Don’t pay your Royalty fees: Pay mine instead.

December 10, 2008


Whenever you hear your lawyer say those words, you should:

  1. stand up,
  2. clear your throat and say in a clear, proud and noble voice
  3. (when he questions you why you are urinating in his ear):
  • “Les Stewart told me to do this.”

His brain is on fire because of the bill collector: You’re doing him a great service.

What you are doing is technically illegal but is entirely justified. Chances are you’ll never be brought forward on account of the reporting policeman’s laughter.

If he sues you, God doesn’t have enough bandwidth to handle how quickly his Statement of Claim .pdf would be sent around the legal world’s  community.

  1. Lawyers are the most incestuous, unhappy, vain, catty group of individuals on the face of the earth.
  2. The franchise bar? Same times gazillions.

Your advocate is a liar, a scoundrel, is counseling not a criminal act but is intentionally sabotaging your claim and has breached their fiduciary duty.

  • Reporting his conduct to appropriate Law Society (in Ontario that would be the Law Society of Upper Canada: what they lack in ethics they make up in in officious naming exercises). It won’t make you any money but the resulting website’ll send a message will be reward enough.
  • btw: This is the same union that maintains that sleeping with clients is not an ethical issue. The physical as opposed to the economic act being differentiated here, I suppose.

Pawn Store example: A little birdy told me about a group of pawn store franchisee that were spun this con by their “brand name” Toronto franchise lawyer. Because the franchisees didn’t bother to call me 1st, they followed his advice.

When entirely reasonable claim surfaced at Trial, the Ontario Justice  just exploded: At the franchisees.

  • The Justice did not look at the cause of breach (based in time, space: the relationship).
  • He simply saw franchising as a spot-trade type contract (complete) and saw one side’s blatant breach (franchisees’ not paying) and that was enough to get the case off the docket.

Every sentient lawyer knows that franchisees have to vestal virgins (pay every cent, cross every “t”) as soon as a dispute become serious, even though the franchisor is the worst whore imaginable. Breach a technicality and your cheap knock-off Charles Manson franchisor is out on unsupervised day parole at Discovery Day.

This goes to the heart of the difference between:

  • a Court of Justice (which most franchisees think they are in) and
  • a Court of Laws (where the Justice can use any pretense to get clear the docket.)

I have a good deal of sympathy for judges: The law has never been appropriate for the sorting out of franchise disputes. It is only used as a mechanism for filtering out disputes (ie. franchisees “settle” because of their impending bankruptcy). I think a simple paper-rock-scissor contest, best out of three would be preferable. Instead of the unprofessional fees, hookers and Vegas. Marginally less demeaning then listening to your own lawyer threaten you for the next payment, but that is for another day.

If you know of any lawyer that’s running this con by saying: Pay me instead of your franchisor

  • let me know too.
  • I collect these stories and I promise not to tell anyone.
  • Honest.

Note: If you receive a set of ear muffs as an office gift…

Undue Influence: The Case of the AUS Professor

October 20, 2008

Publicly funded institutions can become co-opted or captured by special interests.

Some university faculties have a better or worse reputation for pandering to special interests when compared to other disciplines. Business schools are not well respected by other faculties for their independence of thought.

I’ve seen it at my old school and confirmed it in other universities as well.

The Greeks defined 3 modes of persuasion:

  • logos (reliance on facts and figures: can be true or false),
  • ethos (authority, honesty of speaker, morality), and
  • pathos (appeal to emotions, sense of injustice, outrage).

Franchisees appear in front of public hearings and rely almost entirely on the rhetorical device of an appeal to justice: “It’s not fair that they did this and that.” Policy makers listen and judge its “truthiness“.

  • Generally, their narratives are concrete, visceral and credible.

Big Franchising responds if they have any remaining credibility, directly with at times shaky logos and ethos.

1. Consider the following article in Australia’s SmartCompany: Survey reveals drop in franchising disputes as franchising inquiry continues.

It says:

A new survey of Australia’s $130 billion franchise sector has shown disputes between franchisees and franchisors have declined, with just 2% of Australia’s franchisees classified as being in dispute.

Let’s stop there and list the persuasive assumptions that this single sentence relies upon:

  • survey: a scientific, logical, rational, independently verifiable academic study that is reviewed by other academics [did it appear in a refereed academic journal? no],
  • $130 billion sector: size matters: infers that big = successful, growth is good [uses social proof, is a huge credit crisis and run-away cancer growth good?],
  • declining number of disputes: situation is getting better [what is a dispute? how many have abandoned? is the mean dispute big or small?],
  • just 2% of franchisees in disputes: tiny problems, inconsequential, minuscule [can use anchoring to deceive].

