PIPS - The unofficial FAQ (update 13)

(updated and reorganized)

This FAQ intends to expose some common misconceptions about PIPS. You will have trouble getting answers to the questions asked here in the Official literature, so we thought it useful to provide these answers to you.

Also, this article will be the last o­n the PIPS series so as not to monopolize the site (except for a further o­ne when PIPS implodes). Any further developments will be added to this FAQ so check it out if you want to know more.

Do legit $1 Billion dollar companies have o­nly weekly backups? Do legit $1 Billion dollar companies lose 1 week of data and transactions? Do legit $1 Billion dollar companies after losing the data keep mum about it officially?

No, no, and no. Yet, PIPS lost data from 31st January to at least the 5th February 2005, in their words due to a Oracle bug. This included both transaction data and user data. All of it completely wiped out yet the company does not contact its "loaners"/members/investors telling them what happened. They o­nly find it out through member updates in their forum. And this is supposedly a $1 Billion dollar company. How obvious can this get?

Do banks sit o­n 2 months of wire requests from large corporate customers because a branch "can't handle the volume"?

No. EON bank is perfectly capable of servicing PIPS, as any other medium sized bank would be. No bank would ever sit o­n 2 months of wire requests from a large corporate customer, those requests would be handled at a central location if needed be. And besides, if there were 1000 wires to be done per day, that would be $15000-$20000 in DAILY business the bank would be sending away.

Check the wages in Malaysia and you'll understand why that kind of business would not be turned away.

If you really doubt EON can handle PIPS volume, call them at their headquarters:

HEAD OFFICE

21st Floor, Wisma Cyclecarri, 288,

Jalan Raja Laut

50350 Kuala Lumpur

Telephone : 03-2691 0200 (10 Lines)

Facsimile : 03-2698 5388/2692 7488

Website : www.eonbank.com.my

I can't log in or get money out. What do I do?

Once PIPS implodes, you will need to contact Malaysian authorities with the hope of recovering a small part of the money lost. Bryan Marsden and some of the PI companies should still have some assets that might be divided between those scammed by this scheme.

To contact the Malaysian securities regulator (SC), you can call the Securities Commission (Complaints Unit) at tel 03-6204 8999 or e-mail aduan@seccom.com.my .

Is everyone related to PIPS based in Malaysia?

No. Many people promoting PIPS are based outside Malaysia, they run clubs devoted to promote the scheme, for instance. o­ne of the people working for PIPS censorship department and deleting every bit of truth in PIPS forum is actually based in Nebraska, it might be important for you to keep his contact handy for when PIPS finally implodes. We just got this out of PIPS forum:

"Once PIPS implodes, you will want this important info so you can call this guy and ask him why he defended it so hard and why he deleted so many posts telling the truth:

Nicholas Mark CEO, Impact My Life 402-496-4181"

Why is PI changing Banks and not accepting Credit Cards anymore?

The entities handling the Credit Card transactions and Banking Transactions (HSBC) have finally caught up to the true nature of PIPS. We have confirmed that HSBC is declining incoming wire transfers into PIPS o­n the grounds that PIPS is an "internet scam".

Are we the o­nly o­nes that see PIPS for what it is?

No. It is our most sincere belief that anyone with a modicum of knowledge in mathmatics, economics, finance and business will have the same opinion as we do.

Also, just yesterday (11th December 2004), PIPS got their first exposure in a reputed newspaper. The Guardian just wrote a skeptic article o­n it. Although this article is filled with incorrent facts about PIPS (the PIPS returns, even if outrageous, are smaller than the o­nes quoted in the article), the conclusion is right: it is a ponzi scheme: http://www.guardian.co.uk/guardian_jobs_and_money/story/0,,1370962,00.html

One thing stems from this article: then this type of fraud gets in the big newspapers, the regulating authorities have a much harder time ignoring it.

What am I doing with PIPS? Am I investing or loaning them money?

A curious thing just happened. In a story in Business Times (http://www.btimes.com.my/Current_News/BTimes/Saturday/Nation/20041210233937/Article/), Bryan Marsden put the PIPS Inc revenues at $205mn yearly. Now, if you look at Pips Inc 11 "brick and mortar" businesses, the first thing you'll notice is that they've mostly just been launched or are in the process of launching. Which means the $205mn in yearly revenues can o­nly come from o­ne source: member contributions.

Well, then that means member contributions are being accounted for as revenues, not as loans or investments (which wouldn't go through revenues, they'd just go into the a balance sheet as either liabilities or equity). Which means members are neither loaning nor investing money. They are paying for a service/goods as per Pips Inc's accounting! Clearly, there is some funny accounting going o­n, which is what was to be expected, given that the whole thing is a Ponzi scheme.

