone, with the winner paying $23?
$1000’s in bids made, many time the price of the unit, why isnt there some wild profits there?
I hope i explained that right.
Was it not true that bidsson never shipped items won and also had shill biddings?
You will probably find 100’s of similar statements from Zeekheads, both about “purchasing sample bids” and “highly profitable”. If you repeat it often enough you will probably start to believe in it.
You expressed it fine.
The scenario you describe is plausible but in actuality it does not seem to have happened that way or at least not very often. The stories you’ve heard probably made a great recruiting pitch at one time and probably induced some people to participate in an auction who would otherwise have not, but general, paying public apparently did not embrace the concept.
A penny auction has one winner (maybe,) lots of losers and no cocktail waitress. It probably sounds a lot cooler than it really is.
My next statements are from memory so they may not be exactly accurate.
The RVG Reciever found and reported that there were 3 Billion unused bids that were banked and assigned to fake e-mail accounts. In other words, bids purchased or earned were never going to be utilized or used to bid against a bona fide bidder.
There were many instances where people were certain that they were competing against robot bidders for products. This effectively burned up the bids people had bought or been given but more importantly illustrated that the whole auction process was manipulated. Once that perception took hold (and I think it was being understood) spending time and money bidding against robots was a lot less interesting to people.
Anyway, according to the Receiver the revenue contribution of the auctions was only 3% of the total money pumped into RVG. What that actually means is not very clear.
The expense of running the auctions has not been disclosed , but the impression given by the SEC and Receiver to the Court is that the auctions were not profitable on their own even if they did contribute some revenue.
You are not listening or this is over your head.
I can use examples from Zeek and JubiRev, to avoid checking Bidify’s compensation plan (I don’t remember the details there).
First some principles …
* Revenue and profit will require REAL MONEY.
* Virtual currencies (anything paid to the backoffice only) are NOT real money.
* Bids, casino chips, etc. are not real money
* “Points” of different types are real not money
You can’t mix real money with any of the other.
* If you pay 100 JubiBucks for a product, JubiMax hasn’t made any profit on that sale.
100 JubiBucks = $0 paid IN
* If you reinvested 100 “RPP Reward Points” or “Cash available” in buying sample bids, Zeek hasn’t made any profit on that sale.
100 Reward Profit Points = $0 paid IN
100 “Cash available” = $0 paid IN
* If a customer spends those 100 sample bids in an auction, Zeek hasn’t made any profit on that.
100 sample bids = $0 paid IN
* But the 100 bids have actually raised the price for the item with $1 (one penny per bid).
100 sample bids * $0.01 = $1 potential revenue
* If a REAL customer is buying 100 retail bids, paying with REAL money, Zeek has made a profit on that sale:
$0.65 * 100 bids = $65 revenue, paid IN
* If the customer is spending the 100 bids in an auction, it will raise the price for the item with $1. That isn’t very profitable in itself.
100 retail bids = $0.01 * 100 = $1 potential revenue
SELLING bids can be profitable if customers pay with real money. SPENDING bids in penny auctions isn’t very profitable in itself.
The theory was constructed and hypothetical.
People’s MAIN motive for becoming affiliates wasn’t the bids or the auctions. It was about the prospected ROI and the prospected reward for recruiting a downline.
It becomes hypothetical when you believe people would have purchased sample bids anyway, to give them away to fake and real customers just for the pure JOY of doing that.
Can a ponzi scheme be profitable? I look forward to your answer. Yes or No.
I was not writing about “the Peoples'” motives. I was writing about the company’s motives. Two different things entirely. Do you think the company cared about the People’s ROI? Paul Burks made up the People’s ROI in the morning with his coffee and donuts.
However, you are correct that the PEOPLE’s main motive for participating in Zeek was the ROI (imaginary as it was.) This desire resulted in them buying millions of bid packages from RVG, a trade which was very very profitable for the company.
So Paul Burks lied. It does not change the fact that RVG as a company was making money hand over fist, and not by selling Mix Masters at auction. Its profits came from selling bid packages via multilevel sales and marketing.
Ponzi schemes are usually profitable for their owners and those who invest early, and not for those who get in last (usually not easily determinable).
“Are they sustainable?” is a far more pertinent question.
In it’s last month of operation, Zeek Rewards took in 62 million and paid out 60 million. Another few months of compounding ROIs and it would have collapsed, easily swallowing up any “profits” made.
