ATM Fraud and Due Diligence
Valerie Killifer writing for that ATM Marketplace has a story on individuals who may have been burnt by an ATM business opportunity, "an ATM venture which promised $1 on every transaction, with placements guaranteed to turn between 240 and 450 transactions per month." (my emphasis) Last September, a pair of distributors sent $41,000 to One Source Solutions LLC, a California-based ATM placement company. This again is the standard securitization of a business opportunity fraud. that Pantheon engaged in. A Denver paper and previously reported this fraud in late May, 2006. The Court Order referred to in the story can be read here.
The rest of the article discusses other ATM scams, and a securities regulator opines that nobody should be investing in one of these companies, unless the company is operating under the aegis of the SEC. The latter advice is relatively worthless and only expresses the typical frustration regulators have when facing frauds that should have been avoided. "If they would have only phoned us." is the typical lament. Unfortunately, this disguises two uncomfortable facts: a) individuals purchasing unregistered securities, don't know that the investment is a security, and b) security regulators do not give advice out about the quality of the investment.
The article lists (3) warning signs:
"You will receive a high return on your ATM investment." -- The higher the return, the higher the risk
"The investment is guaranteed. You can't lose money." -- No investment can make that claim.
"We will place the ATM in a high-traffic location, like a casino, airport or convenience store." -- Know the specific location, since many of those high-volume sites have already been cherry-picked.
But there other specific warning signs for this company. What are they?
First, the company according to the California records is a Nevada company, and according to Nevada the company is managed by a company called SILVER STATE MANAGEMENT SERVICES LLC. Since none of this was disclosed, or the fact that the company is brand new, and that the alleged principles appear to have nothing to do with the company, this company and its promoters are going to be impossible to find. Very bad sign.
Second, the company by using industry standards regarding vend transactions, anchoring you to a distribution of proft, is actually violating one of the proposed new sections in the FTC's Business Opportunity Rule. Very bad.
Third, there is a confusing identity with a real company, see here. Not good.
Interestingly, none of the individuals who discussed this on the ATM forum, here and here, made any of these connections.
The real question is how were the Colorado investors related? How were they contacted?