ROI is paid daily, isn’t that a proof that PIPS is for real?

No. ROI is not money. ROI is just a book keeping entry. That means pureinvestor.com can pay as much ROI as it wants, forever. They could “pay” more ROI than the entire World money supply, because they can manufacture it out of thin air. If needed be, they could pay ROI at a rate of 1000% per day, and PIPS would still be viable (as long as withdrawals were kept low in spite of a surging ROI).

Pureinvestor.com has offices, isn’t that proof that PIPS is for real?

No. The most successful Ponzi Schemes all had offices. Charles Ponzi himself had offices, and the MMM scheme in Russia had as many as 30 delegations and regularly used mainstream media to publicize its scheme. So having offices doesn’t prove PIPS is for real.

PIPS pays its withdrawals and there are a lot of people that have withdrawn more money than they put it, doesn’t that prove PIPS is for real?

No. Every successful Ponzi scheme pays their withdrawals for a while, or they wouldn’t be able to attract more investors. And in large Ponzi schemes, a lot of people withdraw considerably more than what they put in, that also attracts new investors and gives credibility to the scheme. But it proves nothing, because a Ponzi scheme can easily be kept alive as long as withdrawals are smaller than the money intake from new investors (and even for a short period after that point is breached).

PIPS has 11 brick and mortar companies making money for PIPS members, doesn’t that prove PIPS is for real?

No. The most successful Ponzi schemes usually get credibility from some underlying business. Charles Ponzi for instance based his scheme o­n a supposedly very profitable arbitrage between stamps of different currencies. Having “real” businesses takes away the focus from the obvious impossibility of providing the returns promised out of trading the markets. It is important to take the focus out of this, because many people are aware that hundreds percent returns in the markets do not come easily or reliably.

PIPS is audited twice yearly, doesn’t that prove they are legit?

No. For starters, even if they are audited, the auditor’s report is not made available. If the auditor’s report is not made available, you cannot know what the auditor’s conclusion was. They could be audited and the auditor could say “this is not viable” and yet, you would not know it. Until the auditor’s report is made available, this means nothing. When the auditor’s report is made available, you’d still have to phone or contact the auditing firm to know whether the report really came from them.

Bryan is all over the world, he doesn’t hide, doesn’t that prove they are legit?

No. The most successful Ponzi schemes, like Charles Ponzi’s or MMM, all had public, well known officials. So having Bryan be well known proves nothing.

PIPS is not a MLM, doesn’t that prove they are not a Ponzi?

No. A Ponzi scheme might not be based in a MLM (multi level marketing organization). Indeed, Charles Ponzi, the original, has nothing to do with an MLM. The defining characteristic of a Ponzi scheme is paying some member’s returns from another member’s capital.

Rich people can get PIPS returns, you o­nly need enough money, isn’t it?

No. The rich can get into investment vehicles that usually outperform the traditional investments like Mutual Funds. These are called Hedge Funds, they are more lightly regulated and at least for the past decade or so they’ve been able to outperform almost every other category.

However, as you can check in www.hedgefund.com, hedge funds o­nly go so far. A good return in a hedge fund comes to an average of 10-20% yearly, and the very best might have runs averaging 30-40% over a number of years. But none of them gets 100% or more average, and they all have a lot of volatility in their returns.

PIPS, however, is promising hundreds percent of return without ANY volatility (the returns are achieved in a straight line). This is not possible anywhere in the investment world, no matter how much some might harp.

If any doubt remained, a look at a Forbes listing would remove it: the richest people in the world are listed there, and their networth doesn’t increase nearly as much as anyone using PIPS could theoretically achieve. If they are rich, why can’t they do it? And if PIPS can also be subscribed by rich people, why is it that they don’t (the largest contribution according to Bryan was $300000)? Because rich people usually know what they’re getting into, that’s why.

The 11 brick and mortar companies make the returns possible, don’t they?

No. Most of the 11 companies listed by pureinvestor are starting up or growing. Companies at that stage have to invest, and thus they consume money, they don’t throw off money. So they can’t be making the money that pureinvestor claims they are.

Furthermore, PIPS is supposed to be a loan. Now, profitable companies can easily finance themselves at market rates, something around 8-10%. WHY would such profitable companies choose to finance themselves at hundreds percent per year? Answer: they wouldn’t.

Why do the 11 brick and mortar companies pay 500%+ for the loans instead of 8-10% if they are profitable?

Because, either they are not profitable, or they are profitable but they’re o­nly an excuse to make members think PIPS returns are possible.

This question has been asked to Bryan, and obviously he didn’t have any sensible answer for it.

But, PIPS has been reviewed by the SEC, hasn’t it?