The SEC intervened though, so they didn’t progress to the inevitable loss stage Ponzi schemes conclude with.
Indeed, which is why they they are known as “criminal enterprises” rather than “business enterprises” and why I thought that considering RVG as a business enterprise was worth doing.
Of course there are differences but there are also a lot of similarities. If there weren’t I do not suppose anyone would be fooled.
As regards the sustainability of a criminal enterprises, some of them have lasted for centuries. Ponzis have a much shorter life cycle, but MLM startups? They seem to proliferate like fruit flies and die just as quickly.
How about established businesses? Of all the companies comprising the S$P 500 in 1955 there are only 20 of them left.
Nothing lasts forever.
There’s a difference in failing in business and generating a >100% liability on every “product” you sell.
Every sample bid Zeek sold resulted in a liability that was >100% of the money paid for the bid. They had 90 days to pay out this liability (via the daily ROI) or the system collapsed.
As such, even at a purely business enterprise level the company was not successful. You cannot be successful when you have to pay out >100% of the revenue you are generating.
The only fooling going on was the affiliates who refused to see and accept the above. Given this, comparing RVG to legit businesses is pointless.
Even if RVG sold billions in bids the resulting liability was still more than they took in. And it had to be paid out within a rolling 90 day period at any given point in time. It was an inescapable flaw, inherent in every Ponzi scheme that has ever existed.
“Nothing lasts forever” is as paper-thin an argument as “everything in life is a risk”. Next you’ll be telling me “everything in life is a Pyramid scheme”…
Profitable for who?
As an enterprise itself, the answer is no, since it pays out MORE than it takes in. The only way it can be sustained short-term is it recruits people who put in money faster than it is being taken out (by the net winners).
As a PARTICIPANT, Ponzi schemes can be profitables, if they join early, and the rules of the Ponzi are written to simply funnel money to the earlybirds, as Zeek did, when the early birds have huge point balances that nobody joining late can hope to achieve.
Generally, those lasted for centuries because they deal with “taboo commodities” such as sex, violence, or narcotics, not because they deal in fraud (i.e. deceive their customers).
In fact, there’s little fraud in the “underworld” because they know there will be retaliation in the form of bullet in the head if they tried to cheat the mob or such.
Well congratulations “HOSS”
I thought I had seen it all but I most definitely haven’t
Please, please tell us your question is rhetorical and not an attempt by you to “win” a discussion.
How can it pay out more than it takes in?
Via re-investment of Ponzi points and the continued implied guarantee of a >100% ROI over a rolling 90 day period.
Zeek Rewards never had enough money to pay out everyone’s VIP points dollar for dollar (that’s what they cost to generate, a dollar).
It all comes down to liabilities and revenue, with Zeek creating a >100% liability for every dollar it generated. Thus the claim Zeek Rewards was somehow profitable or successful is absurd.
thanks I guess.
Really. Whether a ponzi can be profitable is a legitimate question for discussion.
Chang already says no. I say yes. So I guess the answer is not so obvious as you might think. Maybe you want to wade in.
My orientation is that a ponzi cam be profitable. I suggested that RVG could be described as a profitable business burdened with a really bad, overly generous comp plan.
Its profitable for the banks and government.
You are describing company contingent liabilities. They are a claim against revenue and capital. You can not pay out more by adding liabilities to your balance sheet.
You can call it whatever you want. Zeek Rewards created a >100% liability payable within 90 days for each dollar it made in revenue.
That’s not going to work for obvious reasons, nor is it an example of a profitable or successful business model.
All Ponzi schemes suffer from this fundamental flaw.
Is it solved having liabilities with expiry dates??
Not when 98% of your revenue is coming in on the implied guarantee of you paying out a >100% liability within the expiry date (Zeek was 90 days).
You really don’t understand how a ponzi scheme works, do you ???
Come to think of it, it’s fairly obvious you have no idea about how the prosecution of HYIP ponzi schemes works, either.
So in effect it creates a hit and run situation. Where if you didnt give a toss where the money came from or who losses out you would load up the system day one, using false names to stay of the radar and go for a triple up and get out early.
So this really is a Vegas style deal like giant crap shoot, disguised as a legit deal. Only those in the know, know it for what it is and stay the hell away. The rest of the unsuspecting souls are cannon fodder.
