By now you have probably read some of the many articles being published on affinity frauds, Ponzi schemes and other fraudulent investment schemes. It is the scam du jour. But have you thought about why Ponzi Schemers would be so attached to a particular investment vehicle or a particular vendor who sells administrative services to "facilitate" that investment vehicle? Well, let's examine the long term, happy marriage of Religious Affinity Fraudsters, Ponzi Schemers and Self-Directed IRA ("SDIRA") Custodians. I am guessing, fortunately, that Ponzi Schemers like to faciliate frauds that are easy, quick and not too labor intensive. They want their money fast and with little effort. For those of you that have opened a SDIRA, generally speaking, your experience was probably that it was an easy, relatively quick and a not too labor intensive process. Perfect! In fact, the SDIRA Custodians offer to fill out the paperwork to open your SDIRA account FOR YOU! From the Ponzi Schemers Perspective-All the better!
And the SDIRA Custodians advertise that your SDIRA investment is safe, secure, audited, and inspected so you have no worries about your investment. But Wait! Is that true? Read the fine print on your 20+ page 8 point type SDIRA Custodian contract and you will find that SDIRA Custodians are responsible for nothing. Nothing. In fact as the SDIRA owner YOU are responsible for everything including any wrongdoing by the SDIRA Custodian! But from the perspective of a Ponzi Schemer or Fraudster-Perfect! If the SDIRA Custodian has no liability for anything then they won't care that their customers are being scammed. And don't be silly-it will be years before their customers find out they have been scammed and they will be able to collect thousands of dollars in fees to manage an investment that does not exist. Absolutely Perfect!
So you open your SDIRA with the help of your friendly SDIRA Custodian, then the nice SDIRA Custodian wires your money to the Ponzi Schemer never to be seen again. But no worries the SDIRA Custodian periodically reports on the value of your SDIRA so you know exactly where your money is. But Wait, is that true? Of course not. The SDIRA Custodian may actually tell you what the value of your investment account is by asking the Ponzi Schemer who stold it and who will provide a false value to the SDIRA Custodian who will report i,t with a great deal of authenticity and credibility, to you, the poor victim. Perfect!
What could be easier than stealing money from an investor and then telling the investor/victim that not only is the money still there but it is increasing in value so the investor does not ask any further questions about their investment? Perfect! Acutally that is beyond "Perfect" because it permits a Ponzi Scheme to be perpetrated for years or decades without the victims even knowing they are victims! Awesome!
Finally, what happens when you, the poor victim, find out that your money is gone and your SDIRA is worthless? Why you, of course, will owe quite a few fees to the SDIRA Custodian in order them to change the value on your account and close it. The SDIRA Custodian will also tell you in no uncertain terms that they are not responsible for your investment, will not help you find out what happened to your money, and consider the Fraudster who swindled you their client. Perfect!
So now do you understand why Religious Affinity Fraudsters and Self-Directed IRA Custodians have a Marriage Made in Hell? YEP!
And now you understand the logic behind my Michael Jackson Lawsuit. Amen.