Fallout from Madoff & Asset Protection

By Jeff Lipton

The last thing anybody needed was further distrust in this current environment.

As if fear of the unknown was not bad enough the fact that someone could hide such a Ponzi scheme for so very long and under the eyes of regulators only further emphasizes the fact that there is no free lunch and no wizards who are so incredibly bright that they can out-pace the market.

When the market was falling and those Madoff investors were still seeing gains on essentially a covered call strategy what did they believe was happening?

I will tell you, it’s another case of the fact that some people see hedge funds and their managers as these mystical brilliant masters of intellect who can defy all laws of probability with their cunning and guile.

The answer is that hedge funds operate in an unregulated market place, and as masters such as Warren Buffet have proven for decades, you cannot out-think the market place consistently for any length of time.

As Buffett has pointed out; buy the best in the industry, one that does not rely on the government or subsidy to earn its market share and hold. Yet there are many who felt that Madoff was smarter, the fact that he was unaccountable and mysterious added to the mythical proportions of this wizard from hell.This is the similar in the world of asset protection, and there are some parallel axioms. Don’t move your assets into any structure (offshore trust, foundation ect.) that is not regulated and the partners (your banker, broker, trustee and custodian) are not regulated and transparent.

Don’t trust some company in an offshore locale with your assets unless the aforementioned is true. It’s an old story, but hundreds are ripped off each year in offshore trust, foundation, or corporate schemes. Many are too embarrassed or its non declared money that gets ripped off or they are charged fees and can’t complain because of the non transparent or non declared nature of the assets.

This was some of thinking behind asset protection insurance™, there was a need for a transparent way to insure assets against creditors and that all parties to the equation were regulated, licensed, and accountable.

This is not the case with the majority of offshore trust or foundation providers, nor do you have the benefit of choice of their bank, broker or custodian (or even how and if they are regulated).

Follow the lead of your smaller domestic life interests, if you don’t know or don’t understand, don’t do it. Especially in regard to asset protection strategies, go with regulated, licensed, accountable and transparent partners and products and declare the process or you may never be able to avail yourself of the ability to use the law to protect your assets when you need to.

Madoff Cont ...

I am always amazed at the hypocritical regulatory finger pointing when a fraud is not found as in Madoff but even angrier by the usual knee jerk reactions and the closing of the barn door after the horses are out.In this case people have been saying for years before and after the Long Term Capital that hedge funds must be regulated a lot closer.

In fact having worked offshore for many years I can tell you that its harder to open up a bank account in Barbados than New York, Paris or London, or set up a trust or purchase asset protection insurance.

You would need a passport, two utility bills three letters of reference (one from a bank) all notarized. But yet billions go unnoticed in the surreal institutional world.

Even more amazing is the fact that there not only several intuitions but competitors who actually complained of the fact that Madoff was involved in a Ponzi scheme early on, but yet nothing.

All of the fund business adheres to the regulatory world except hedge funds that are offshore funds and “not as closely regulated”?This is not true all of the offshore funds, our clients buy a lot offshore funds but they are regulated very closely.

Hedge funds are essentially private funds and are not regulated and the issue of the audit and supporting documentation must be scrutinized, what kind of lax double standards these institutions that look down their noses at everyone have.

Truth is all of Madoff’s clients are guilty of the greater fool theory and maybe now we will get disclosure in an industry (hedge funds) that has proven once again that it must be more closely regulated and monitored.

Lastly, let’s all stop with that foolish belief that anyone is that much smarter than the market (and thus not scrutinized because we apparently cannot understand what they do so why bother?). Or that they can get consistent double digit returns over years and without risk, for its this foolishness that makes Ponzi schemers flourish, lets regulate this industry so that it plays on the same filed as all other funds and institutions.

Axioms of Asset Protection

By Jeff Lipton

I am always asked and I am tired of repeating myself, additionally I am tired of all of the hucksters, fraud artists and usual hangers-on that make anything to do with asset protection or off shore planning sleazy and untoward.

I am angry that I try and convince people that you can no longer hide assets from economic predators (governments, partners, litigants, creditors, ex-spouses, family ect.) , and that it’s no longer difficult to find you or your money.

Thus, please find as my gift, to keep out of trouble and enjoy the protection afforded by real asset protection working effectively to disenfranchise economic predators, the following axioms of asset protection.

I will expound on each in days to come;Axioms of Asset Protection;

a) Do not go offshore unless it’s for asset protection,

b) Asset protection requires a fully disclosed irrevocable disposition of assets in order to work effectively and legally, this means that the structure will be visible and thus defendable at law and yes taxable (remember you are doing this for asset protection not hide from the tax-man!).

All structures (trusts, foundations, asset protection insurance) require the aforementioned to be effective for legal asset protection to work.

Protecting Your Inheritance

Jeff Lipton


This is a recent question I received which I thought I would post to the blog and forum:

Dear Jeff:

Q;

I have an inheritance of $400,000 coming to me and I also have some stocks, I am planning to marry soon and want to insure that this money is outside of the marital assets and that I can safely pass these assets to any future generations.
Samuel

A;

In regard to the $400,000 note that you should not try to hide the existence of the asset as that will involve an immediate element of distrust and in reality you would only be potentially perjuring yourself should you be discovered (in the legal sense of the word) in a subsequent litigious matter.

The use of either a declared asset protection trust or simple asset protection insurance, will allow for those assets (the inheritance and the stocks) to be placed into an asset protection structure. They would be in normal cases outside of the ability of a court of Family Law courts to attach if the they were irrevocably transferred (which would include taxes being paid) and declared and the structure resides in another jurisdiction.

Asset protection insurance is a superior vehicle to protect them as those assets would have had to have been irrevocably transferred into the policy for the benefit of beneficiaries and domestic courts could not attach these assets. The trust subjects itself to the risk of being what is termed a sham trust, and is not as flexible of a vehicle.