A crap shoot if you don’t personally recruit new investors and treat it as a passive investment (you don’t know when recruitment of investors will dry up).
You can however sustain things (at least till you pull out your initial seed) by recruiting new investors and encouraging those who have invested to re-invest.
And there you go. It doesn’t pay out more. It merely PROMISES to pay out more.
So the “net winners” are taking cash out of the system (those put in by the late joiners) while the enterprise itself is promising more and more people more money by adding “contingent liabilities”.
No income, no profit. That’s why Ponzi’s a fraud. It made too many promises without any income to back them up.
Not necessarily. Some ponzis have maturity date, while others encourage rollover and thus have ever evolving maturity date. HYIPs generally have fixed terms, like payout in X days (Profitable Sunrise had a 170 day long haul thing) which gives them plenty of time to find more people putting in money.
Zeek is one of those encouraging rollovers, i.e. “100% repurchase” so the late joiners don’t get any money out, EVER, while the early birds cash out what they can.
Joining early is essential in a Ponzi. When to get out depends on what type of Ponzi. With Zeek the net winners are holding on until last second, and in fact, was STILL fighting the feds in trying to get their funds released even now.
Thank you, That is correct. You can PROMISE to pay out more than you take in. You can not pay out more than you take in.
Why don’t we just stick to generally accepted accounting principals and terminology. That’s all I ask. If we do that, the rest will take care of itself.
Because it’s a bloody deliberate fraud, that’s why.
Forget the generally accepted accounting principals and terminology nonsense.
Fraudsters lie, cheat, steal, forge and deceive.
They WANT the pseudo intelligentsia “HOSSES” of this world to discuss their particular fraud in “generally accepted accounting principals and terminology”
Goodness, gracious, man, give it up.
You’re making yourself look like a complete and utter fool with your nitpicking hypotheticals.
And…this supposedly permits a company to pay out more than it takes in? If it did a ponzi could expand infinitely, because as you have described it, the more liabilities a company creates, the more cash it has to pay them.
Wouldn’t it be nice if things worked that way. I would go take out a new car loan every day and automatically have the money to pay it off. You know it does not work that way.
Thats your argument? They lie, cheat and steal so accounting principals do not apply. I guess the laws of mathematic do not apply either. How about gravity?
None of this explains how a company can pay out more than it takes in. It addresses how a company can prolong the ponzi by limiting the cash burn.
If you’re looking for an explanation as to how Ponzi schemes pay out more money then they bring in, you’re barking up the wrong tree.
The guarantee (implied or otherwise) is all they need to put out there for the schemes to take off.
I am not looking for an explanation of how they can do that. The fact is that mathematically they can’t and that is good enough for me.
Sinmply put this conversation started with Chang’s assertion that a ponzi enterprise could pay out more than it took in. I disputed that on the basis of simple addition and subtraction.
You commenced to prove, knowingly or not, that in the short run a company’s outflows could exceed its inflows (deficit spending.) I fully agree that it can do that and its done all the time by companies of every size and style. Its just cash flow management.
But! In the end when accounts are settled (and they always settle eventually) a company can not pay out more than it took in. Its mathematically impossible.
Where a company overpromises and stacks up liabilities as RVG has done, the creditors must neccesarily take a bath. That process squares up the accounts and balances the books. That is what is occuring now. The creditors are lining up and filing proofs of claim.
Now I remember you. You’re the guy who can’t understand the difference between a company’s bona fide expenses and fraudulent transfers. Hang in their mate, it’ll come to you eventually.
Don’t bother on my account “Hoss”
You’ll be gone soon enough.
There’s always a “Hoss” or three in the wings full of theoretical explanations and “generally accepted accounting principals and terminology” after the collapse of every HYIP ponzi fraud.
HYIP ponzi promoters and pseudo MLM operators love ’em.
If ya can’t dazzle ’em with brilliance, baffle ’em with bull****, eh, “HOSS”
You’re not Paul Burks’ nephew or cousin by any chance, are you ??
You are an angry round man.
Maybe if people were familiar with accounting principles then they would not be fooled by scams in the first place.
I am not contending that RVG was legal or excusing the misrepresentations that it made. FAR from it. You accuse me of using accounting tricks to justify a ponzi? Are you are out of your mind? This just shows how little comprehend what I have been saying.