This opening sentence is strictly a blatant misrepresentation, lacking in any connection to formal logic or any verifiable measure. The “just 2%” is a hallmark give away as to lack of any journalistic standards or any pretense of editorial oversight. Shame on SmartCompany but why is a university named?

If the 2008 Report is similar in method to the 2006 Report, it may be junk science: bought and paid for by its funders, the Franchise Council of Australia. Franchisor-controlled associations are well-known for blocking any changes to a statute, regulations and public regulatory body mandate.

You decide.

2. Next, let’s take a look at more detail into the role of the Griffith University. See the FCA’s media release: THE POWER OF ONE STRONG SECTOR REVEALED IN POSITIVE RESEARCH FINDINGS

Authority is clearly defined as another Weapon of Influence by social psychologist Robert Cialdini that can be applied to universities. They can be used to give the impression of academically rigorous research when really the work is simply a consultant’s report.

  • I don’t begrudge business admin profs or their peers earning the vast majority of their income from consulting to one or the other industry.
  • What I wonder is whether it is appropriate for an academic to overstates their conclusions (either intentionally or unintentionally) during a time of national lawmaking?

    You decide if Professor Powell has exercised undue influence or abused his duty:

    “The continued growth and maturation of Australian franchising is impressive, particularly considering the current economic outlook, a recent change of government, and a franchising sector that has faced close government scrutiny” said Professor Michael Powell. Pro-Vice Chancellor (Business), Griffith Business School.

    Did Professor Powell interfere with the Parliamentary Joint Committee on Corporations and Financial Services’s Inquiry into the Franchising Code of Conduct? I checked the 140 written submissions and didn’t see his name.

  • The test could be: Did he know or would he be reasonably been expected to know that his publicly funded authority could be used used to influence [inappropriately interfere?] with the operation of a  parliamentary committee?
    1. True scholastic work is published in refereed professionally-recognized journals to ensure high quality (an editor and reviewing peers, correct methodology, usually a very, very narrow scope, transparent auditing, meets ethical and conflict of interests standards, vetted before publishing, etc.). There is a whole series of checks and balances to weed out biases [innocent and not so innocent].
    2. Consulting work, no matter how many PhDs are piled up, has none of these centuries-old safeguards in place.
    • Blurring these lines is not fair, especially during a time of a fairly controversial public lawmaking process.

    Academic research is a credence good and as we have seen, is susceptible to cheating because “Joe Public” cannot determine if it is the appropriate quality or quantity.

    I have read enough articles and progressed far enough in a good school to seriously question the validity and reliability of this work. I imagine any academic that values their reputation would not rely or quote this report in their submission to the Joint Committee.

    Unfortunately, some scholars are more closely attuned to serving dominant commercial objectives rather than the pursuit of reality-based truth (as opposed to power-based truth) as is their duty as a tenured academic.

    My qualifications only go so far to speak on behalf of academic rigour and the arguments not made [eg. sunk costs as the primary and unique source of franchisor opportunism] in the current Australian public hearing.

    If a second opinion were to be sought, I believe Gillian K. Hadfield might be an appropriate candidate. pdf CV

    Credit bureaus: How about a Market Memory for Franchising?

    September 23, 2008

    This is a good book for several reasons.

    One of them is the history it provides of the company that we see today as Dun & Bradstreet. It’s motto is Decide with Confidence and they one of the first companies to be in the information game.

    Lewis Tappan (1788 – 1873) started the Mercantile Agency in 1841 and was the first modern credit bureau. In effect, Tappan established a national bureau of standards for judging individual winners and losers.

    By 1857, Tappan was able to find and appraise the creditworthiness of a single businessperson within a population of 29 million 7 days of a request. The system managed identity on a case by case basis, while doing a volume business which is a unbelievable task.

    The marketplace was disciplined through surveillance and it now had a memory. New business relationships could be started without as much fear of default.

    Tappan was able to do this by a network of independent agents, often local lawyers, insiders and/or postmasters. By 1846, Tappan had 679 local informants; by 1851, his network had reached 2,000.