Lastly, family courts would in fact try to do an even up of existing assets that exist within your domestic jurisdiction. Meaning that if there were $400,000 plus asset value in a house or a business the split would not be 50-50 on these assets and the judge may attempt to compensate the other spouse from those assets. That said, the goal is protect the $400,000 plus for the benefit of beneficiaries and in this regard no extraterritorial decree from a judge can affect the disposition or use of the $400,000 plus assets.

Many a spouse in this position will name the other spouse a beneficiary of the policy, thus difficult to say that the spouse has been disenfranchised, and yet the critical rational for protecting these assets is to insure that the original beneficiaries which may the couple’s children and the spouse, receive these assets and that they are not tampered with or their course of use altered if the spouse remarries.

In many cases it’s more important to insure that those assets benefit the children and a subsequent marital event cannot alter their future use. If the other spouse is named as a beneficiary then it’s hard to argue that they have been disentitled-just the freedom for that spouse to choose has been limited and there may be some minimal even up on existing other assets.

This works, we have deployed asset protection insurance and like scenarios to protect family assets.

Asset Protection Insurance - A Great Idea !!

By Jeff Lipton

We have a unique insurance product that fulfils many long-term needs such as: Creditor Proofing; Intergenerational Rollover of Assets; An Alternative to Liability Insurance; and Protection of Intellectual Property (including royalty, license and any payment streams).

Creditor Proof Your Assets Against Future Liabilities This product will creditor proof your assets and insures their replacement should a successful attack on your assets ever occur. It is effective against any creditor or claimant; be they clients, business associates, partners, or personal contacts (your current family or future members of your estate).

Virtually any asset can be protected in a policy including cash and securities, but real estate, private equity, gems, art and intellectual property.
Intergenerational Rollover of Assets The product will dovetail with any estate plan, freeze and existing insurance planning proposal.

In fact, it will not only protect assets for future generations from the standpoint of all litigation and/or regulatory, family, or economic incident, but do so for as much as 100 years in the future. Families can rest assured that all assets will transfer unencumbered and as planned regardless of intervening future events. This is a superior alternative to prenuptial agreements. Alternative to Liability Insurance this product is designed to replace costly initiatives such as medical malpractice insurance but is equally applicable to any liability coverage. It protects all of the estate assets inside the policy and rates will not increase as a result of prior claims history or subsequent findings of negligence. If you are a consumer of liability coverage that has seen rates skyrocket for any claim history, this is an excellent alternative solution.

Protection of Intellectual Property and Royalty Streams:This insurance will protect and preserve the sanctity of intellectual property from creditors and others that might seek to control or influence its use.

The policy can be administrated to allow for licensing to other parties and cash flow payments can be made directly to the policy, protecting both the asset and the resultant payment flow as well.

The insurance policy is transferrable making it an excellent vehicle for transacting the sale of intellectual property. As with all of the applications mentioned, the product is ideal for corporations, partnerships, foundations, trusts and individuals alike.

For further information on the application and usage of asset protection insurance products in detail visit our web site; www.aseassurance.com

Why Your Child Support Will Never Be Paid

By Kevin Bousquet -
Corpa Investigation www.corpa.com


Child support orders are rapidly becoming worthless (no different than judgments). It’s not a collection problem, it is an ability to have some power to get access to information like bank accounts, employment, the vehicles owned so you can collect on your order. For example, how in the world is anyone expected to find the bank account of their ex-spouse and determine if there is any money in the account?

Due to the fact that there is so much attention in the media about the Family Responsibility Office (FRO), right now, about collecting child support, I am going to help people understand the real reason why their child support will never be paid or collected.There is no point in blaming the FRO – they run into the same problems as any starving recipient trying to collect support. They send letters, they make phone calls and they manage a payment systems for those payers (lets call them debtors) who actually pay.

The failure to collect these order is not about collection at all. It’s about trying to find the assets, the employment, the bank account, the property or the vehicle of the debtor so you can collect.Your on your own and it’s and “investigative task” not a “collection task”. This is the main reason why assigning support orders to collection agencies will never work.

Collection agencies make phone calls, write letters, and report the debt into the debtor’s personal credit bureau file. They have no access to bank account information nor do they have any power to obtain the actual information you need to collect on your order. This is an investigate mission on all fronts and someone has to play detective and it won’t be any government agency doing if for you.
Here are your responsibilities:

Find a bank account.
Find property (land or a house).
Find employment.
Suspend the debtor’s driver’s licence.

Finding A Bank Account

You are expected on your own to find a bank account with money in it. You need to identify the bank (i.e. the institution) and the actual bank branch where you believe the debtor might have a bank account. You do not have to have an actual account number.How on earth is someone expected to lawfully find a bank account on a person but most importantly if there is actual money in the account? The banks certainly won’t give out this information, as they will protect their customers, and even more so now, with the new privacy legislation and fraud and identity theft on the rise.There is no system, nor any powers of a support order, which will allow recipients of support orders to properly and lawfully get bank account information in order to proceed with a garnishment. What about if the debtor works at a job for cash? or perhaps the account is joint? or is in some other name? or even a company name as with a self employed person?

Finding Property (land or a house).

It is possible in most states and provinces to take a debtor’s name and run the name through a computerized database to see if they own land or a house. But very few child support debtors put property in their name. Some may be found to own property jointly however depending on where you live you may be able to register an execution on the property. This would merely allow you collect monies only when the debtor sells the property. You would collect what is left over after all the mortgages and expenses have been paid on the sale.

Finding Employment

While you may find employment on the debtor through word of mouth, friends, relatives etc… Trying to garnish employment wages can be very difficult if not impossible if your debtor falls under one of the categories:

(Working For Cash)

(Working Under Contract)

(Self Employed)

(Low Waged Employee)

(Working For Cash)

One of the biggest reasons your child support will never be paid is the underground economy which is nothing more then a term for people who go to work everyday and are paid in cash.