Getting the accounting right exposes a ponzi for what it is. Do you think Ackerman and Icahn aren’t pouring over the books of Herbal Life to understand the accounting? Its the tool of analysis and if you do not understand it then take a class. You will be better off for it.
Keep it civil fellas.
I’m sorry, when did I do that?
POSTS #44 AND #47
“As an enterprise itself, the answer is no, since it pays out MORE than it takes in ”
Time for a break.
Bad choice of words. It should have read “It’s obligated to pay out more than it takes in. ”
Ponzi schemes are on perpetual “edge” of running out of money, since it has little to no alternate sources of income, and with every “investor” its obligation actually INCREASES instead of decreases. It solely relies on the “delayed maturity” (i.e. future payoff) to obtain additional funds.
Perhaps that’s where the perception departs from reality… It’s OBLIGATED to pay, but it does not PLAN to pay (as it have no money). That is the fraud.
Right. Even the obligation is a source of confusion. A waffle. For example is the company contractually obligated to pay or does it simply promise to pay based on some parameters that it controls (in which case the contract is illusory and of no effect)?
Obligate yourself to pay and you have an investment contract that runs afoul of the security laws. Don’t obligate yourself to pay and can not attract investors.
So they sort of promise to pay without really obligating themselves and trust the investors won’t notice and the SEC is too busy.
What a world
What a world.
Which would apply IF we were discussing “real” businesses.
But, we’re not.
We are discussing HYIP ponzi frauds made to look LIKE a real business.
Accounting rules don’t apply to smoke and mirrors.
Point out an accounting anomaly or impossibility and the fraudster will simply make up another lie to cover it.
In fact, to take it a step further, HYIP ponzi fraudsters actually WELCOME input from theoreticians.
It gives them more opportunities to convince wavering victims there is a possibility of the fraud being “real”
All the “woulda, shoulda, coulda” academic discussions which have taken place WRT the profitability or otherwise of Zeek/Bidify type penny auction “model” have overlooked the fact that NONE of them in fact have anything but a token penny auction presence.
Less than 2% of Zeeks’ entire REVENUE came from its’ penny auction business.
Forget about “profitsharing” or “accountancy practices” or “business principles”
There will never be the sort of “PROOF” demanded by academic analysts unless and until someone actually gets’ “inside” the fraud as has happened with Zeek / RVG.
As I have pointed out, fraudsters are not bound by the normal rules of business.
Demand to see a balance sheet and they’ll fake one.
Ask for a picture and they’ll pay an expert Photoshopper to produce one.
Say it’s an obvious fraud and they will produce several thousand members who can honestly say they are being “paid”
Around a MILLION people signed up for Zeek RVG and I am certainly not prepared to say they were all greedy/stupid/willing/unfamiliar with normal business practices.
Neither am I prepared to deny the fraudsters were good at what they did. Which is NOT hero worship but an acknowledgement of what IS the reality of the HYIP ponzi “industry”
As you keep injecting words like theoretician and academic into the discussion, I would like to add a word of my own. Pragmatic.
“Running the numbers” is pragmatic, not theoretical or academic.
I suspect if someone tried that, you would walk away. I certainly would.
And rely on what?
So I have read. For obvious reasons RVG did not reveal this to the world, but the neat thing about accounting is that it takes what you do know (you will almost always know something or start with some reasonable assumptions) and it directs your attention to what you don’t know so you can ask more questions and hopefully get some straight answers.
This is the strength of double entry accounting and why its universally used in business. So do not confuse business accounting with an academic exercise or theory. It is the complete opposite.
Here is what I knew 5 minutes into reading the Zeek plan documents which were available to anyone who took time to read them.
1. the purported returns were implausibly high.
2. There was no auction revenue disclosed (*and this was supposed to be the big income generator!)
3. Bid package sales were included in the daily profit share.
It appeared that some unknown proportion of Zeek’s business was selling bid packages. Now that we know for certain that the auction revenue was not there, its obvious that the primary business of Zeek was selling bid packs and the auctions were only window dressing.
Could an affiliate have known this ahead of time? Not with any certainty, but what they could have known, and apparently did not want to acknowledge was that Zeek, to a large extent was recycling money. Item #3 above revealed that.