    The marketplace now had a memory, an archive for permanent records of entire careers. Each page looked more like a series of stories than a column of statistics. Individual cases spanned decades, while accumulating updates chronicled a subject’s beginning, middle, and end. When did he start, and where? What has he achieved? What happens next?

    Tappan meant to create an intelligence agency that would reward men of integrity and punish rash lenders and crooked borrowers.

    This is the type of service that is very much needed by those looking to invest in a franchise.

    • Unfortunately, potential franchisees in the class of people that are least likely to be willing to voluntarily support such a network. They do not know what they do not know (they are both unskilled and unaware of their lack of skills).

    Governments have a legitimate role in regulating the quality of market transactions as the unfolding worldwide depression will prove (again). Without the supporting information framework to reward good and punish bad franchise behavior, the industry will continue to die.

    They could do this by:

    • create a franchisee and franchisor national registry system (just tombstone information run by  an independent company),
    • limiting and registering confidentiality agreements (only for very rare “trade secrets”),
    • broadly defining what a franchise is,
    • making every franchise agreement contingent on both sides having independent legal advice (including spouses),
    • establishing a reverse onus on good faith (ie. when challenged, the franchisor is obliged to prove that they had not acted in bad faith; a much more realistic approach than defining what is “bad” faith), and
    • requiring lenders to support a private service that rates franchisor’ reputations.

    Accidental franchises: Sue franchisor and their lawyer

    September 21, 2008

    When a franchisor and their lawyers pretends that a franchise is a license or distributorship, sometimes they end up shooting themselves in the foot.

    An interesting article on this week demonstrates how an Accidental franchise happens. And the consequences can be very profound.

    Kevin Tampone of The Central New York Business Journal (Make & Take, franchisees battle in court) starts off pretty hum-drum [Gosh, not another franchise misrepresentation case?]

    It warms up substantially when Michael Einbinder’s name is dropped as he is a very heavy-duty lawyer.

    Okay…These guys are very good. What next? So it seems the allegations are that the franchisor lied and failed to make a legal franchise offering: No disclosure documents were given and…

    State law, he says, forbids companies from making such earnings claims unless they’re contained in a specific document, called a uniform franchise offering circular. Make & Take did not provide the franchisees with that document before actually selling them franchises, Einbinder says.

    …the system was not registered to offer franchises in New York state (although there was a legal requirement to do so). The U.S. law defines a franchise very, very broadly and intentionally so, as to stop this weasel marketing efforts.

    This is why the franchisor’s lawyers are being sued:

    The firm helped Make & Take circumvent state requirements by creating licensing agreements for the company, the suit charges. The actions were part of a “schemeto sell franchises in violation of the law, according to the suit.

    While none of these allegations are proven, this is good example of an Accidental franchise (sometimes called hidden, inadvertant or unintentional franchises).

    • Accidental franchises are disguised as distributorships or licenses so as to avoid state and federal legal requirement and obligations [read: consumer protection laws].

    There is, of course, seldom nothing accidental or unintentional about these situations. These are all grown-up gentlemen and lady lawyers who have a duty to their client and their Courts not to be engaged in a conspiracy to commit fraud against specific investors and the good people of New York state.

    And the old “ignorance of the law” chestnut applies to everyone, right? Even lawyers in limited liability corporations, right?

    • With the operating losses in the $2-million for each of the three plaintiffs, you’d wonder why the lending institutions were not named in the lawsuit because they should have not released any funds without having on file the appropriate client paperwork [releasing the funds would have breached their lending duty]
    • Statements of Claim can always be amended, I suppose but…
    • Richard Solomon explains how proving predatory franchise lending is so tough.

    How can banks get away with repeatedly and knowingly lending into crapola franchises?

    September 20, 2008

    It ain’t called a bank shot for nothing.

    It’s as simple as Richard Solomon explains over at Blue MauMau.

    First, Richard spells out the weasel play in an article named The Complicit Loan Broker In Franchise Fraud. [Whether there is a broker or not doesn’t matter.]

    It is common practice in franchising for a franchisor, especially a fairly new franchisor, to steer its franchise investors to a particular loan broker, and sometimes even to a particular bank. It is also fairly customary for the loan broker or bank to pay the franchisor for the “traffic”.

    The information in the business plan always comes from the franchise sales/marketing people of the franchisor. The franchisee has little or no input in the whole matter other than to sign what is put before him by the loan broker without reading it or with scant attention being paid to it. The information is almost always false in the sense that it is full of exaggerations, to put it nicely, and the pro forma financial information has little or no basis in fact.