Millions of people go to work every day and work for cash. They are paid in cash and never deposit their cash wages into any bank account or report their income to the IRS or Revenue Canada. If they are paid by check from a cash employeer they simply cash their check at a local cash stop store and pocket their wages in cash. People who live like this do not fear collection agencies nor are they concerned about their credit rating. They don’t need credit cards or credit as they pay cash for their expenses.

Finding out if a person is working for cash can be impossible on your own. There is no other way to show a person is working for cash then to have them followed. How do you show cash from hand to hand?

The normal course of investigation would be to have the debtor followed into work. Obtaining video or pictures of a debtor spending every business day at the same job site for eight hours yet never reporting a nickel of income.

But many who are starving for child support can not afford to hire private investigators at $50.00 to $75.00 per hour plus kilometers and expenses. Doing surveillance on your own could be illegal and dangerous from a driving stand point. When you have a debtor working for cash not paying child support or filing tax returns who then is responsible for this mess?? Is it the Family Responsibility Office or the IRS and Revenue Canada who is responsible for cleaning up the underground economy?

It is logical to expect the FRO, the IRS or Revenue Canada to follow a cash paid dead-beat dad into work at 6:00 amto a construction job-site? With all the controversy surrounding privacy concerns can we expect that anyone can solve this problem?

(Working Under Contract)

One of the biggest scams going to avoid child support (and judgments) is employers who hire a person (a debtor) under contract and call it ”contract”. This is most commonly used by employeers to avoid paying payroll taxes. When we use the word “contract” we are not talking about about a contract position or an agreement. We are talking about a situation where an employer pays an employee (the debtor) by check and makes it look on the books like the employee/debtor is a business who invoiced the company.

The debtor merely gives an invoice to the employer every second friday for his wages. No tax is deducted and no income is ever reported.Many employers create actual written agreements where the employee has to promise in writing to file taxes at the end of the year. But what many don’t realise is that this contractual relationship can be very very illegal.

If in the tax year the debtor has worked for only one employer that whole year and he has not invoiced any other company, the IRS and Revenue Canada could consider the relationship illegal.

Both the employee and the employer could face fines, penalties, and be compelled to pay all appropriate payroll taxes and deductions.

Many starving recipients of child support often wonder how the debtor they are chasing is able to go to work everyday for the same employeer yet not one nickel from the garnishment served on the company has ever been paid.

THE OTHER SIDE OF THE COIN

But what about the other side of the coin? Much of the reason why child support is not being paid is that many payers of child support cannot easily and cheaply apply to the court to have their support orders reduced if there is a change in their employment of financial situation.The result is that these payers fall drastically into arrears, being unable to afford to get their orders to reflect their true income.The ultimate result is that the payer will become so far in arrears their only alternative is the underground economy (working for cash under the table) to avoid a large garnishment of wages that may, in fact, be unfairly registered against them.Lets do the math!! The average retainer to a lawyer to have a support order reduced (or the legal term “varied”) can be anywhere from $2000.00 to $6000.00.

Days will be spent preparing court papers and attending at court hearings. For example: a seasonal worker in like a landscaper, may earn very high wages in the warm, summer months, but in the winter the wages drop or he/she may earn nothing at all.

The seasonal worker may be paying $700 per month in support, based on a job he/she had two years ago at the time of the divorce.Now, years later, the income has dropped. At $2000.00 to $6000.00 in legal fees to get an order varied who can afford to keep up every single time there is a change in employment circumstances.

Some courts will allow you to file the paper work and attend on your own (without a lawyer) yet some judges will insist you be represented by a lawyer. It’s a crap shoot if you think you can do it on your own and find a judge who will listen to you.

The Law Society of Upper Canada has just recently licensed Paralegals in Ontario. In the past a payor of child support could perhaps hire a Paralegal to cheaply assist in completing the forms to have a support order reduced.

It is now illegal for Paralegals to advertise this service and to do may aspects of family law or divorce law. This now makes it more expensive to get your support order reduced. Learn the word “no standing” real quick. There will be nothing more humiliating if you file your papers and attend at court when you are drastically in arrears depite the reasons you may have. Chances are you won’t have any standing at all before the judge despite the legitimate reasons you may have for being unable to pay and being so far into arrears.

As long as their is no system in place to reduce a child support order inexpensively and less time consuming the family court system will continue to manufacture no payers into the underground economy. You can roll your eyes all you want but no-one in their right mind will spend the time and money to have their order changed every time there is a change in financial circumstances.As would be payers fall into the underground economy, they will not only continue to not only avoid paying child support, but also personal income taxes.

To recap:1.

Until the court is willing to give more judicial powers to support orders and judgments information be impossible to find to allow people to collect on their Orders and Judgments Things like the order having authority or power to force a payer’s employer to give circumstances regarding employment. A bank being served with a support order to be compelled to report on all bank accounts registered in the payer’s name. The department of transportation upon being served with a support order being compelled to provide a vehicle and address information so a vehicle could be seized or a license suspended.

Assets have to be identified before there can be collection and/or enforcement.

2. Until a simple paper system is in place to allow parties to go to court (with or without a lawyer) to get their orders changed, simply and cheaply, there is a change in their financial circumstances, payers will continue to outsmart the system, go underground and not pay support or income taxes. It is possible to represent oneself in small claims court and landlord tenant Court but not in the family court.

These hearings could be conducted with a simple set of forms and be heard by a referee, arbitrator or registrar, instead of busy judges with overloaded family court dockets. The system right now is too complicated, time consuming and expensive.