The daily revenue share was simply an imaginary number, made up by Paul Burks each day, not related to any revenue or profit. It wasn’t affected by anything other than Paul Burks’ imagination and a few random mistakes, e.g. posting 8.9% one day instead of 0.89%.
The mistakes show that the numbers were manually entered into the system, not calculated by any accounting program.
Elitist, much there, “Hoss” ???
YOU knew after 5 minutes of reading.
Unfortunately a MILLION other people did NOT know.
I’ll leave it up to you to judge who did and didn’t know and who should or shouldn’t have known.
I’ll stick to pointing out the whole thing was smoke and mirrors
There is a difference between daily revenue share and daily profit share. Revenue share is like a sales commission and accounting-wise is an expense of sale. On the other hand, Profit = Revenues-Expenses
So:
Revenue from Bid Pack Sales (money from customer/affiliates)
+ Revenue from Auction Sales (mostly insignificant)
= Total Revenue
– Total Expenses (commissions, rent, advertising. salaries etc.)
= Profit
So long as the incoming revenue from bid pack sales was sufficient Burks could dole out actual real money per the comp plan and like any company, profits are dependent on sales (in this case bid Packs)
Its really not different than the way a legitimate business operates, except a legitimate business does not rig the numbers (too much… unless you count Enron and World Com and Global Crossing and Pets.com)
The real glaring flaw here from an accounting standpoint is that you may not count incoming money both as a capital investment entitled to a share of company profits (requiring full SEC style disclosures) and sales at the same time. It must be one or the other. Zeek was straddling the line and that is why the SEC took jurisdiction in the matter.
Was the bookkeeping and accounting screwed up. Sure, badly. But like any other company, lots of revenue hides a multitude of sins…..at least for awhile.
It might have taken ten now that I think about it. As to the million people who’s desire for an easy buck impaired their common sense there’s not much to say.
Fill out a proof of claim, read Behind MLM religiously and do not make the same mistake again.
Yes, the *money* will balance. The OBLIGATIONS will not.
If I ask to borrow 50 from you, and promise to pay you back $100 in a week, my OBLIGATION (debt) is $100, not $50.
If I then ask to borrow $100 from someone else to pay you back your $100, my obligation has INCREASED, not decreased. Though money in my pocket has not increased or decreased. It’s still $50.
Zeek is about to go negative when it was closed. It can BARELY meet its payout ($170 mil paid out in July, $172 taken in, going by memory here). It can only go WORSE from month to month as it dips into its cash reserves to keep the payout going.
They tried to delay payout and to encourage “repurchase” (the “Burger analogy”, the “hacking problems”…) to slow the payout. But that only delays the inevitable.
I think your problem, Hoss, is you’re basing your view too much on the “present”, i.e. money in the bank, and not enough on the obligations.
If you look ONLY at the present, yes, Zeek still have assets. But their OBLIGATIONS (debt) is off the scale. SEC had said what? 3 BILLION points in the system?
I never said the money will balance. I said as long as their was sufficient investment (bid pack sales) Burks could continue to pay out cash. Isn’t that what a ponzi does? Nothing new here.
But isn’t that the same thing? i.e. the “sales” (income) exceeds or matches payout, i.e. the current money will balance? Perhaps we’re just using different terminologies.
Yes, but they made up for it by volume. 🙂
You missed the point completely, by focusing on an unimportant detail and writing a whole essay about it.
The point was about “imaginary numbers, made up by Paul Burks each day and entered manually into the system”, not about the difference between revenue and profit. And as long as something is imaginary, the difference isn’t really important.
BTW, this thread should normally be about Bidify, not about ZeekRewards and RVG. So I won’t participate in more off-topic discussions here.
If you want to discuss ZeekRewards, you can probably move the discussion to the other thread where I posted the Duracell video ad, “It can go on and on and on …”.
Yes we are using different terminology.
I do not think you can say that if something “exceeds or matches” something else you have a balance.
If by a company’s “current money balance.” you mean the cash “balance” then I agree that it must meet or exceed the current accounts payable when payments are due if there is to be no disruption in the expected flow of payments.
If this occurred then Zeek will have met ts current obligations which means that incoming revenue from bid pack sales was “sufficient” for “Burks to dole out actual real money per the comp plan.
However sales (income) as you call it is not equivalent of a “current money balance” or even the cash balance on hand because there are expenses in between. It is not a one to one ratio. Revenue does not equal cash balance. Its an apples and oranges comparison.