No. PIPS has not been reviewed by the SEC since the SEC makes no mention of it. If SEC approves, licenses or reviews any business, they publicize it. It’s their job. That’s they way they foster investor confidence. If you want to know if some broker or investment vehicle is legit when they claim to have been registered/licensed/reviewed by the SEC, you just have to check www.sec.gov for them. PIPS does not show, hence PIPS wasn’t reviewed by the SEC.

Granted, PIPS is based in Malaysia and is outside SEC’s jurisdiction. However, people promoting PIPS in the USA aren’t.

Is PIPS audited by Ernst & Young?

No. PI claims that they will be audited by Ernst & Young in the future, but they haven’t been yet. And even if they were audited by Ernst & Young, you would still need to see the auditor’s report for it to have any value.

Is the Pureinvestor 5YIP insured by Allianz?

No. PI’s own staff do not confirm that even though Bryan seems to have said it at some meetings. PI’s own staff claims that the insurer is still being selected (even though the program is open and supposedly insured already). We do not find it likely that any well known insurer would insure such an mathematically impossible plan, but that remains to be seen. Meanwhile, contacts directly with Allianz have also produced the same answer: they are not insuring the program, they never heard of the program. they’ve been getting a lot of calls about the program and they think it’s a fraud.

Is PIPS sustainable for 5 years?

No. For PIPS to be sustainable for 5 years would imply that the present capital allocated to it by members (approximately 300 million USD) would grow to the size of a large nation’s GDP in just 5 years, 3-6 times larger than Microsoft, 4-8 times larger than Wal Mart. And that in 5 years is simply impossible. Which means that PIPS crashes before then. Our own opinion, based in similar programs, o­n the numbers publicly available, and the o­ngoing withdrawal problems is that PIPS will last anywhere from a few weeks to o­ne year.

Does PIPS do its own trading?

The part of the returns that Pureinvestor claims doesn’t come from the 11 companies, is supposed to come from trading. Do they do their own trading? No. They, according to their FAQ’s, “Pureinvestor Trading is contracted out to independent Traders o­n a performance basis”. So where are these independent traders? As we have seen, the hedge funds themselves cannot meet the kind of returns PIPS offers, and they have the absolute best traders, yet pureinvestor claims to have found not o­ne, but several, traders that are able to outperform the entire world and yet remain anonymous. This is impossible, because there are many much larger than PIPS hedge funds that would contract these traders if they existed, and would pay them more than PIPS ever could. Yet, the hedgies can’t find and contract them, so they can’t match PIPS’s returns. This is another clue about the truth.

Do IT Migrations always produce this kind of trouble?

No. How many times have you seen a $750 million o­nline business go offline for more than a week just because they were migrating servers? Zero. This is a very un-professional organization at work here, yet everybody is believing that they are producing returns that no o­ne else in the world is able to replicate.

PIPS is licensed, doesn't that show it's legit?

Supposedly, PIPS would have been licensed by LOFSA in Malaysia. But no, it's no longer licensed by LOFSA even though if you ask for a license, you'll be shown the LOFSA license. According to LOFSA, the license was revoked. According to the Pipsters PIPS is now licensed in Panama. Which begs the question ... where in Panama?

Does Bryan have a past of trying to build Pyramids?

Yes. Both known (the matrix/clone system, Golden Womb) as well as a variety of less known schemes, such as: - CEO Discount Malaysia - The Referral Machine. - Promote-n-Pay - Ads4pay. - nmbc - Allgoods worldwide superstore - AdMania Safelist Thus we know for sure that although Bryan was never a Finance Genius able to provide impossible returns at an impossibly low level of volatility, he was well known for building pyramid-like schemes. Now, did he suddenly turn into a Finance Genius just before launching PIPS?

Who are you trying to save? What is your agenda?

The following comment was made by www.talkgold.com, and it relates to FLO, a scam much like PIPS:

"The Freeland Opps fiasco continues. Many members seem to be in denial that the program is gone. The admins and mods of the program continue to promise refunds and a new private program, however these are all empty promises. We have seen programs go down this route all too many times. It is really ashame to see so many people, new to HYIPs, who had took loans, mortgaged their homes, and their families homes in order to get into this program. We have even heard stories of suicide. :( "

I've seen PIPS companies registered in http://www.ssm.gov.my/findroc.htm, doesn't that prove they are registered with the Malaysian SEC and legal?

No. That site is a commercial registery. In every country when you incorporate a company you have to register it somewhere, but that register does not involve any scrutiny of the company's activities. It is NOT the same as registering an investment vehicle with the SEC or another securities regulator, where due diligence by the regulator is performed. The o­nly thing being registered at http://www.ssm.gov.my/findroc.htm proves is that the companies exist, and that was never in doubt.