3. The only way to catch a person working for cash is to follow them in to work – plain and simple. No search method on earth will reveal how a person is truly spending their working day if he or she is not reporting his income.Government Insurance companies like the Workmens Compensation Board (now the WSIB) spend millions of dollars to hire independent private investigation firms to use private investigators to follow (via surveillance) on would-be cheaters of the insurance system to see if they are continuing to work or faking their injuries during the business day. It’s the only way to fight this kind of fraud. Revenue Canada (or the IRS in the United States) should be teaming with the FRO to help fund Private Investigation agencies to conduct surveillance and inquiries on cheaters not only of child support but working underground for cash.

A person working for cash trying avoid child support is not only cheating the family court system but is in fact committing tax evasion. This makes the problem a joint responsibility of Revenue Canada and the IRS who continue to unsuccessfully battle the underground economy. The underground economy is partly manufactured by the failing family court and FRO system.Privatization of the FRO, or forwarding child support orders to collection agencies, will accomplish nothing in the way of actual collection.

Collection agencies make phone calls, send letters, and report to credit bureaus. It will be a waste of your tax money on a system that is already failing both sides of the coin. You can’t collect on what you don’t find. Finding assets is an investigative mission. Dead-beat parents need to be followed into work – plain and simple – there is no other way.

The Venture Capital Broker Scam

By Kevin Bousquet

Corpa Investigation
www.corpa.com

Scams To Watch For (If you are seeking investment)

If you use a company or a middleman such a loan broker to try to find you an investor or a venture capitalist, you may be asked to pay a large fee up front before any financing has been obtained. This advance payment may be called a processing fee, finder’s fee, or credit application fee.

Prior to being told about the up-front fee, you will be put through an exhaustive array of frustrating paper work which will include credit applications, the business plan, references, co-signers, numerous interviews, etc.Even though you have been told the fee is completely refundable, you may have trouble collecting your refund through the court system if the middleman has no assets.

You should be aware that there are thousands of fraudulent companies and fraudulent middlemen who make their living scamming for these processing fees.

The agreement between you will be so fine that you may find yourself in the cold as a result of some unconditional clause in the contract. There are hundreds of reasons why you could be denied independent financing under the contact.This processing fee scam has gotten so bad there has been new legislation written in many States and Provinces to protect consumers from it. This type of scam is most commonly found in the mortgage broker and loan broker field. I could write a book on the number of mortgage brokers I have investigated in my career.If you are using a middleman you must check references.

Have them give you the name of 10 to 20 individuals for whom financing has been successfully obtained. Pick up the phone and call these individuals.If you are nervous about paying the finder’s fee, pay the fee to your lawyer in “trust.” Your lawyer will disburse the finder’s fee only when the financing is in place. Just have your lawyer write the middleman a letter confirming that his fees are being held in trust upon completion of financing. It must be your lawyer, and not the lawyer acting for the middleman.There are a number of legitimate middlemen out there who work on a “No Find No Fee” basis; to find them you’re going to have to call around.

A reputable real estate lawyer or securities lawyer should be able to refer you to someone.We are not stereotyping these middlemen. We’re merely suggesting that if you are dealing with an individual or a company whom you don’t know, you must check references.You may even wish to perform a litigation search to see if the middleman has ever been a defendant in a lawsuit. This basic search should cost you no more than $100.Scams To Watch For (If you are an investor) Needless to say, the investigative and due diligence efforts that have to be made by an investor cannot be summarized in a few paragraphs.

There is an endless number of situations in which investors have been scammed lending money to new ventures that were nothing more than fraudulent paper corporations with no real foundation. The money gets invested into a corporation, the directors abscond with the money, and the company goes bankrupt. The same scam can apply to fraudulent real estate deals.We would suggest that all investors conduct extensive due diligence and investigative research before extending money to any individual or company.

It is important to investigate not only the company you’re looking to invest in, but most of all the individuals who are truly behind the company.Do these individuals have criminal records? Have they been defendants in lawsuits? Is there a history of bankruptcy, in which the individual formed a company that was shortly bankrupted after being financed by investors?It will be necessary to know where these individuals were before they started their new venture. If they were in a previous business, why did it fail? What is the likelihood of success this time around?We would again suggest that if you do not know how to do your own due diligence or homework (or you just don’t have the time) then you may wish to consider an outside source.It is best to go to a corporate lawyer (in the city where you reside) who can refer you to a reputable Private Investigator or Forensic Accountant.

Due Diligence - Investigate Now or Litigate Later

How many times have you heard about acquisitions that went bad shortly after the deal was signed?

If you are thinking about buying or selling a business or investing in one, you want to make sure it doesn't happen to you.

This is why we always discuss Investigating before Investing. Either you Investigate now or you litigate later.

The best way to protect yourself is to do enough "due diligence" to ensure that you know what you are buying or investing in.

What is due diligence?

Due Diligence is really a form of risk management most commonly known as doing your homework before you invest. "We want to make sure we believe the story before we invest."The Due Diligence Check List and Investigative Due DiligenceThere are a number of forms of Due Diligence.

The most common form of Due Diligence is that of the "Due Diligence Check List." This is a checklist which a corporate lawyer will request that the seller complete prior to closing or making the investment on behalf of the client.This can be a very small list, or in some situations the check list can be very lengthy and exhaustive.

In some cases the list can be up to 100 pages of items to be provided before closing. Here are just a few examples that might be found on a standard due diligence check list:Standard Due Diligence Check List

What You Should Be Asking For?

Letters from Provincial/Federal/State/County government confirming that all tax returns are filed to date with no arrears owing (i.e. payroll, sales tax, health tax and taxes from year-ends).
Articles of Incorporation.
Minute Books.
Shareholder Agreements.
All Tax Returns Filed To Date.
All Year-end Reports To Date.
External and Internal Auditors Reports.
Letters of verification confirming that all Provincial/Federal/State/County taxes have been paid.
Letter from Commercial Landlord confirming lease terms and no arrears.
Powers of Attorney.
Government licenses, permits, approvals etc.
Litigation/Execution confirming no judgments, pending or threatened litigation, claims or disputes.
Listing of outside contractors.
Loan agreements, lines of credit, debt instruments, notes payable, guarantees (by or in favor of the company), and any other agreements collateralized or secured by the assets.