    Richard goes through the details and asks rhetorically with knowing what the answer is:

    What is the likelihood that a franchise investor, on these facts and with this testimony, will get a favorable verdict? Anyone care to guess? Since it may be a somewhat novel case, what is the likelihood that a favorable verdict will be upheld on appeal? Anyone care to guess?

    And when Michael Webster asks a pertinent question:

    How can the franchisor provided information to the loan broker, an agent of the franchisee, which amounts to an earnings claim when the franchisor disclaims making earnings claims in their Item 19?

    Richard goes on to explain:

    In the mind of the jailhouse lawyer crooked franchisor, providing information to help a franchise investor obtain a loan and complete a business plan (which it all total crapola anyway), is not considered (by them) to be the making of an earnings claim. In the weasel word play of franchising there is the FDD, and then there is everything else. The position that we weren’t defrauding the franchisee; if anything we gave the bank false information by providing it for the franchise investor’s business plan, is not just some cynical homorous thaing I made up. That’s how it really goes down.

    It is useful to read the whole thread and then keep an eye on the posting.

    Here’s a clip from one comment (named appropriately Hindsight) that has shown up:

    How I wish I had read an article like this 12 months ago. This type of article should be covered on a major publication small business section.

    Betcha wish you had read this article before signing up, eh?

    Collusion allegation: AUS bank and franchisor

    September 18, 2008

    In a Smart Company article by James Thomson called MP renews calls for investigations into mistreatment of Bakers Delight franchisee, he quotes:

    NSW parliamentarian Joanna Gash has renewed calls for the Australian Federal Police to launch an investigation into accusations Bakers Delight and ANZ bank colluded to put a franchisee out of business.

    Quoting emails between the franchisor and the bank, Gash alleges:

    On Monday, Gash revisited the case in Parliament, producing emails from Bakers Delight chief financial officer Richard Taylor and ANZ executives that she says shows “plans had been conspired to terminate Ms de Leeuw’s franchise well ahead of time”.

    The bank and franchisor deny all the allegations.

    This is the first public AUS public allegation of the key franchisor:franchise banker relationship that I identified and wrote about in a 2005 paper for Industry Canada called Franchising Opportunism [free download].

    The Royal Canadian Mounted Police did a 10 month investigation of a related predatory franchise lending matter. [free download: Mounties investigate ‘predatory lending’, Ottawa Citizen, March 25, 2006]

    And Mr. Oudovikine is accusing the bank of transferring the loans to Country Style without his authorization before he had a chance to obtain a business plan and other financial details from Country Style.

    Mr. Oudovikine says his case shows how big banks, franchisors and franchise brokers team up to take advantage of franchisees, many of whom are recent immigrants like him.

    “It’s predatory lending. (CIBC) didn’t do any of the due diligence they should have done,” says Mr. Oudovikine, who sent the Citizen e-mails confirming the RCMP investigation. An RCMP official said the police force doesn’t confirm or deny investigation.

    And the Canadian bank’s reaction?

    Mr. Oudovikine says he has repeatedly contacted senior CIBC officials and executives about the loan dispute, to little effect. He alleges that CIBC breached the Canada Small Business Financing Act regulations that require lenders to conduct due diligence on borrowers, including their ability to repay loans.

    Les Stewart: Air Force brat

    September 3, 2008

    RCAFEmblenI was born in 1959 on a Royal Canadian Air Force radar station, CFB Sennetere, Quebec where my dad was stationed. He was a Chief Warrant Officer and made 22 Atlantic ocean crossings during WWII. They gave him an Atlantic Star medal and a gun as the ship’s purser.

    Dad retired at CFB Borden in 1961 because it was close to his hometown of Paris, Ontario and my mom’s Ukaranian relatives in Toronto. The service was very good for men who came of age in the Great Depression. The house my mom and dad bought on Bayfield Steet was financed through the DVA.

    I guess it is unusual for a non-commissioned air force officer to be given a navy medal. He prepared flight crews in Canada under the British Commonwealth Air Training Plan. My Dad trained commonwealth flight crews in Canada and brought them over to England.

    The British Commonwealth Air Training Plan Agreement, between Canada, the United Kingdom, Australia and New Zealand was signed in Ottawa on December 17, 1939.