The Malaysian Securities regulator is at http://www.sc.com.my, and if you search their site for "Pips", you will find nothing.

Where did all the Trolls go? & Why are all the Trolls just a few days old?

There are some things o­ne shouldn't need to explain, but here it goes. Trolls are gone, and Trolls are o­nly a few days old for the same reason: they get deleted and banned by the PIPS Forum administration, the same way that posts containing unconfortable facts get deleted.

Why doesn't Bryan/pureinvestor sue me for defamation?

It's simple. Because the first thing I'd ask for to make my point, would be bank statments and auditor's reports. And with those, the fraud wouldn't last for more than 10 seconds. And any court would understand my request. Besides, I would also use the figure of "litigância de má fé" (bad faith litigation) to get me some money out of him, if he did sue.

Warren Buffett did it too, so it’s possible to get these returns, right?

No. If you visit www.berkshirehathaway.com, and read the latest letter to his shareholders, you will notice that over his entire 29 year history, Berkshire Hathaway achieved a 22.2% yearly compounded return. And his best year was just under 60%. He also had a lot of volatility.

PIPS claims to be able to produce 500% or more per year, with no volatility. That the difference to Berkshire Hathaway is so staggering should in itself be self explaining as to how possible it is.

If PIPS is so bad, why are there so many people ready to defend it?

You have to understand the nature of a Ponzi scheme. In a Ponzi scheme, the earlier members get paid with the money from the later entrants. So, everyone invested in PIPS has a large incentive to suppress any doubts about PIPS, so that the money keeps flowing in. If it were a legitimate business, the participants couldn’t care less about naysayers. As it stands, they MUST care and suppress dissent, because dissent might keep new entrants from joining, and that would speed up the end of the scheme.

It quacks like a duck, it walks like a duck, but can it not be a duck?

PIPS is part of a new internet phenomena called the HYIP (High Yield Investment Programs). Virtually all of these are scams, but since PIPS outlasted most of its peers, it is said that PIPS isn’t a scam.

However, PIPS has the same trait as all the other programs, namely promising an impossible yield over time. That it lasted longer comes from just 2 reasons:

1) It is harder to withdraw money from PIPS than from other programs;

2) In a large population, some of the programs are bound to last longer.

It should be said that PIPS is not alone in lasting longer either. A huge program folded last year, Nova Lights, that lived for about the same time as PIPS. It was, obviously enough, a scam. It also had server migrations, withdrawal difficulties, cheerleaders and everything else.

Are there any clues as to when PIPS might fold?

Yes, there are. But they’re hard to read since o­nly Bryan has all the facts. The best we can do is speculate o­n the “when”. For instance, any member of PIPS will have noticed that in the last few weeks it has become harder and harder to withdraw money for a multitude of reasons, such as fraud, migrations, verifications, etc, etc. That’s a clue.

Another clue comes from PIPS own numbers. We don’t know how reliable these are, but we do know that they claim that PIPS 2% funds were growing much faster just a few months ago, than in October. In October, PIPS 2% funds grew o­nly 30%. 30% seems a lot, until you consider that if left alone just compounding, they’d have grown by 38%. So any time the monthly growth falls below 38%, the likelihood is that withdrawals started to match intakes from new members. Ponzi schemes usually fold not long after that point, cause withdrawals will keep growing exponentially. However, we don’t know how reliable these PIPS figures are.

Can PIPS be for real in spite of this all?

The answer here is a resounding NO. “This time is different”, when applied to impossible odds (just like in the tech bubble), always proves that this time was not different.

We are not predicting the future here. PIPS fate has already been sealed. PIPS fate was sealed not long after its creation. It must be said that many of these programs do start honestly, Charles Ponzi’s supposedly started honestly, but the sheer compounding implied in the interest rates offered makes the endgame inevitable. We do not know whether PIPS started out honestly or not. We do know it won’t be finished honestly. It can’t, by design. The funds that people think they have in ROI do not exist in reality.

So what can I do if I’m a member?

You can try to withdraw money. o­nly the o­nes that withdraw more than they put in will come out as winners.

And what should I do it I am not a member?

You should understand what PIPS is, and if you decide you want to try and get in and out before it implodes, you will do so informed, instead of thinking that PIPS is a whole new honest investment scheme. It isn’t.

Is there a way to disprove this entire article?

Well, have Ernst & Young audit your books, and register the scheme with the SEC. That would be enough. That won’t happen.

Is there a way to prove this entire article?

Yes, it will be proved by PIPS’s implosion. But when that happens is open to speculation.

Author

Incognitus, 2/11/2004

Comments

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