Perpetual Profits

A full page ad appears in USA Today declaring:

"Tired of High Electric Bills . . . How About No Electric Bills, This Machine May Give You Free Electricity For the Rest of Your Life . . "

"There is a company in New Jersey that plans to install a revolutionary new type of generator to produce electrical power at 1.6 million individual residences. These generators produce far more power than is needed; and the company plans on selling the unused wattage back to the electrical companies. What this means is that owners will be getting their electricity for free."

"You can sign up now; and, for each person that signs up as a result of your efforts, the company will pay you 1300 dollars residual income per year. If you persuaded 100 to sign up that would garnish you a residual income of $130,000 dollars a year...doing what we all like to do best: promote."

The ad, as well as their internet site, invites you to attend free meetings across the country to hear about investing in a cooperative of fifty people in order to obtain a "perpetual motion machine".

Each person in the cooperative is expected to make a one-time investment of just $275 and in return will receive a "certificate of beneficial interest" which entitles you to use of the machine for life, "so you may never have to pay another electric bill again".

They say the free electricity program will both set you free from the power grid and reduce pollution even though big business and the government are conspiring to keep it off the market.

In addition, 20% of the income generated by selling the energy as a commodity will supposedly be used to restore family values in America, feed the hungry, cloth the naked, take care of widows and orphans, and finance the restoration of a Constitutional government.

They say that $75 of your $275 will be used for administrative, organizational, registration, and processing fees and the remaining $200 ($10,000 total for 50 investors) will be held by a trustee or other third party until a working perpetual motion machine is ordered and installed for the first investor. The income from selling its energy will eventually fund "free electricity machines" for all fifty members of each cooperative.

They assure you that there is no risk because a third party will hold the investment funds. They guarantee that unless the first machine is delivered within one year your money will be returned.

Those who have seen the shows liken the presenter to a circus barker. They say he reels in his subjects in much the same way, using a lot of fast talk to confuse and dazzle his audience.

In one demonstration, the promoter lifts a piece of metal, holds a magnet to it and tells the audience that because the magnet will stay on the metal indefinitely, it is a source of infinite energy.

"There's never a break in the action. He's always talking. A lot of it has nothing to do with the production of free energy or free electricity. As far as I can tell, most of it is to befuddle the audience. By the time they leave, their heads are spinning with so many devices they can't think properly," said a physics professor who went to shows during a tour.

Those who attend the shows are middle-class couples, many of whom appear to be retired, are dressed in blue jeans and have "grease under their nails." Their talk is generally anti-government rhetoric mixed with fundamentalist religion.

The presenter fails to disclose how the laws of physics are overcome to produce this perpetual motion or that the actual builder of the machine claims that the machine, which is described as a "counter-rotational" device, actually uses more energy than it produces.

A surprising number of people go for the pitches, for there are plenty of technologically ignorant people who have more faith than knowledge. Drawn to the possibility of cleaner, alternative forms of energy, many even put down $10,000 to become a dealer. It is estimated that $3 - $4 million is raised on each tour.

No financial statements are provided, nor other information, such as who controls the trustee account, the current number of perpetual motion machines they are obligated to install based on prior sales; the minimum capitalization needed to proceed with the program or the stage of development of the perpetual motion machine.

Nor is the fact that the promoter has pleaded guilty to seven of 47 felony counts in the past for marketing and selling a similar program, a solar energy savings program.

In 1988, he pleaded guilty in California to fraud and misappropriation of $800,000 from 200 victims for which he served two years in prison. Eight arrests in New Jersey between 1974 and 1979 alleged fraud, forgery and drug-related offenses.

Some states have taken legal action. Vermont filed a consumer fraud complaint, alleging that the technology does not exist to provide free electricity.

Regardless, he still promises that his organizations, Better World Technology and United Community Services of America, can offer jobs, a better quality of life and a clean environment.

freewidget.com
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In one demonstration, Lee hands a beaker he says contains 200 milliliters of gasoline to an assistant, who pours it into a glass jar next to a small engine.

He then hands the assistant some Pepsi, Coke, Gatorade, Frappuccino, pickle juice, sugar, salt, A-1 Sauce, Tabasco, Aqua Velva, used transmission oil and a jar of urine to mix with the gasoline.

The assistant pours the mix into another jar containing Brillo pads, screws on a lid with two hoses in it, then pulls a starter cord a half-dozen times. The engine sputters to life and sucks the mixture through the hoses.

Placing a white handkerchief over an open hose on the device he then displays the handkerchief and claims the engine produces no pollution and that the engine will also run off a 20 percent gasoline, 80 percent water mixture.

"The secret is in the reactor," he said. "Nobody knows how it works. ... Whole universities are studying this."

He claims his other technologies include a heating and air conditioning system that runs off septic tank fumes, a device that uses water to produce a flame that will not burn flesh yet can slice through a seven-inch block of steel and a system to neutralize nuclear waste.