Which is why I said there had to be “sufficient revenue.” What constitutes sufficient depends on many many factors.
Zeek could have changed their comp plan for example. The auctions could have contributed more. Expenses could have decreased.
I fully recognize that money in the bank is only one parameter in judging the viability of an enterprise. Obligations as you call them are a huge claim of present and future earnings. Anyone can understand that. But virtually never do all obligations come due at once.
As such, so long as their is sufficient revenue a company can continue in business. (unless the SEC steps in)
There is a big difference between revenue and profit (ask any airline company-lots of revenue-very little profits) and if you really want to understand what’s “BehindMLM” then I should think you would want to know the difference.
Profits at Zeek were not imaginary, You do not understand that yet. They may not have been exactly as Burks represented them and they were never going to be sustainable, and they were generated illegally and by fraud but there were still profits made by RVG doing business as Zeek Rewards.
Those profits were fraudulently transferred to the net winners. That is what this whole receivership is about….recovering those profits for the creditors of the estate. I know you will not understand this but it is true.
Roundman, This is why the bona fide expenses are different from fraudulent transfers. They are pre-profit share. You see the Receiver represents the company. He wants to recover the company’s profits. He will then pay back the creditors.
If you want to delete this or me entirely it is entirely up to you. You and Roundman have gone to great pains to link ASD to Zeek to Bidify so it seems like this is as good a place as to talk about it as any but if you can not appreciate or do not like what I say or how I say it, this is your sandbox.
Ponzi proceeds participants receive aren’t “profits” for a company.
Every dollar (98%) Zeek made in “profit” had an attached >100% ROI liability over 90 days. Time delayed sure, but that’s a loss not a profit as a business.
The problem is not that your point about revenue is incorrect, “Hoss” the problem is that it’s irrelevant when discussing ponzis.
Charles Ponzi was not selling postal reply coupons for a profit, he was selling the “idea” that postal reply coupons returned such a high profit he could afford to pay out the ROI he was offering.
Similarly, “bids” were irrelevant to Zeek and Bidify, just as “AdPacks” were to AdSurf Daily.
The entire premise of the success of Zeek was based on the concept of “bids” yet less than 2% of revenue came from the penny auction side of RVG.
IOW, “bids” were Zeeks’ equivalent of Charles Ponzis’ postal reply coupons and AdSurf Dailys’ “ad packs”
Throw in the fact that each “bid/postal reply coupon/ad pack sold produced an immediate liability and you can see that any discussion about revenues is totally irrelevant.
In fact, I would go so far as to say ponzi fraudsters use the “but look at the revenue” argument with great effect in roping in new victims.
Looks like Linda Helin is busy pushing many more ponzies:
HourlyAdShare
AdHitProfits
RebateDailyProfits
DeserveProfits
^^ Not surprising. My take on Bidify’s “all new opportunity” is that they’re trying to ressusitate an affiliate-base that has already left the building.
Well, except for those who invested huge sums of money at launch and are now wondering where their ROIs went.
JubiRev seem to be trying to do the same thing now too, trying to make honest MLM marketers out of the masses of HYIP passive investors they worked so hard to bring into the business over the last few months.
If Bidify opens again, do they need to have a new income disclaimer? Did they not have to make a tax report?
They’re running off to Europe so who knows.
Mind you they were always based out of Europe, with the US presence nothing more than a virtual mailing address. They only set themselves up there to convince US investors they were legit.
With all of Bidify’s cards out on the table and all the investor money sitting comfortably in their bank accounts, keeping up that charade appears to be no longer important to them.
And the only way it can “sustain” sufficient revenue to continue is to lie about its “profitability”, and incur additional obligations.
Zeek never did incur any “profit”. It’s profit only if you ignore the obligation that comes due in the near future, and that would be fraud in itself.
And that would be a losing battle, because the two crowds are completely different.
MLM marketers are heavy into selling ****, face to face, etc. And “team-building”.
Passive Ponzi-ers on the other hand are into handing over money and watch their balance grow (points or whatever). Team-building? Doesn’t benefit them.
Passive Ponziers don’t make MLM team members. Passive Ponziers, however, are much like sheeple and can be convinced that they can BECOME MLM team members… usually by investing a lot of money in training lessons and sales aids and such fluff (none of which is refundable, unlike MLM merchandise).
