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10 - 23 - 2013 Americans lose some $50 billion from swindlers peddling products every year. Many of these frauds could be avoided if more of us cast a skeptical eye on how the products are being offered. I recently received a series of emails from a reader describing one of the most convoluted and troubling stories I’ve heard in some time. “My 82-year-old mother bought [iraqi] Dinar about 6 years ago. A friend of hers told her that their entire church had invested in the Dinar and it was going to make everyone a millionaire very soon. She didn’t buy a lot of it, but spent about $6,000. She even got me to put in $1,000. I have it still sitting in my little safe. Its fun to look at but I have set my expectations fairly low on this currency ever making me a millionaire. After the stock market took most of my investment in 2008, I decided hard work tended to yield better results with my investments! A few days ago my brother contacted my mother and told her that he had gotten an inside scoop regarding exchanging the Dinar. He said that he was told that the US government was currently converting the dinar at an exchange rate of $8. I questioned this as it just didn’t seem to make sense. I mean isn’t the government kind of broke right now? He is not sure either, but says that he is being told this is a definite fact. At first she was told that she had to fly to Reno, Nevada but that has since changed and now it is to a military base in Washington DC? So close to the capital! When I google Dinar Scams – Reno pops up so I am inclined to think that this is just a new location for an old scam. I have told both my brother and my mother I think this is a scam. That they will take her passport and her identity. They will give her back fake Dinar that will look like the real one. They will then re-sell her Dinar and make a few thousand. But the real bonus is having her identity as well!” There are a number of fuzzy details that make this set-up even more bizarre, but it smelled fishier than a Maine trawler, so I told her to call law enforcement authorities. She then called the FBI and enrolled her mother in an identity protection service. “When I spoke to the FBI, they were unaware of the Iraqi Dinar scam (it was kind of like calling in to some local hotline and not terribly helpful). But the guy I talked to said that typically after the scammers have all the identity information, they fade out of the picture as far as making good on their promise. Right now, the good news is that she is not going to travel to DC as there has been no contract presented for the Dinar purchase. And so far, no movement on her identity. I’m just holding my breath….” My advice to this reader was simple: Avoid these people! Although there are plenty of legitimate Iraqi Dinar dealers, (they are all over the Internet), if you have to go to extraordinary means to buy the currency, that’s a huge red flag. No identity information should be necessary. While I can’t independently verify my reader’s experience, it raises a number of red flags. How to Avoid Scams Swindlers prey daily on the most vulnerable among us. According to a recent survey by The National Crime Prevention Council and the FINRA Foundation, those 65 and older were 34% more likely to lose money than younger Americans in their forties. All told, some eight in 10 respondents said they were solicited for a “potentially fraudulent offer.” One of the reasons that fraudsters succeed so often is that their “marks” often can’t identify the red flags of swindles. Here’s what they should ask: * Focus on Rate of Return. The U.S. stock market has risen about 20 percent this year, but neither is that performance guaranteed to continue nor is it “locked in.” Most insured money-market funds are earning well under 1 percent annually. If somebody promises you that you’re going to do better than a federally insured vehicle — or the stock market — simply walk away. A return figure like 110% is particularly suspect. * How Will the Return Will Be Achieved. Almost no returns outside of FDIC-insured accounts and U.S. Treasury securities guarantee principal. That means the risk level for achieving above-average returns is huge or unrealistic. Complex derivatives may be involved or it could just be a classic ponzi scam (remember Bernie Madoff?) * What is the Probability of Earning That High Return? At the very least, the seller should tell you how good your odds are. If they are overly optimistic, then walk away. The vast majority of risky investments never pan out. To achieve a high return, investors must be willing to face high risk — and lose all of their investment. * What Does the Seller Ask For? If they ask for bank account, Social Security or driver’s license numbers, they are trying to steal your identity so that they can buy things in your name. The key is personal identification numbers. That’s the tip-off to an identity scam. * Is Something Else Offered? Many swindlers will “throw in” a free meal or trip. They’re not interested in your company or educating you. They only want your money. If there’s one thing that swindlers don’t like is when their potential “customers” ask a lot of questions. That scares them, even when they offer patently false answers. But the more questions you ask, the more they will regard you or your loved one as a poor prospect, which is a good thing if you want to hold onto your money. http://goo.gl/Cu3uag