Eric Kreig, an electrical engineer from Philadelphia, states that Lee has been promising for 15 years to put a device on the market for free electricity but never has, nor does the U.S. Patent Office list any patents for Lee for any of his inventions.

More on Dennis Lee Energy Promotions

Beating Out Bill

"MAKE $15,000 A MONTH NOW!  

"Fortunes made on the Internet will exceed mine" states Bill Gates.

"Entrepreneur Magazine predicts that Internet Consulting will be the most profitable business opportunity taking us into the next decade."

"TouchNet, Inc. has developed a unique consulting business opportunity designed for anyone with the desire to profit in this booming industry. Best of all, this opportunity requires No Prior Computer or Internet Experience Whatsoever!"

Such ads instruct you to call an 800 number to reserve your spot at their upcoming free seminar, being held at a nearby hotel.

The internet consulting seminar, which last about two hours, are actually presentations for their business opportunity which entails your becoming an "Internet consultant," selling Web pages to businesses who want a presence on the Internet but lack the necessary computer expertise.

They say that their Internet Mall enables its consultants to make large amounts of money by selling web pages to businesses that want to become members of "World Virtual City".

"I am here today to show you how to profit on the Internet. We have two proven programs that will make you money as an Internet marketing consultant. We will show you some testimonials of people who, under our programs, are making a lot of money. Today we will introduce you to a product, World Virtual City, that quite frankly will knock your socks off and allow you to take your income to the next level."

"You're looking at a weekly tally that posts $3,500, a monthly profit close to $14,000 and there's no one here in the audience who would turn down an annual income of $167,000. These are true numbers and I think they're very conservative."

Says Aaron White "Two days after signing up I signed my very first client. Not in my wildest dreams did I think this could happen so quickly. I've generated $8,500 in fees. This, of course, does not include the rent which I will collect on a monthly basis. Thank you for all your help."

To begin to make this money you must pay them $3,195 for "in-depth training". They use urgency to get you to purchase the business opportunity right at the seminar by stating that the training session is limited to ten people and that the first four people who register will receive two free Web pages on World Virtual City that can be resold to businesses.

Typically, investors are not told the real costs for which you are responsible, including leasing special telephone lines, paying for national promotion, and handing over fees to endorsers used in "infomercials" or other advertisements.

In a highly competitive marketplace, the vast majority of consultants end up losing money… far from the 250 percent annual return that con artists are so quick to claim is a "cinch."

Advice on Seminars

Promises of quick, easy money can be a powerful lure. If you buy into a business opportunity at a seminar, you may find that the products and information you purchased are worthless and that your money is gone. You can take steps to avoid getting hit by the seminar pitch.

Tax Refund Scams Promoted at Investment Seminars Involving the Donation of Overvalued Collectibles to Charities 

One fraudulent scheme that is quite pervasive in Canada and the United States is when open seminars are organized and promoted for those interested in investing while saving taxes. At the seminar, the attendees are told of a process whereby they can purchase some undervalued item which are usually collectables, with little real value, and sold in bulk (such as, say, packs of hockey cards).

These items are then to be donated by the investor to a recognized (licensed charity) and the investor receives a tax credit receipt made out for its inflated "true value" (not the "undervalued" amount that they will be lucky enough to purchase it for). Thus, for, say, a $200 investment, the investor can receive a tax receipt for $1000.

The seminar organizers enhance the credibility of their scheme by supplanting persons in the audience who appear to be just attendees but openly proclaim their astonishment at how fool-proof the scheme is. These "singers" are, invariably, "Chartered Accounts".

The materials provided seem to have the following characteristics:

(1) there is a deadline (these schemes appear in December before the year-end and thus the investor has only a few days to make up their mind).

(2) the organizers include a letter from a prominent law firm which confirms the authenticity of the scheme (though most people miss the one phrase in the legal opinion that makes all the difference: "provided that the valuation is properly made...")

The Income Tax Act and its accompanying regulations require that collectables be valued by an independent third party. This is never the case.

If the collectables were purchased in free market conditions (arms length purchase) then the Act and its Regulations provide that the specific amount paid is the amount to be included in the valuation. If a valuation is included then only an independent third person, competent and skilled to value, can determine the valuation amount. This negates the differential in valuation that the promoters suggest.

The result of investing in these schemes are that:

The Investor loses. The C.C.R.A., fully aware of these scams, is on the look-out.

(1) As a result, the investor will have his charitable deduction completely rejected.
(2) The investor will also lose the $200 investment and any additional funds used to buy into this scheme;
(3) the organizers simply walk away as C.C.R.A.'s jurisdiction is limited to tax payers, not the organizers.
(4) the charity may lose their charitable organization registration with the CCRA. It appears that most of the charities are not involved in the scam but also fall prey to the organizer's convincing stories.

For a more detailed look and evaluation of Real Estate based seminars visit John T Reed

Getting Out of Your Contract Before and After Three Day "Limit"