Watch out when Jubi or other companies start recommending their “flock” into buying lessons from MLM trainers/hacks and/or buy leads from lead sellers. THEN **** will really hit the fan.
Well T. LeMont Silver seems to think it’s going to work.
Mind you, this is after publicly declaring GoFunRewards’ legal advice that the Ponzi points revenue-sharing business model was “illegal” was made-up bullshit, uploading videos with barrages of insults against anyone who questioned the model or was critical of it and urging JubiRev investors to put in as much money as they can over the last few months.
At one point Silver even declared that anyone critical of the Ponzi points revenue-sharing model should just “shut the f… up”.
In the last week or so I think Silver has had to backflip so hard that he’s probably biologically now classified as an invertebrate.
To top it all off Beistle and Silver are running around pretending this was all some new revelation to them that was only just recently disclosed by JubiRev’s lawyers.
I mean really, how do you justify rubbishing your “blogger buddies” analysis and continue to declare the legitimacy of the Ponzi points revenue-sharing model, and then announce you had no idea the model is nothing more than just a thinly veiled Ponzi scheme?
I think Silver’s repeated assertion that “he doesn’t want to start over again” is going to translate into dragging anyone around him down with him as JubiRev circles the gurgler. Facts are facts and the only reason the company has revenue today is on the backs of the HYIP passive investors they bait and switched.
Those that play along are only looking to recover what they put in, and that doesn’t make for a solid foundation going forward. If Beistle and JubiRev were serious about starting over again they’d offer refunds on investments for those not interested in going forward without the passive investment side of the business.
It’s not pretty but it’s a hell of a lot better than digging a deeper hole.
Bidify tried that when they backflipped last year and tried to rely on retail bid sales. Look where they are now.
I am really perplexed about all the lawyers that seem to be supporting these ponzies and telling the public at large that these schemes are compliant. Is that just anothether ruse used by these so called companies?
For myself, I conclude that there were no company profits. Neither were there any ROI obligations owed by the company. This is because a company can not legally sell, or contract to sell nor can an individual legally buy, or contract to buy, an entitlement to the distributions of an illegal scheme.
I believe the Receivership’s actions have been consistent with this interpretation. Such as:
-The 1099s were silent as to the nature of the distributions.
-Assets contributed to the estate have been frozen.
-The Receiver has indicated his intention to seek a ruling that any person or entity in possession of estate assets will be deemed to have received them fraudulently.
-Points or entitlement to assets of RVG accumulated in the Zeek accounting system are invalid and to no effect.
-Any person who contributed money to RVG is entitled to file a proof of claim and if approved, share pro rata in the distribution of estate assets.
For myself, I conclude that there were no company profits. Neither were there any ROI obligations owed by the company.
This is because a company can not legally sell, or contract to sell nor can an individual legally buy, or contract to buy, an entitlement to the distributions of an illegal scheme.
Not legally, which is neither here nor there in analysis of the business model. The Ponzi points revenue-sharing model only works on the implied guaranteed ROI paid out to affiliates over the life of the points.
You’ll find no arguments here that the points themselves are worthless outside of the opportunity and investment into it.
I find the use of “implied guaranteed ROI” to be confusing in the context of sketchy business models and ponzi and pyramid schemes since it strongly suggests the truth or existence of (something not expressly stated) Is that really what you are trying to convey ? I don’t think so.
Notional ROI seems more appropriate to the subject matter
Definition of NOTIONAL from Websters
1
: theoretical, speculative
2
: existing in the mind only : imaginary
3
: given to foolish or fanciful moods or ideas
4
a : of, relating to, or being a notion or idea : conceptual
Notional
The “implied guarantee” term came about when MLM Ponzi schemes decided they’d argue legitimacy because “we don’t guarantee a ROI”.
Nobody would have invested in a single sample bid in Zeek Rewards without the implied guarantee that they would be paid a >100% ROI over 90 days.
The same is true for every other Ponzi points scheme that has followed, and thus whether a company publicly guarantees a >100% ROI or not quite obviously an applied one is there otherwise these schemes would never attract investors to begin with.
It’s really not that complicated.
YEP.
You missed the point completely once again. There’s not a big difference between IMAGINARY revenue and profit in the model.
The daily percentage is simply an imaginary number, made up by the organizer himself, not based on any calculations derived from real revenue or profit.
