Where’s Mark Bryers? With Waldo in AUS, of course.

September 4, 2008

The children’s game, “Where’s Waldo?” was a big hit with my kids a few years back. Here is a link to Waldo Wiki for some fun.

Otherwise, it appears from New Zealand’s One NEWS that the Blue Chip founder is somewhere in Australia (Blue Chip hope sparked by frozen funds).

Hundreds of Blue Chip investors across New Zealand have been given fresh hope that they might be able to recover millions of dollars worth of deposits for apartments they never wanted to buy.

The High Court has frozen funds in solicitors trust accounts until a full hearing takes place later this year…

We’ll wait and see if any cash actually surfaces from freezing the lawyer’s escrow accounts for the 2,000 seniors (mostly) who have lost over $84-million.

It does seem that Mr. Mark Bryers is keeping a pretty low profile these days. It appears that lawyers are having a hard time tracking him down in Australia to serve him with bankruptcy papers.

And what does one of the 2,000 investors [$1-million lost as a condition of re-locating to Britain] have to say about Bryers’s moving to Australia?.

“And now he’s off to Australia to do the same to people over there, I just – unbelievable,” says Blue Chip investor Michelle Hickman.

Altered loan documents, fraud and an agency relationship you say? Mrs. Hickman’s intrepid barrister Paul Dale:

“Certainly on the affidavit evidence we have filed to date, there has been fraud. We have produced examples of altered loan documents,” says Paul Dale the investors’ Barrister…

Dale says he has got powerful evidence of a profit sharing agreement between Greenstone and Blue Chip which would have seen money flow to Mark Bryers when apartment projects like this were completed.

Like I said before [Oz Alert: Shrewd businessmen immigrating], if you bump into Mr. Bryers or Bob Bangerter, let me know.

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Ponzi scheme unwinds in Real Time on Blue MauMau

August 30, 2008

Interesting times over at Blue MauMau for franchisor Dale Nabors of Cuppy’s Coffee and More as he responds to allegations of running a Ponzi fraud (see Cuppy’s Speaks Out on Accusations, SBT, AAFD and More).

Janet Sparks is one of the most experienced and knowledgable franchise journalists there is. Period. She is a real professional that is not afraid of many of the things that go bump-in-the franchise night.

I think it is the best if Mr. Nabors speaks for himself and I would encourage everyone to read this whole story:

“I’m putting money into the company, and the company is putting money into the projects. In a roundabout way I guess it’s fair to say yes, I am putting money into the company to cover some of these projects. But these are very few projects.”

In a posting entitled Cuppy’s Fraud, Michael Webster (see Misleading Advertising Law) responds in a blunt and  thoroughly unCanadian fashion:

  • When Nabors says “he was having to put capital into the businesses to keep them moving forward, and some of those monies in turn are used for construction and build out. He said there had been projects that monies were paid on and those monies went into a general operating account and were not used specific for a project.” this is an admission of fraud.

Webster goes on:

You cannot take money borrowed by A to pay off building out B, although you can certainly count on the support of B when that happens or is promised to happen.

This is not a construction company pretending to be a franchise company.

This is a construction ponzi scheme
, taking funds from later investors, paying off earlier investors, pretending to be a franchise company.

These related entities are insolvent and the creditors need to shut this mess down immediately, appoint a receiver and come to an equitable solution.

Nabors call for more time is the typical whine of a ponzi operator. [my emphasis and format]

His allegations are numerous, serious and very interesting. Take a close look. I have worked with Michael Webster for several years. He is a very careful person, a skilled litigator and fraud investigator. The last guy I’d want to oppose in a biz op or franchise swindle, if I were so inclined.


Predatory lending practices

August 20, 2008

This is a very good 9 minute summary of what happens when governments look the other way.

In this example, it the U.S. subprime mortgage market which has reached over $1-trillion. It is rapidly causing a worldwide recession.

  • The mechanisms used in the U.S. mortgage industry (predatory lending practices: loan pushing, sales agents, etc.) are routinely seen within the franchise industry.
  • The exact same process was used in the +$84-million Blue Chip fraud in New Zealand.

If these financial practices have affected your family, I would suggest you take the action as suggested at the end of the video.

Thanks to Loan Sharking – Creditoris Squaliformes for posting this.


New Zealand announces a franchise regulation review at a sales expo

August 18, 2008

The national Labour government of Helen Clark announced on August 15th that:

The Ministry of Economic Development is conducting a review of franchising regulation to explore whether there are any widespread problems in the franchising sector which may require franchise specific regulation.