You may wish to obtain more information on your due diligence check lists, we have a number of samples. Alternatively, it is really best to consult a corporate lawyer. Investigative Due DiligenceInvestigative Due Diligence is a whole different ball game. It is in fact a background investigation on the individual and/or the company. Investigative Due Diligence can be conducted with or without the knowledge of the individual or the company being investigated.

This is your decision to make. It is perfectly lawful for you to retain an investigation company to conduct a background investigation without anyone knowing about it.You must first make a decision whether you want to have the owner or the company investigated, or both. Our position is to always do both.

The Owner Of The Company

If you are investing funds in a company, it is the owner(s) who will be responsible for how the funds are spent within the company.What happens if the owner is in great financial difficulty? What if there are outstanding lawsuits, judgments, child support obligations and credit card debts? Where do you honestly expect the invested funds to end up first?The owner may have told his or her outstanding creditors that payment would be resolved once company financing is in place.

This could suggest that much of the funds invested will go to paying off personal debts instead of using the funds to expand the company as proposed in the business plan.In many cases where troubled companies are looking for capital, the owners have exhausted much of their personal reserves. You can expect that paying off personal debts will happen in most of these situations. It is important, however, to know just how bad the debt situation is. We need to get a rough idea just how much of the investor's money will actually make it into the company.We also want to find out as much as possible about the past tactics of the owner.

Have there been other companies owned by this individual that have gone bankrupt shortly after financing was obtained?

Are there any old or current lawsuits against the owner or the company?

Has the owner ever been bankrupt?

Can this owner be trusted ?

What kind of person is he?

Does he get on well with employees and managers?

Is he a proven leader with vision?

Has this person ever been written up in the media, a trade journal, or an industry publication?

Was it a good or bad article ?

Where does he live?

What kind of car does he drive?

How much money does he have in the bank?

What is the status of the mortgage on his home?

In a recent reported case an owner who had obtained financing for his company was deeply indebted to creditors. The owner did everything possible to get money out of the company and into his pocket.

Numerous fictitious invoices and companies had been created by the owner. The owner wrote cheques to these companies which appeared on the books as nothing more than valid business expenditures.

Thousands went into his pocket through one company name or another. It is the oldest trick in the book.(Credit Searches, Criminal Records & The Law).

The Controversial Stuff

Two very important investigations to conduct on the owner, in the background stage, are a credit search and a criminal record search. The credit search is important because it will yield information about the balance on credit cards, collection matters, previous addresses, past employment, the works.

Credit SearchesThe Fair Credit Reporting Act (USA), and the Consumer Reporting Act (CAN) make it illegal for anyone to conduct a credit search on an individual without their consent. This means that you will have to advise the owner that you wish to conduct a credit search on him or her or you will not invest. Just like applying for a loan, it is expected that a credit search will be conducted.

It is best for you to draw up a simple written authorization and have the owner sign it. This is a very important search in the investigative due diligence process.Criminal Record SearchesThe law in regard to criminal record searches varies from state to state in the United States.

In Canada it is not public record so it is completely illegal for you to obtain a criminal record search on an individual without their consent.If the owner resides in a location where criminal record information is not public record, you are going to have to instruct the owner to go out and obtain his or her own Certificate of Non-Conviction from their local police station.

How to obtain this document will vary from county to county. Inquiries will have to start at your local police division.If an owner should refuse to give consent in these two areas, your alarm bells should start ringing. There may very well be a skeleton in the closet.Unlike the employee and employer relationship, in most investment situations you have the right to refuse to invest for any reason; you may not even have to give a reason at all.

FACEBOOK VS YOUR PRIVACY - You've Been Warned !!

While I admit to joining the klan of facebook.com I find the site very dangerous in the way of personal privacy and people should be very concerned and warned.

People who have had their lives destroyed because someone got a hold of their personal information and applied for credit in their name.


I a tv show of a lady who woke up one morning to a collection agency phone call. She discovered that someone impersonated her identity and managed to purchase two houses in her name in Gretzky’s home town of Brantford Ontario.

http://www.corpa.com/programplay.asp?show=Undercover-FraudVictim

She had no idea that someone had used her identity by applying for credit in her name. It took years for her to get her life back.Yet people who register on facebook post their name and their date of birth right out in the open for anyone to see.

Many on facebook will argue they use their privacy settings and only close friends see personal information. This is great for those who actually use their privacy settings.There are networks after networks of interest groups that allow people who you may not directly know to see your personal information. They are allowed to see it because your privacy settings have allowed people in the same network to see your personal data.

Many assume because they have an interest in common with someone, skiing, music, church, city events that a person in that network is not going to compromise their data. Do you really know everyone in your network? Yet bigger city networks like “Toronto” or joining a network where in the city where you reside can be a great place for would be fraudsters to take your personal information and apply for credit.

Your Name & Date of Birth is all it takesPeople need to realise that all it takes is your name and date of birth to steal your identity.Facebook A Great Place To HarvestThe word to be aware of is “harvesting”. Right now I can go on facebook and within less that an hour I can harvest names and dates of birth of dozens after dozens of people.

If I really tried I could probaby average 100 names and dates of birth in an hour. People who I don’t know, who are not in any network. Personal data out in the open makes you vulnerable to attack by fraudsters to get your data to apply for credit in your name. Problem is people don’t realise just how bad the problem is. There is no recourse, you’re on your own trying to clean up your life if you’re impersonated.

Don’t expect the police to do it for you and don’t expect that the fraudster will actually get caught. Act proactive rather then reacting to a crisis later. Impersonation fraud is the biggest growing crime on a world wide level. If you have a home you could also be a victim of mortgage fraud or have your house sold right from under you with the aid of the data you gave up on facebook.comTeenagers and children are the best targets. Kids who have not yet established credit ratings.