    My mom was in the RCAF Women’s Division a corporal and a teletype operator in London, England during the war. She enlisted because it seemed much more exciting than farming the 1,000 acres of her father’s wheat farm in Ste. Agathe, Manitoba. My Uncle Jerry was lucky: he was old enough to work in Poland during the war. Just the forearm tattoos. I never got a chance to know Dad’s brother Neil.

    My oldest brother was in the Canadian military for over twenty years. He retired as a major after graduating from the Royal Military College of Canada, RMC and Purdue University. Keith wore an iron ring. Gary, next in line, spent a short time at Royal Roads.

    Business, especially big business, is now organized like an army. It is, as some would say, a sort of mild militarism without bloodshed; as I say, a militarism without the military virtues. G.K. Chesterton

    RCAF: per ardua ad astra, “Through Struggle to the Stars”

    RMC Yearbook 1968

    RMC Yearbook 1968

    Clan Stewartvirescit vulnere virtus, “Courage grows strong at a wound”

    Keith siblingsThanks to Brent for the story and Keith’s photograph.

    Keith Cold Lake PIpeband

    Keith Comendation

    Sue Big Franchising: franchisor, lawyers, lenders, sales agents, developers

    September 2, 2008

    Neil Hickman, with wife Michelle and their children Lewis (6) Lauren (11) and Holly (10), moved here from the UK for a better life but have lost their life savings after investment company failures. Photo / Martin Sykes

    Good job: Naturally, raise enough doubt to have the contracts set aside as unenforceable because they were based in fraud.

    More body parts are washing up on New Zealand’s shoreline in the continuing Blue Chip scandal.

    See my post on the family on the left, Kiwi scams touch all classes of immigrants and the New Zealand Herald’s original article, Immigrant banker put $1.7m in Blue Chip).

    The Herald says this week:

    The investors claim the agreements are unenforceable.

    They say Greenstone and the Blue Chip group had an agency relationship, including a profit-share arrangement. They are also taking action against three Blue Chip-recommended lawyers over the advice they gave – Jonathan Mathias, Zeljan Unkovich, and Hamilton firm Foster, Milroy & Turketo.

    Okay but Jenni McManus and really gets into the details in Blue Chip investors sue their lawyers:

    Eight out-of-pocket investors in bankrupt property company Blue Chip are suing their Blue Chip-recommended lawyers for breach of duty for their handling of millions of dollars worth of apartment purchases due to settle within weeks.

    They say lawyers Jonathan Mathias, Zeljan Unkovich and the law firm Foster Milroy & Turketo who habitually did Blue Chip work, were recommended to investors for legal advice when buying apartments in the Barclay development in downtown Auckland about two years ago.

    The investors claim they were dissuaded from using their own lawyers by Blue Chip, who they say told them its property schemes were complex and their own lawyers might not understand how they worked.

    But Mathias, Unkovich and Foster Milroy & Turketo regularly did Blue Chip-related work and knew how the schemes operated, the investors say they were told. Some say Blue Chip threatened not to pay their legal fees unless they used lawyers Blue Chip recommended. Specifically, the plaintiffs allege the lawyers failed to advise them of the implications of the transactions they were signing or to give them any advice about the documentation.

    So its the lawyers and franchisor only? No: Here are the lenders, sales agents…

    The claim is part of the first significant lawsuit against Blue Chip. Other defendants have been named as Greenstone Barclay Trustees, GE Custodians (a lender), Tasman Mortgages and Executive Mortgages (mortgage brokers) and Blue Chip associate Bribanc (now know as Vault Realty).

    Fraud claims have been brought against Tasman and Executive, where it’s alleged one or both fraudulently altered the loan documentation for one investor whose income was misstated, and mortgages were obtained from GE Custodians on the basis of fraudulent conduct.

    …but last if not least, the property appraisers.

    Described by Dale [Paul Dale, the Hickman’s lawyer] as naive and unsophisticated investors, the Hickmans also relied on a valuation from Blue Chip associate Bribanc Real Estate that they did not even see. Dale is arguing that, as with several plaintiffs’ properties, their apartment was over-valued.

    They are seeking an injunction and although I am not a lawyer they appear to have to satisfy a pretty low legal standard:

    …all the plaintiffs need prove is that they can mount a credible argument against the developers and Blue Chip.

    Whatever happens, there were no aligned interests or a conspiracy to commit fraud. Only a nut-job would ever think such a thing.

    Green Acres fraud triggers Kiwi franchise review?

    August 19, 2008

    This is an interesting article by Nevil Gibson in The National Business Review: Franchisers face prospect of regulation.