The announcement, via the Ministry of Economic Development, can be seen here or the Discussion Paper can be downloaded here [Review of Franchising Regulation in New Zealand, pdf]

  • There have certainly been enough high profile franchise nightmares and spectacular fraud investigations to justify this action: Blue Chip, Green Acres, Green Power. And, usually, only the most severe ever surface into the national media [tip of the iceberg].

Further coverage was provided by the Franchise New Zealand trade magazine in an article named: Government Wants Feedback on Franchise Regulation.

Interestingly, the Commerce Minister Lianne Dalziel made the government’s annoucement at a franchise sales show. You can see her entire speech here and please find below Minister Dalziel’s concluding remarks to her franchisor marketing and franchise banker audience:

Can I conclude by congratulating all of you for participating in this Expo and can I thank the Franchise Association for its advocacy for a sector that is a vital part of the New Zealand economy. Can I acknowledge the sponsorship of Westpac – these events don’t happen without sponsors – and can I congratulate those of you who have been chosen as the ‘show stoppers’ for going the extra mile.

It is important, at certain times, to remind those in authority that they serve citizens’ interests as well as corporate interests.

  • I would encourage franchise investors and those affected by no franchise industry oversight [such as Blue Chip] to voice their opinions to their elected officials, current government, media outlets and financial institutions.

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.


Legal Aid used to fund franchise lawsuits

July 23, 2008

Now here are a couple of novel ideas from New Zealand.

Maria Slade at the ever-vigilant New Zealand Herald reports today that the 2,000 investors who have lost over $84-million in the Blue Chip franchise collapse are being encouraged to apply for legal aid to finance their attempts at getting thier money back.

Commerce Minister Lianne Dalziel says she is:

interested in helping Blue Chip investors find ways and means to access legal advice, particularly in this case where lack of funding is a barrier to legal recourse.

This is a first: I have never seen a publicly funded legal aid program used to fund a franchise legal action.

Not that surprising that the New Zealand government doesn’t want to touch the Blue Chip mess with a 10 foot pole. It’d raise too many questions about lax commercial regulation, I’d imagine.

  • Something about creating a very friendly feeding ground for massive consumer fraud, targeting Kiwi senior citizens.
  • International financial market laughingstock? Or some other alarmist conclusions.

The second is that the the lawyers and valuation firms are being scrutinized for their professional competence.

Law firm Ellis Law, together with barristers Paul Dale and Daniel Grove, are acting on behalf of several hundred of them. Activity includes taking legal action against solicitors over allegedly negligent advice they gave on the investments.

Valuers who provided allegedly inflated valuations on properties sold through the Blue Chip scheme are also in the lawyers’ sights.

But we’re missing a key ingredient to the Blue Chip fraud sausage: The lenders. Where are they in this fiasco? The last time I checked, there should be some type of regulation or lapdog self-regulation to cover these lenders.

  • Could it be the government is handing over the heads of the small fries [no-name lawyers and valuators] to avoid looking responsible for not regulating lenders sufficiently?
  • The Kiwi government knew or would have been reasonably been expected to know that lax or no lending regulations causes loss.
  • When the chickens come home to roost, the government blames everyone except themselves.

This fraud would have been impossible without a source of funds. I suspect the government was asleep at the switch as $ millions fed this humongous scam.

  1. Remember: Sue the SOBs with insurance, when you don’t have the cojones to sue the government and Her Majesty’s ministers.

Will Kiwi Courts view mortgage debt Unenforceable?

May 26, 2008

There is a very important article with the sleeper title of Blue Chip loans disputed by Jane Phare of the New Zealand Herald.

Auckland barrister Paul Dale plans to apply for injunctions against finance companies involved in Blue Chip properties in cases where the loan application documents appear to be false or fraudulent.

He argues the mortgages should be set aside and is preparing to launch a precedent-setting battle against finance companies, including GE Finance, other lenders and their agents. The action could prevent the mortgagee sales of homes owned by desperate Blue Chip investors, many retired, who face losing everything.

To date, Dale has looked closely at four case studies, collectively worth about $2 million in disputed mortgages. “My own view is some of these mortgages are not enforceable,” he said…

I agree with Mr. Dale.

From what I can see, Dale is the only person that is willing to take practical action and wish him (and those smart enough to support him) all the best. Otherwise, everyone else seems to be defending the franchise and banking interests.

Attentive readers of the FranchiseFool might remember my Mar 19th posting called: Loan Contracts: Unenforceable or Voidable?

I asked if these mortgage debts were valid or:

“…unenforceable (valid but the Court will not enforce) or voidable (certain conditions present or absent: fraud, material misrepresentation, etc.)…”

It is certainly too early to tell but this is the most promising development to date, in my non-legal opinion.

Too bad the Clark government couldn’t help out ($) with some of the legal heavy-lifting but they are notable for their consistency.


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