STOCK GENERATION
UPDATE - January 5, 2000:
It appears that cracks are beginning to show in the Stock Generation facade. We have been receiving an increasing number of emails from players who claim to be unable to access either their original investment or supposed profits. An increasing number of articles have appeared in the media condemning the game as a blatant Ponzi scheme. The company is telling an increasing number of players that they will not be paid.
Julius Timothy, the Finance Minister of Dominica, where the game is registered has started an investigation. ''We've had a lot of complaints,'' he was quoted as saying in a USA Today article. Letting the Web site stay in business could hurt the island, which is seeking to become an offshore banking center, he said.
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To all you promoters of the "game" who claim to have made money, thank you for your email. Sorry that I am cutting into your "affiliate" sales. For those who are being approached by those pushing this program, ask the person who's trying to sell it to you how they profit. Your money allows them to collect their winnings.
UNTIL SOMEONE FROM STOCK GENERATION ANSWERS MY QUESTIONS AND PROVIDES FURTHER INFORMATION ABOUT THE "GAME" MY OPINION REMAINS UNCHANGED. STOCK GENERATION IS A PONZI SCHEME. If it were offered in any of the developed countries it would be illegal for that reason. See definition of a Ponzi Scheme below.
I have seen these types of programs offered on the Internet before and just because you have been paid does not mean it is not a Ponzi scheme. The Oxford Savings Club (Antigua) ran on a very similar program until it was issued a termination order by the SEC.
AS LONG A PEOPLE CONTINUE TO PUT MONEY INTO THIS THING SOME WILL GET PAID. To entice folks, the promoters pay the early entrants generous returns and bonuses but will leave later players high and dry (which is a classic Ponzi scheme ploy). That means it could collapse at any time.
The web site claims that if someone had put $1 into Company 11 on January 1, 1998 (when it apparently started) it would now be worth $241,677.67?!!! Can someone tell me if there is any other way this thing makes money other than by people putting money into it? Perhaps some earlier players have made some money but in the end the majority will lose. Why do you think "there has been a substantial fall in the rates of growth in the profitability..." as per their warning at http://www.stockgeneration.com/newbonus.cfm ??? Do you think that perhaps the promoters are taking an increasing share of the winnings or are more players cashing out? What do you think will happen when more money is taken out of the program than put in? Unfortunately, its the people who can least afford to lose that get caught by such programs when the music stops.
Ponzi Schemes
In 1919, a guy named Charles Ponzi convinced about a dozen people he could make them 50% profit in 45 days by an international trading scam. And sure enough, at the end of 45 days, he paid off. Each person got exactly what was promised, $375 for each $250 they invested. When word spread of this great opportunity, thousands ran to give Ponzi their money.
What he was doing, of course, was using the money from the newest investors to pay off the oldest investors. As long as the crowds kept getting bigger, he was okay. He skimmed money off the top and started living high on the hog. Eventually, in 1920 the whole thing collapsed. and he went to jail for 10 years.The Internet is allowing a new surge in the number of Ponzi schemes being promoted to unwary victims. Particular offshore havens known for lax regulation are part of the plan because they allow the promoters complete anonymity and banking secrecy to hide their ill-gotten gains. One program we saw asks victims to invest a minimum of $25 to be paid back $1,000,000 in eight years. What do you want to bet the promoters won't be around when it comes to pay-back time? The problem is that the more patient the scammers, and the larger the pot. There are also many more victims!
Promoters increase the number of participants by paying out promised returns to early participants. As in the case of Charles Ponzi, this creates a stampede of victims wanting to take part. Like a pyramid scheme, those entering the program later, get left holding the bag.
1) How does the "game" generate money? From what I can see, the only way of paying back early investors is from the proceeds of those investing later which means it's a Ponzi.
2) I have been challenged by those promoting the game to show them anyone who has lost money. I have also been told that it is a gambling game and people lose money. If there have been no losers to date (which I find highly suspicious), where does all the money come to pay participants? Someone must lose. I suspect it will be those joining the game later but no one (except the promoters) will know when this will occur. Another indication of a Ponzi scheme.
3) Has anyone posted odds of winning? All gambling games are required to post the odds of winning. I have been unable to find this anywhere on the StockGenereation site. If it is a Ponzi scheme then the odds are dependant on the number of folks entering the game and how much money the promoters are taking out of it.
4) Does anyone know who is behind the game? One of the reasons for going offshore is to keep this information secret. The danger of this is that when people lose money it is next to impossible to track down those behind the scheme.
Read the interesting story about Charles Ponzi. It could be the story about Stock Generation or any number of incredible high-yield "opportunities" offered on the Net.
IF YOU HAVE PUT MONEY INTO STOCK GENERATION OR OTHER SIMILAR PROGRAM AND HAVE EITHER NOT BEEN PAID AS PROMISED OR HAVE LOST MONEY PLEASE EMAIL US AT net@goldhaven.com
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