Money matters: Give hot deals the cold shoulder

By MARY HOLM

To mark April Fool's Day, the letters in this week's Money Matters don't ask for advice. Instead, they offer opportunities to make big money.

And what do they deliver? Opportunities to lose money.

People who respond to such letters generally wind up not only poorer but feeling pretty foolish.

I got most of the letters from the Securities Commission, which collects examples of some of the bad stuff out there. A couple were received by friends.

We'll start with a letter that came from an Auckland address.

This is to formally confirm that The Financial Information Centre has received from you the full sum of $60,000 for indirect international investments at the total discretion of The Financial Information Centre, in order to endeavour to achieve a significant return of profit by (a month later).

The Financial Information Centre hereby undertakes to underwrite the repayment of the Principal amount within the period stated above. An estimated return of at least 50 per cent is expected as profits.

The Financial Information Centre agrees and confirms that the investment will not be associated in any way with criminal, unethical or anti-human activity.

This agreement, including details of the returns, is to be kept totally confidential and therefore must not be disclosed to any third party without the express permission of The Financial Information Centre.


Quite. We don't want anybody's lawyer or financial adviser casting an eye over this, now, do we?

A professional might start asking tricky questions like: "Could you give us an example of a non-criminal, ethical and pro-human indirect international investment that is expected to bring in 50 per cent in a month?"

Once a year we look to expand our correspondent base, and it has been drawn to our attention that it may be of interest for you to receive our monthly market newsletters.

The expertise of our in-house market analysts has been proven time and time again with winning recommendations. In the past year, our clients' portfolios have increased over 80 per cent.

Over this period we had the pleasure of spotlighting The ATEC Group Inc. (Nasdaq). We recommended ATEC between $US3.50 and $US4.50 during the month of March. The stock hit a high of $US10 in May. That gave our clients a return of over 100 per cent in a three-month period.

We specialise in finding undervalued stocks with tremendous upside potential, and ATEC is just one example of many successful situations we have brought to our subscribers.


All I can say is that I hope, soon after this was written, you recommended that subscribers sell ATEC.

The US high-tech company has since moved from the Nasdaq to the Amex exchange. It now trades around 45USc.

Anyone writing a newsletter of stock tips can find a past example that did well in a particular period.

And they don't tell you about the other recommendations in the same period that bombed.

If it was possible to find "undervalued stocks with tremendous upside potential" with any consistency at all, I'm sure these writers wouldn't be publishing newsletters.

You are informed herewith of final judging results in National Audit Centre Sweepstakes NAC67W.

Based on your pre-assigned Audit Number 2384636003, our judging committee affirms that you will receive a cash prize up to $48,500 or a 2000 Volvo Sedan.

Therefore, you will receive title and registration to a 2000 Volvo Sedan or, if you prefer, the same value in cash ($48,500) provided you comply with all claim procedures and further provided that you return Part 2 Claim Form (enclosed) with the grand prize winning number before midnight of the deadline date.

Please note: The $39.95 processing fee is required for delivery of your consumer entitlement.


Funny, but I don't remember entering that sweepstake. Still, all I have to pay is $39.95 and I get a whole car. I'd be silly not to do it.

Or should that read: "All I have to pay is $39.95 and I get a whole nothing. I'd be silly to do it."?

Now one from Africa:

I have been instructed by my colleague to look for a foreign partner who can assist us to execute an urgent private business, involving huge profit and international cooperation.

We are interested in the importation of agricultural equipment and computer accessories from overseas and we need a foreign partner who can assist us with a bank account for the transfer of $US33 million.

We have resolved that 30 per cent will be your commission for nominating a new bank account and a company that will receive these funds on our behalf.

Ten per cent of the entire sum has been mapped out to settle any outstanding expenses we may incur in the cause on this funds transfer, while 60 per cent of our share will be used for the importation.

My colleagues and I are civil servants and, as members of the contract review panel, it is against the code of conduct bureau for us to operate a foreign account. Hence we are soliciting your firm support. We can finalise the transaction in ten working days.

There is no risk involved. We just need international contact.


So I can make almost $10 million with no risk?

Sounds wonderful. And yes, sure, I'll be happy to send you the $100,000 or whatever you're likely to need to get things rolling. And the additional sums after that.

And if it turns out that the bank account I let you use keeps emptying out, rather than filling up, I'd love to have a little holiday in Nigeria while we sort things out.

If I don't make it back home from the holiday, it must be because I'm having such a good time there.

A very successful US firm is opening operations in Australia and New Zealand.

This publicly traded, product-brokerage corporation is taking applications from motivated individuals who, by following their proven business plan, can develop a very lucrative, ongoing six-figure income. This can be accomplished part-time while continuing your current job.

Company representatives will be in major cities within the next few weeks to interview individuals who seek a new opportunity and a higher standard of living.

No obligation required.


I don't, by any chance, have to pay a fair bit to get into this game, do I?

And if I don't end up making a six-figure income for my part-time work, I wonder how you'll respond?

Could it be that - if you respond at all - you'll say I didn't follow your "proven business plan" properly.

Or I wasn't motivated enough.

Or anything but "We're sorry. Here's your money back."

This could well be a pyramid scheme. I would do well only if I could get many others to sign up.

Pyramid schemes are illegal in New Zealand.

Do you have high mortgage payments? High rent payments? Are these high monthly payments weighing you down? Worry no more!

How would it feel like to live rent/mortgage-free for the rest of your LIFE?

Through this programme you no longer will be paying those costly expenses, allowing you to save money for your children's college fund, to purchase your dream home, buy that new sports car OR SPEND IT!

You become a member in this programme by paying a yearly membership fee of $375. In six months we will pay your rent or mortgage (up to $1600 a month if you are a qualified member) directly to your landlord or mortgage company.

A qualified member is one who has referred at least three new members who have registered into this programme, by at least four months prior to your payout.

If you do not have at least three new members registered, you will receive $375 a month until you have referred three registered members.


I would love to worry no more about my mortgage. But I've got a sneaky feeling that if I get involved in this scheme I might, instead, worry quite a lot more.

There's no doubt about this one. It's a pyramid scheme.

Even if it wasn't illegal, it clearly requires many new $375s coming in to cover everyone's mortgage and rent payments. New Zealand would soon run out of people to sign up.

* Mary Holm is a freelance journalist and author of Investing Made Simple. Send questions for her to Money Matters, Business Herald, PO Box 32, Auckland; or e-mail: maryh@journalist.com. Letters should not exceed 200 words. We won't publish your name, but please provide it and a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice outside the column.