A nice clean name, date of birth and address is all a fraudster needs to start applying for credit in your child’s name. The Federal Trade Commission just did a warning to the public that over 400,000 children and have already had their identity stolen and many don’t even know it yet. This will include teenagers. If your address is posted all the better. If they get a hold of your Social Insurance Number or Social Security Number you’re done like dinner you may never get your life back.

You’ll spend years trying to clean up your credit rating convincing creditors and collection agencies that you’re you and not the fraudster who managed to swindle thousands from banks and credit agencies using your name. There was just a news article recently where a victim of impersonation was reported dead to the government, yet he was alive and well. He spent months just trying to convince the government he was not dead and his problems continue.

You could find the IRS or Revenue Canada knocking on your door or even the police or perhaps immigration. The answers to virtually all verification questions asked by a bank or credit agency to prove you are you can be answered on facebook.com Let’s start with the most common question that all credit card companies ask to verify you? “What’s your mother’s maiden name”? Your dog’s name, where did you attend school. Your previous addresses. Take a look at the verification questions used by web based email services like hotmail.com when you sign up. Many of these questions could be answered by looking on facebook.com.

There may be those who may want to use your name and date of birth to commit a crime or get a job when they don’t have status to work in the country. Ask yourself could someone easily recreate your resume from facebook depending on the information you posted? I am fascinated by those who post their resume.

Where you went to school, what degrees you have, your past jobs, your marital status. Your interests, where you volunteer, you associations and degrees. Even your religious beliefs. What about child predators seeking to hurt and exploit children.

People continue to post pictures of their children, some have posted where they go to school or daycare and even what time they are picked up. Your toddler could even be at risk. The security risks to openly posted personal data are endless.If you give away too much personal information your jugglar vein is exposed waiting for the kill.

If you’re impersonated there are only two things in the world that can prove you’re you. Your DNA and your fingerprints. You’ll spend a lifetime trying to get your life back.Be careful what personal information you give up on any website.

Will Obama be considered the most powerful man in the world like all the presidents before him?

A King vs A President

When Obama takes office he will have to deal with Iran almost immediately. Iran continues to build nuclear weapons and continues threats to destroy Israel off the map. (keep an eye on Russia’s alliance with Iran).

The influx of government funds into the U.S. economy will fail. China (and perhaps Japan second) will be the first countries to no longer accept the U.S. Dollar. This will force the U.S into a recession far worst then in U.S. history.

The U.S. will have no alternative but to merge with Europe forming the United States of Europe and making an even stronger European Union.

The European Union will insist that all countries of world come under a standard currency to stabilise the world’s economy or face economic destruction. This will come in the form of all countries changing their currencies to the Euro Dollar or should I say the “Euro currency”. Due to fraud concerns the E.U. will insist on a paperless currency by either a card or microchip. All paper money known to mankind will be worthless.


The cashless economy will serve to stabilise or save world markets. It will destroy the underground economy making it impossible for those who work for cash and do not pay income tax to remain underground. It will increase security, help to fight crime and find missing persons and wanted felons.

A cashless economy will become law enforcment's best crime fighting machine. It now becomes impossible for anyone to buy, sell or travel without their being some financial record of any transaction of their movements. Any attempts to barter will be punished to the full extent of law.

The European Union will be faced to appoint a leader and make no mistake about it, it won’t be Obama or an American for that matter. Gone are the days where the president of the United States was the most powerful man in the world.

The bankrupt United States no longer has any credibility in the world primarily as result of the controversy in Iraq. The E.U. will not allow an American to lead the European Union.


To the world biggest surprise the most likely candidate to lead the European Union or the world for that matter will in fact be from the 11th Nation to join the European Union which is the country of Spain.

While many will laugh at the thought, the King of Spain Mr. Juan Carlos is currently the most qualified candidate out of all of the rulers currently in the E.U. or believed to join the E.U. His resume of schooling, religious studies, goes forever. The King of Spain has over 37 years of some of the best military training of any man in history.

Juan Carlos already has the title of "King of Jerusalem" (a title that that was given to Jesus in biblical times) and defender of Catholic Holy Land interests. .

The most powerful man in the world will be someone who can be trusted not only by the countries of the world but is someone on neutral ground of a financially sovereign country like Spain.

The world leader must be someone who can be trusted to resolve the conflicts in the middleeast without the hidden self serving agenda of oil in the background like the U.S.
Juan Carlos is more trusted to deal with the middle east conflict to enter into peace treaties between the Jews and Muslims.

Every peace treaty signed between Israel and her enemie have been the direct or indirect result of the efforts made in Spain, at the Madrid conference.

Why would the middle east trust a leader from a counry that has already admited that their financial crisis is a result of the greed and sins wallstreet?

Most scholars and economists believe that the world will not really know or hear about the King of Spain till at least 2012 which is not far away.

In July 1996 "Endtime" magazine wrote an article called "Cashless Society - How Close?"
It was reported that the country of Spain had become the first and only country in the world which required under the penalty of law that all pets in the nation be injected with an I.D. chip.

A simple google search will show that human microchipping is not far away. It makes all the sense in the world with respect to securtiy and the endless problems with fraud and impersonation.

CNN has already reported on the use of such microchips which can be seen at:

http://www.verichipcorp.com/files/CNN_AmerMorn_013106.wmv

A company known as Verichip Corp www.verichipcorp.com/ appears to be leading the way in this technology which is already in use.

Currently if you become a victim of impersonation about the only things you have in the world to prove you are you are your fingerprints and your DNA.

People will love the idea of human microchipping and will line up in droves to have it done with smiles on their faces.

Line ups up for travel through customs will be cut in half by a single swipe of a microchip. Your medical data would be available in seconds if you had a medical emergency.