    Nevil Gibson starts of with:

    The Green Acres franchising scam, in which dozens of new migrants from China and India were bilked of millions of dollars, has sparked a government clampdown on the sector.

    Commerce Minister Dalziel [picture] is quoted as saying:

    “I was actively involved in meeting with franchisees at the beginning of the year who had been caught up in what is an alleged fraud and still subject to investigation by the relevant authorities including the Franchise Association of New Zealand (FANZ).

    As a bit of a reminder to viewers:

    In May, the NBR reported the Green Acres Group – the country’s largest franchiser – had recovered from the $4 million fraud, which involved an individual selling a home ironing franchise to several hundred investors for more than $20,000 each.

    The media reason given is Green Acres but the Discussion Paper cites a total of 3 reasons:

    1. information imbalance [assuming more of the same pre-sale disclosure information will help],
    2. cost of any remedy [keep litigation but make mediation mandatory], and
    3. reputation damage that interferes with the franchise industry’s ability to sell, sell, sell.

    Curious how the wrong that seems to get the most attention is the negative publicity drag on the head office as opposed to the $4-million cash lost to the recent immigrants.

    Time will tell if this proposed regulation turns out to another McLaw: the illusion of franchise investor protection. A cynical interpretation makes this spin designed to get past the next election.

    • One great suggestion is a requirement for every franchise system to join the FANZ and be held accountable to its Franchising Code of Practice [download pdf].
    • Mandatory legal advice would be a real step forward, too. [A Certificate of Independent Legal Advice from both spouses to make a franchise agreement enforceable.]

    These standards would apply to all members of the FANZ community [lawyers, accountants, consultants, salespeople] and not just to the franchisors. Right?

    It would be a shame to have salespeople or consultants not being responsible for their advice let alone the professionals [franchise lawyers and accountants] who have an existing statutory duty of care to provide prudent advice.

    It would seem a shame to maintain the fraud incubator where a Blue Chip v2.0 can flourish [ie. defrocked professional uses franchising as a mask and liability shield that causes thousands of the most vulnerable to lose their homes].

    The standard when evaluating public official actions is, if I recall correctly:

    • knew or
    • could have been reasonably been expected to know.

    Blue Chip in government hot water since 2005

    July 23, 2008

    Another in a series of terrific articles by The New Zealand Herald on the Blue Chip mess.

    This time, it seems the government was fiddling while Blue Chip investors’ money was burning.

    Maria Slade reports today that two brief cases of original documents were handed over to property consultant Olly Newland [left] who has been helping the victims and the Serious Fraud Office.

    It appears the Inland Revenue Department was pressuring the Blue Chip group of companies for income tax payable in 2005.

    The documents – 40 or 50 files in their original folders – reveal that the Blue Chip property investment group was being pressured by Inland Revenue over hundreds of thousands of dollars in unpaid tax as far back as 2005.

    The group did not fall over until early this year, when 22 of its companies were placed in liquidation owing around $84 million.

    So a government agency was having a tough time with Blue Chip company 2 to 3 years before the whistle was blown? I wonder how many people got burned after the government knew or should have known there was a public risk?

    Every public servant [civil servants, Oath of Allegiance, Parliamentary Oath & Executive Councillor] swears an Oath of Office to serve Her Majesty Queen Elizabeth the Second.

    • Presumably, QEII would frown on enabling a theft of $84 million from 2,000 of her loyal subjects [many of whom were old enough to remember her coronation].

    Somebody knew something. They reported their suspicions properly. Somebody else did nothing because it would have been embarrassing politically to pull the plug, even though that was their duty to do so.

    Some of the two thousand Kiwi were sold down the river to avoid a political scandal. The Blue Chip fiasco was not an accident: This was perfectly predictable and made worse by government inaction. The scammers had some very good friends in high places, I think.

    For example, Simnel Ltd – a company associated with Blue Chip founder Mark Bryers – was under pressure to pay a tax bill of $226,806.

    As Newland said:

    “It was all happening long before the whistle was blown.”

    Note: It is my experience that federal public servants are meticulous in documenting that they had informed their political masters about a likely tax loss. They know their duty and they knew there was a vulnerability [public hazard] in failing to regulate non-bank lenders.

    There exists a paper trail from the Blue Chip tax problem into the political elite. Unless I miss my guess, all roads lead to the office of the Prime Minister of New Zealand.

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