* “Based on the revenue” will give a percentage.
* “Based on the profit” will give exactly the same percentage.
Since none of them are using any mathematical formulas or any real numbers, the outcome will be exactly the same.
* “The formula” doesn’t exist in any of the models, it’s typically about a “secret formula” known only by the organizer himself, and it doesn’t involve other calculations than “Within daily range?”, “Within weekly range?”, “High enough to be attractive?”, “Looks real enough for an untrained eye?”.
* Other people will simply fill in their own imaginary formulas for how the daily percentage is calculated.
Running a Ponzi scheme is simply about selling the IDEA that something is highly profitable, and make the idea vague enough so people will fill in their own ideas.
* “Up to 50% of the daily revenue” is vague enough.
* “Up to 50% of the daily profit” is vague enough
The IDEA doesn’t become more believable if you replace “revenue” with “profit”, or vice versa. Both can be used to defend different types of ideas, people’s OWN ideas about how the daily percentage is generated. And people will gladly accept both ideas.
You’re using hypothetical examples, assuming it COULD have been about a real business sharing a real profit, and you’re constructing theories based on your own flawed idea.
I told you up front I was considering RVG in light of how a normal business operates. It was an experiment and an enquiry. I thank you for your participation.
No its really not
At the risk of being redundant don’t you think you should scrap the terminology that the “MLM Ponzi schemes decided they’d” use to “argue legitimacy.”
When a ponzi promoter “implies” his scheme guarantees a return its a lie and a waffle. As an independent commentator why would you waffle along with him?
You well know, there can be no guaranteed return and yet instead of saying so straight up, you tell your readers that Ponzi Pete is offering an implied guaranteed ROI.
That is ponzi jargon and your use of it can not sanitize it. If the returns are theoretical, speculative, or imaginary (notional) then you as a commentator-analyst should say so. There should be no doubt as to your meaning.
They don’t use the term “implied guarantee”, I do.
And no, I think it perfectly deflates the “we don’t offer a guaranteed ROI” justification affiliates use to defend Ponzi schemes.
I can’t control how clowns marketing and justify Ponzi schemes but I can debunk their silly claims.
Whether they are theoretical or not is irrelevant to me. Only whether the guaranteed ROI exists (real, theoretical, it doesn’t matter). If a business model staves off collapsing because it promotes itself as not having a guaranteed ROI (“regulators will leave us alone) yet it indeed does have one, then that’s what I’m interested in debunking, nothing else.
Typically affiliates don’t argue that Ponzi schemes are sustainable, they argue that whatever opportunity they’re in isn’t a Ponzi scheme for (insert reason here). If (insert reason here) is “we have no ROI guarantee) than pointing out that one exists within the business model is the quickest way to abolish that argument.
Deliving into legal mumbo jumbo and accounting theory just puts everyone to sleep.
They are trying to market, we’re analysing. The intent behind the use of the terminology is important. They use it to waffle, I use it disspel the notion that these opportunities aren’t still guaranteeing a >100% ROI.
As a long time reader you’d be fully aware of how opportunities are analysed here, so I’m not sure what you’re hoping to get out of this discussion. I’ve noticed you’ve been arguing with people for the sake of arguing over the last few weeks.
Not sure what’s up with that.
I see what you are saying. There is no difference between an implied ROI and an explicitly stated ROI within a business model. Thanks
GREAT Reading here.
It really shows how a level headed, non-accusatory conversation can be held. With the exception of a few outbursts of personal insults, I ‘enjoyed’ this dialogue.
I agree
Of course, Bidify never really operated out of the USA; The US address was simply a rented (16.95$ per month) mailbox in Wilmington, Delaware, to provide a ‘virtual presence’ in the USA. ( https://www.earthclassmail.com/Delaware-Address )
Bidify boss Frode Jørgensen would probably not be allowed into the USA, because of his criminal record (2 1/2 years prison sentence for running the PlexPay pyramid/ponzi scheme) and his Cease & Desist Orders (Kansas and Alabama) plus unpaid 50 000 $ fine from the Kansas Securities Commissioner.
If Bidify should open its web site again and officially operate out of Europe, I guess it is time to report this to the Norwegian police, informing them that ‘Fraudy’ is up to his old tricks again.
Fraudy and linda helin and jjgang also.