It may very well be Spain that will lead the way to human microchipping in the world.

Over the next three years keep a sharp eye on the European Union and watch it grow to be the most power government organization the world has ever known.

A great deal of the world's oil comes from the middle east, don't think for one second that your life be it American or Canadian will not be effected by the conflicts in the middle east. We are already effected by these middle east conflicts everytime we pay for inflated gas prices to gas up our vehicles.

References
Ahmadinejad: “Destroy Israel”
Ahmadinejad: Destroy Israel, End CrisisBy SEAN YOONG
The Associated PressThursday, August 3, 2006; 10:49 AM
http://www.washingtonpost.com/wp-dyn...080300629.html

Iran Threatens to Destroy Israel, Elected to UN Commissionby Ezra HaLevi
http://www.israelnationalnews.com/News/News.aspx/101999

Euro to Replace the U.S. Dollar
Greenspan says euro could replace U.S. dollar as reserve currency of choice The Associated PressPublished: September 17, 2007
http://www.iht.com/articles/ap/2007/...nspan-Euro.php

Euro to Replace the U.S. Dollar?
http://www.onejerusalem.com/2007/09/...the-us-dollar/

Spain & The European Union
http://en.wikipedia.org/wiki/Juan_Carlos_I_of_Spain

Spain’s covert role in Middle East - all diplomatic roads pass through Madrid17 Mar 2004 Barry Chamish http://www.barrychamish.com/ http://israel-politics.tripod.com/Sp...oordinator.htm

Human Micro chipping
http://en.wikipedia.org/wiki/Microchip_implant_(human)
http://www.verichipcorp.com/(video) http://www.verichipcorp.com/files/CN...orn_013106.wmv

Radio frequency identification keeps tabs on goods, services, pets - even peopleMay 11, 2006, Sacramento Bee (the leading newspaper of California's capital city)
http://www.sacbee.com/content/lifest...15069873c.html

US group implants electronic tags in workersFebruary 13, 2006, MSNBC/Financial Times
http://msnbc.msn.com/id/11314766/

Remote Control Device 'Controls' HumansOctober 26, 2005, San Francisco Chronicle/Associated Press
http://www.sfgate.com/cgi-bin/articl...f133702D73.DTL

RFID: Getting Under Your Skin?August 5, 2004,
CNN/Fortune
http://money.cnn.com/2004/08/05/comm...chnology/rfid/

Would a microchip keep your child safe?December 18, 2003, BBC http://news.bbc.co.uk/1/hi/magazine/3307471.stm

A Real Chip On Your ShoulderJuly 7, 2003, CBS/Associated Press
http://www.cbsnews.com/stories/2003/...in563819.shtml

Chipping at the FutureSeptember 23, 1998, ABC News
http://more.abcnews.go.com/sections/world/dailynews/cyborgman.html

Why Canadian Businesses Fail

Why Canadian Businesses Fail

What would happen if you were given a key to a race car for which you had only the manual (a written plan), but you had no previous driving experience? You take your new race car out on to the track and find yourself surrounded by other race car drivers on fast moving track. You try to follow the manual (your written plan), but you discover it’s useless without practical driving experience.Within moments, you crash into a wall and bring down other race car drivers with you. You suffer injuries that affect you and others for a very long time.

Banks, lenders, and business development organizations wonder why new start-up businesses in Canada continue to crash into the wall at record rates. Even with the most perfect written business plan, many lenders no longer lend to new start-up businesses simply because the risk for failure is too high.

A friend of mine was recently laid off from a job she had for many years. Like most people she went on unemployment benefits while she struggled to look for work. Realising her hope for employment in Canada was bleak she decided to start her own business. She had no previous experience running a business. She discovered a government-sponsored program that would allow her to receive unemployment benefits while starting her own business. The only catch to the deal was she would have to attend and complete the unemployment business training course on how to properly start her own business, or her unemployment benefits would be cut off.

While taking the class she came to me almost weekly seeking help with her business plan. I soon realised that her course was very focused on the written business plan, with very little practical training involved. Every business scholar and successful entrepreneur would agree that a written business plan is crucial to the start-up process. Before a building can be built there has to be a solid blueprint. Essentials to a business plan are strategies such as the mission statement, target market, industry analysis, competition, marketing, financial projections and so on.

There is, however, a limit to what can be learned in a classroom setting, without hands-on experience or through the examples of successful entrepreneurs. If government lenders, banks and others continue to focus exclusively on well-written business plans, they might as well attach a bankruptcy application form to each loan application.There are many reasons why businesses fail, and in most cases failure has little to do with not following the actual business plan.

CANADA’S BUSINESS TAX SYSTEM

A new small business owner may not be properly prepared to handle Canada’s tax system. After a year or so in business, the owner can expect government envelopes to begin arriving almost daily in the mail.All levels of government will be looking for their money. There will be Municipal, Provincial and Federal taxes, plus GST. If your business qualifies you may also be subject to Retail Sales Tax and Workman’s Compensation dues.

Hiring an employee or two will launch the new business owner into Canada’s complicated and expensive payroll system. Many business associations continue to lobby against Canada’s excessive business payroll tax. They maintain the expensive payroll system alone is prohibiting new start-ups from providing job opportunities. They say this is the true reason why there are few jobs available in Canada. Entrepreneurs simply don’t want to do business here because of our tax system. A business owner can expect that more than 50% of every dollar earned will be paid out in tax. This means the tax man is your partner and you may not even know it. That is of course if you’re a business that actually pays tax as many don’t. If you do you may find yourself competing with competitors undermining your prices whom have given up and illegally joined the underground economy.

Understanding Canada’s business tax system and how to manage and pay business tax on time can make the difference between success and failure.