9 - 6 - 2013 As followers of the Iraqi dinar know, there are a lot of “updates” out there on the various websites that either sell or track the troubled currency. Most of this “news” is much ado about nothing. Iraq is on the precipice of a civil war with some 5,000 victims this year alone. It doesn’t appear that the country’s woes — partially unleashed by the disastrous American-led war — will be resolved anytime soon. In the interim, untold millions have been spent on speculating in the country’s currency, which is not traded on any legitimate foreign exchange and is worth a fraction of a dollar. The currency is so unpopular that many Iraqis prefer the buck. But that hasn’t stopped a plethora of internet-based “dealers” from selling the dinar as fodder in a get-rich-quick scheme. The ruse is simple: Get dinar buyers to believe that the currency will be favorably revalued soon so they can sell their dinars at a huge profit. While that may happen, it’s highly unlikely given the current political and economic situation. No U.S. bank will handle the dinar while dealers reap huge commissions and mark-ups. Yet rumors continue to feed this market the way a stoker feeds a coal-fired boiler. The latest rumor is that the Wells Fargo WFC -0.93% bank is setting up some kind of mechanism to buy the currency. I heard the rumor last year and it’s since resurfaced. But the bank wants nothing to do with the currency. Here’s a statement they sent me when I inquired (an email directly from Kate Ellis in Wells Fargo corporate communications): “Wells Fargo does not currently buy or sell Iraqi dinar and has no plans to do so in the future. When we provide banknote services to customers, it is generally for travel related purposes and we do not foresee a high number of customers traveling to Iraq for business or leisure purposes in the near future.“ What was the origin of this rumor? Whoever spread it was desperate to signal that a legitimate regulated entity was getting involved in the dinar trade, which, thus far, has been completely unregulated and beyond the reach of bank watchdogs. Keeping the Dinar Flame Flickering It’s clear that by ginning up news about the dinar, the myriad websites that are pushing dinars are trying to keep hopes up for the untold thousands who bought the currency. One of the ways the dealers keep the flame burning for the beleaguered currency is through “conference calls” where so-called “experts” report on developments on the revaluation front. When you google “dinar conference calls,” you get more than 60,000 hits. I get several alerts a day from sites claiming to have dinar “news.” One reader who contacted me (and asked to remain anonymous) looked into it further: “My friend’s brother gave him dinars, motivating us to start researching. We looked at the likelihood of a revaluation, then started looking at what is motivating them (the dinar site operators)…Many of them do not appear to be selling dinar on their sites. Plus, the only way they can make money on the difference is if there is a way to exchange. As you know, the only way to exchange is to fly over there (Iraq) with boxes of dinars, trade them for a box of U.S. dollars, and hope you make it back alive. Another way we thought they are making money is by pretending to sell the dinars. From what we can tell, everybody who has purchased dinars has received the currency. The only way we’ve been able to determine how money is being made is the free conference calls. I estimate the dealers are making at least $2,500 per day per conference call.” How do the dealers make money from conference calls? They may get a rebate on the cost of the call from telecommunications services. The longer they keep people on the line, the more money they make. Is this how the dinar dealers are profiting? I don’t know for sure, but it is a possible incentive for offering conference call services when there is no real news. Another reader told me he listened in to one of the dinar calls. Here’s what he heard: “The thing was I didn’t quite understand how these guys doing these conference calls are making money. One site had zero advertisements on the site to make any money; he didn’t seem to be pumping any particular Dinar Exchanger site and therefore it didn’t seem he is being paid by a Dinar Exchanger site (unless maybe he is being paid by all of them, which is possible I guess, but I think unlikely). But yet he was doing 3 or more conference calls/week where they average over 2 hours per call. That is a ton of work for nothing, so he has to be profiting somehow (he does have a donate button now, but that has only been there a week or so)…So I am speculating that they can see how many people are on the conference calls and when the callers started dropping off it means they are losing money coming in because everyone was dropping off (because they weren’t hearing the revaluation was happening.” Dinar-Like Dreams Can Be Nightmarish John Wasik John Wasik Contributor Dinar Deception Driven By False Hopes John Wasik John Wasik Contributor I have no way of independently confirming any of this, but I’m aware of the sites that offer conference calls and updates because I see alerts on them several times a week. Let me know what you’re hearing. Meanwhile, dinars continue to be sold and the chicanery continues. Criminal Indictments Last September four men, principals of a firm called the “BH Group,” were indicted for their alleged involvement in a $24 million dinar-selling scheme and two non-existent hedge funds. According to the indictment: “The conspirators promoted the dinar and non-existent hedge funds through the dissemination of a series of material falsehoods conveyed primarily through weekly interstate conference calls and through the conspirators’ web site, according to the indictment. False claims included statements about the U.S. Treasury Department’s holdings of dinar and involvement in the Iraqi dinar investment market, according to the indictment.” In Toledo, a class action suit is also pending against these operators. Toledo attorney Tom Pigott, who represents some of the investors, told me in an email: “These were people (the defendants in the suit)…who did the weekly conference calls. Originally they sold (dinars) direct. Later they set up an arrangement where they had people go to a website and put in a `coupon’ code. The BH