Florida Securities Lawyers

These Security Fraud Schemes Have Attracted Significant International Attention

1. A definition.
During the past few years, there has been a significant increase in the number of reports received in connection with Prime Bank Instrument fraud schemes that has now assumed epidemic proportions. Some current estimates indicate that investors have been defrauded out of nearly ten billion dollars in the United States alone. These fraud schemes have attracted significant international attention, as individuals and organizations have lost billions of dollars throughout the world.

The symbols, names and products of the Treasury Department (Treasury) are misused in these schemes in several ways. Some schemes claim that:

the Treasury backs or approves such programs,

the Treasury has a "secret trading room",

the Treasury must approve the humanitarian projects connected to these schemes,

Treasury securities have been purchased for investors to guarantee against any loss, and

a particular scheme has a way to pool investor funds and buy and sell Treasury securities "just like the Rockefellers can".

NONE of these assertions are true.

"Prime Bank Instrument Fraud" is the general term given to fraud schemes that go by many different names, including Prime Bank Debentures, Prime Bank Guarantees, High-Yield Trading or Roll Programs, Standby Letters of Credit, International Chamber of Commerce (ICC) 3039 or 3034 Letters of Credit, Guaranteed Bank Notes, Discounted U.S. Treasury Securities and International Monetary Fund Backed Securities. In these schemes, the fraud artists purport to have access to a secret trading program sanctioned by the Federal Reserve Bank, the Treasury Department, the World Bank, the International Chamber of Commerce or the International Monetary Fund. Claims are made that a privileged few are invited to participate in the trading of some form of bank security such as bank guarantees, notes, stocks, or debentures, which can be bought at a discount and sold at a premium. It is often claimed that there are only 5 or 7 "traders" or "master commitment holders" authorized to resell these bank securities between the top 25 or 50 world banks. By conducting these "trades" several times a year/month/day, they claim to be able to produce exceptional returns, ranging from 6% to 100% per month. Legal documents associated with these schemes often require the victim to enter into "non disclosure and non circumvention agreements" and require the invested fund be "good, clean, clear and of non-criminal origin." These frauds often encourage the victim to send money to a foreign bank where it is eventually transferred to an account that is in the control of the con artist.

These various "prime bank" trading programs or similar trading programs that offer secret, private investment markets, which purport to offer above average market returns with below market risk through the trading of bank instruments are fraudulent. Offering such programs, or claiming to be able to introduce investors to people who have access to such programs, violates numerous federal law; including criminal laws. There are no "secret" markets in which banks trade securities. Any representations to the contrary are fraudulent.

In addition, investment programs in which a financial institution is asked to write a letter, commonly referred to as a "Blocked Funds Letter", advising that funds are available in the account, that they are "clean, and of non-criminal origin" and are free of "liens or encumbrances" for a certain time frame are frequently used to perpetrate fraud schemes. These letters have no use within legitimate banking circles.

It is illegal to engage in fraud in the offer or sale of a security. Under most circumstances, it is also illegal to sell securities that have not been registered with the U.S. Securities and Exchange Commission. A security includes the following items: "note", "stock", "bond", and "debenture" as well as more general terms such as "investment contract" and "any interest or instrument commonly known as a 'security'." In the leading opinion, the Supreme Court of the United States, held that the definition of a security includes an investment contract, which is "a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third party..." Designating such instruments as "loans" does not alter their legal status as securities. SEC v. W.J. Howey Co., et. al, 328 U.S. 293, 66 S. Ct.1100, 90 L.Ed. 1244 (1946).

2. Is it real?
 
No! - How the Fraudsters Explain this Secret World.
The world of secret bank trading programs as depicted in the following link does not exist. While there is institutional trading of medium term notes and other debt instruments, there is no world of secret, off-book trading by large European banks where "traders" or "commitment holders" are invited into the mix. For a fairly common example of how this fraudulent world is explained to potential investors, please click here(920K, pdf file, uploaded 05-24-01). The more any explanation given to you resembles this explanation, the more likely you are being offered a fraudulent investment. For another explanation by fraudsters of how this secret world works and a superb rebuttal to this explanation, click here(40K, pdf file, uploaded 06-20-02). For an explanation about the origin of Prime Bank Fraud,

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