Other Challenges

And what about other aspects of business that may not be covered in the business plan? For example:· Renting space; dealing with commercial landlords who seek long term leases with hidden personal guarantees that may prevent your business from growing when you can’t break out of a lease.· financing equipment and vehicles successfully· finding the right insurance for the business and its employees· Coping with suppliers or customers who don’t pay.· Dealing with bad debt, insurance claims, lawyers, accountants, customs and freight brokers.· entering into contracts· Learning how to hire and fire employees, and discovering their rights under the employment legislation Some of these issues alone are documented business killers.

What is the Answer?

In the early days of the Internet there was a Dot Com Venture Capital boom. Millions of dollars were being invested by Venture Capitalists and private lenders into new start-ups. Some deals went well; others were disastrous.During this time, I read about a few Venture Capital firms who made the decision to nurture the business in which they were investing on many different levels. For example, the new start-ups were not only well-financed by lenders/investors, they were provided with office space sometimes in the same building as the lender or on the same floor. The owners and staff were given basic business training paid for by the lender/investors. They virtually had a professional venture capitalist holding their hand each step of the way.

Imagine one of Canada’s leading banks lending to new start-ups under a new training program. Before a potential loan applicant could even get an appointment to see a loan rep, they would have to complete a joint government and bank sponsored professional business course. A course available day, nights, or weekends to accommodate any schedule, taught by qualified business professionals who were not only teachers but were successful entrepreneurs in their own right. Entrepreneurs who focus not only on the written business plan but who could teach on all the expected struggles of running a Canadian business.

A course that could cover various aspects of industry, such as retail, construction, manufacturing, technology etc. In Canada we have subsidized housing for those who cannot afford to pay expensive rent. Imagine government-subsidized commercial space for new businesses trying to grow.Why should we expect the government to pay or assist with such training?

Every new business created is a new tax payer to our system. A company who will pay the government 50% or more on every dollar earned. Each employee who works at the new company will also pay an array of other taxes. An employee who is making money will also spend money into the economy.The failure of a company, from a government standpoint, is the death of a tax payer. It is in the government’s best interest to keep businesses alive and offer incentives for business to be created and to grow, so that jobs can be created. Giving out government grants to new start ups using well-designed business plans to the untrained and unqualified only increases the financial coffers of bankruptcy trustees.

Note:If your business failed in Canada, we would appreciate you telling us your story via our feedback of this blog. We continue to research and set up programs to help businesses grow and prevent them from failing.

Collection & Bad Debt Solutions

Collection & Bad Debt Solutions

Keeping up with customer debts, as well as maintaining an accurate record of payments received, are fundamental business elements. Often there are logical reasons for accounts not being paid and which are falling past the 90 days due date.

The Proactive Approach

Assessing the problem on a proactive level involves setting up systems and policies to stop collection problems from occurring in the first place.

It is essential, for example, to set up proper customer information and to have on file application forms with the data necessary to help you find your customers easily, if they renege on payments, go out of business or simply disappear.

Often extending too much to your customer in the way of product or services can result in a customer being unable to pay an account that was out of their league in the first place.

But how can you be sure of how much of your product or service you should extend?

When do you extend to the limit and when do you start asking for deposits or retainers?

Setting up a safe credit application program can make sure you are not extending too much of your product and service, to prevent the risk of not getting paid in full. In some cases this may involve working with the major credit bureaus.

How many times has a company gone out of business leaving you with nothing but an outstanding account and a disconnected telephone number? You try to collect, but if the company is out of business, how do you get your money? You try suing in court but because the company is an incorporated entity you are not allowed to sue or collect from the business owner personally. You spend thousands in legal fees only to obtain a worthless uncollectable judgment and an expensive legal bill.

What you may not know is that as a business owner you have the right to incorporate “personal guarantee” policies into your customer accounts on incorporated companies. This simply means that if the company goes out of business, the business owner can be held personally responsible for his account with you. This policy has to be set up properly when you open a customer account. It must also be set up sensitively, in order to gain a customer’s confidence, rather than hesitancy, in the transactions with your company.

The Reactive Approach

Assessing the problem on a reactive level involves exactly that – reacting to the existing problem at hand.

Get into the right frame of mind about collections. Here are some suggestions:

Third party collection agencies make telephone calls and send letters. That is all they are licensed to do. They may report the debt into the customer’s credit bureau file. But even if they do actually collect for you, they are going to take 1/3 to 50% of every dollar they manage to collect.

If you are lucky, they might manage to negotiate post-dated cheques over time. In many cases, you will send off your accounts and you will hear nothing back from them. Collection agencies generally have only about 20% success. If your company is a member of the credit bureau, you may be able to report your outstanding account into a customer’s credit file to leave a ‘black mark’ in their credit history, making it harder for them to get credit while your bad debt sits in their credit file.


If you want a skip trace to find the customer, or you want that customer to be sued in court, that collection agency, lawyer or skip tracer will be asking you for a deposit and perhaps a big one.

Keep in mind that millions of people are awarded judgments from the court that they can’t collect, simply because the customer has no assets. They spend and spend, trying to collect, but with no success. A secretary or admin person could perform a lot of these collection tasks with right knowledge and/or the right software.

Many companies hire in-house collection clerks on a part-time or contract basis. Many companies handle all their collection problems in-house. Even Small Claims court documents can be downloaded from the Internet. You don’t necessarily need any legal knowledge to go after your account in Small Claims court, if the debt is a simple, cut-and-dried issue.

The Small Claims court recognises that people who come into their court may not have any legal knowledge, and the court can be somewhat accommodating. Many companies handle simple Small Claims court matters themselves. They merely send a secretary or an employee from their accounting department to prove that the debt is outstanding.

Our objective is to evaluate your collection problems and determine what aspects could be handled most cost-effectively in-house, under a program we would design for you. We would also recommend which concerns should be looked after by third-party agencies, based on your budget and our assessment of how collectable we consider the debt to be.

www.corporatefactors.net