Seminars for Fraudulent
Business Opportunities, Pyramid Scams and Trusts
You may have
received a letter or seen an infomercial promoting a seminar or
conference that promises to help you make a lot of money.
up to $100,000 per year!
the world's most successful seminar, we'll show you
multiply your money in 6 months or less —with little
experts will teach you the latest insider secrets for
making money fast.
can't afford to pass up this valuable opportunity.
Seminar hucksters say they'll give you valuable information about
how to invest successfully or operate a profitable business. Their "success
stories" and testimonials seem to show that anyone who attends
the seminar can make money from the investment or business program
they're selling. Some promoters even claim to have gotten rich
from their own investment in the program.
They like to use high pressure sales pitches to get you to pay
upfront for expensive materials and secret knowledge which turns
out to be generalized information. They may promote software packages
which are unusable or inadaptable to your needs, or a service for
which there is no market. Consumers who invest in these "opportunities" frequently
find that the pay-off isn't as promised —and that they can't
even recoup the money they spent.
The Federal Trade Commission wants to alert you to the secrets
of the seminar squeeze. Be wary of promotional materials or sales
pitches that make these claims:
can earn big money fast, regardless of your lack of experience
program or business opportunity is offered for a short time
deal is a "sure thing" that will deliver security
for years to come.
reap financial rewards by working part-time or at home.
be "coached" each step of the way to success.
program worked for other participants —even the organizers.
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
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
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.
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
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
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
"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
"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
your time. Don't be rushed into buying anything at a seminar.
Avoid high-pressure sales pitches that require you to buy
now or risk losing out on the opportunity. Remember, solid
opportunities are not sold through nerve-racking tactics.
the business you're considering investing in. Talk to experienced
business people and experts in the field before spending
wary of "success stories" or testimonials of extraordinary
success. The seminar operation may have paid "shills" or "singers" to
give glowing stories.
cautious about purchasing from seminar representatives who
are reluctant to answer questions or who give evasive answers.
Remember that legitimate businesspeople are more than willing
to give you information about their investment or sales opportunity.
about how much money you need to qualify for the investment
or sales opportunity, and ask about the company's refund
policy. Get this in writing. Keep in mind that you may never
recoup the money you give to an unscrupulous seminar operation,
despite their stated refund policies. Taking precautions
before you invest is a more effective way to safeguard your
money than trying to get a refund after the fact.
Tax Refund Scams Promoted at Investment
Seminars Involving the Donation of Overvalued Collectibles to
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
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
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
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
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
(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
Out of Your Contract Before and After Three Day "Limit"