Group is associated with Bayshore Capital (Florida). Bayshore was run by Rudy Coenen. The BH Group was selling dinar and with Coenen offering prepaid ‘seats’ in a hedge fund that was going to invest in all types of Iraq projects after the revaluation.” Pigott, whose friend invested in dinars and bought them through a man Pigott calls “Fred,” has much more detail on his website: “The Iraqi Dinar scam has been around since the first Gulf War…We see the use of experts, selling to affinity groups, claiming scarcity, stating that you have to act now to become an insider…All a scam. `Fred’ uses economics to explain how the Dinar must be revalued so that the country of Iraq can sell its oil. Fred tells you how it once was trading at three times the value of the dollar instead of the pennies it now trades. Fred neglects to tell you that the `value’ of Dinar to the Dollar was not set by the market, but by a guy named Saddam Hussein who set the value simply by proclamation. In this case, this is known as a hard currency scam. Hard currency meaning physical dollars. Fred makes his money by selling you actual Iraqi Dinars at a huge mark up. Typically they are sold at somewhere like one million Dinars for $1,200. Try to trade your Dinars in at a reputable dealer and they will offer you approximately $650 for your million Dinars. The other method to gain trust and reputation that Fred uses is to say that his company is a `registered currency trader.’ The closest I can get to a registered currency trader is a registered money service business. If you want to become a registered money service business it’s pretty simple: Just complete a form and if you complete it correctly and send it to the IRS you can be one. No exam, no training. What this business relates to is similar to a business that accepts Western Union payments. It has nothing to do with trading currencies.” The BH Group claimed to be a dinar specialist. Its website now states that it has suspended its conference calls due to “pending alleged legal issues.” In the online statement, chairman Brad Huebner (also indicted in the above case) says: “This action has nothing to do with the legitimacy or sale of the dinar and you’ll be informed what appropriate actions to take once the Re-valuation occurs. I look forward to have a chance to defend myself, but until then thank you for your prayers and support.” Speaking of prayers, in the interim, pray that peace comes to Iraq (and to their Arab neighbors to the west), but don’t buy their currency. Buy some U.S. stocks with consistent dividends. They are a much better bet. http://goo.gl/qyLbK0

7 - 31 - 2013 What is it with currency scams these days? Are these the boiler room flim-flams of today? Lately I’ve been seeing operators moving to peddle the Egyptian Pound in addition to the Iraqi Dinar and Bitcoin, the digital currency. I’m rooting for democracy as much as anyone for troubled countries like Egypt and Iraq, but I don’t see a quick resolution to their political and economic problems. According to WallStreetDaily.com, “marked by high poverty and unemployment rates, domestic debt totaling $187 billion and chronic corruption, Egypt is perfect example of a country not to invest in…Now I’m not saying that the Egyptian pound will never be a viable option, but if anyone tells you now is the time, don’t listen.” Sure, if you want to be a contrarian, buy the Egyptian pound or stocks and see what happens. Just keep in mind that there’s more downside than upside at this point. That brings us, once again, dear friends, to the Iraqi Dinar. If you’ve been following the headlines in that distressed part of the world, you might notice that their economy is in a shambles and there’s a civil war raging. Of course, the U.S. invading and pulling out had something to do with that, so American taxpayers can share some of the blame. Yet there’s no sound reason to believe that the dinar will be revalued in a favorable way to investors, rewarding those who have bought millions of the paper currency. The Iraqi Parliament and Central Bank have discussed revaluing the dinar, but the odds are greatly against it gaining much against the dollar or euro. It’s still not traded on foreign exchanges and the short-term outlook is bleak. It’s not to be confused with the rebound of the Kuwaiti dinar, which came back strong after George Bush I’s first gulf war against Iraq. If you can’t place your faith in a disjointed oil-based economy, then what about the digital realm? Enter Bitcoin. Bitcoin is a digital currency traded online. It’s not backed by gold, pearls or even the full-faith-and-credit of Washington. I’m not quite sure what it’s backed by, so perhaps you can inform me. While I like the concept — eliminating paper currency altogether — you can’t have a currency based on an opaque sense of what other people online say it’s worth. One telling sign that Bitcoin is a little fudgy is that the Winklevoss twins of Facebook (FB) fame — they claimed to invent the social network — have filed to open up an exchange-traded fund that holds $20 million worth of bitcoins. Unlike an ETF like the SPDR Gold Trust (GLD), which physically holds bullion in a London vault, the Bitcoin ETF will “own” the virtual currency. How do you possess something that only exists in cyberspace? Perhaps George Lucas can do a Star Wars sequel to explain it to the masses. http://goo.gl/CwE5a0

Postscript. After reading several good comments on this blog exposing the buy Iraqi Dinar get rich quick scheme as a scam, I want to make it very clear that I also believe it’s a scam. My intent for the original blog was to answer tax questions about holding physical currency as an investment, not to drill down into the Iraqi Dinar scheme. I may do just that in a follow-up post soon. -R.G. Read More Here: http://www.forbes.com/sites/greatspeculations/2011/07/27/is-the-iraqi-dinar-worthless-paper-or-maker-of-millionaires/