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Vol 1, Issue 1 |
 Page 12 |
Monday, July 31, 2006 |
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Con Game continues ... On May 26, 2006, The Oregonian ran a front page major story entitled, “PAC Equities Owners Back in Jail, Court.” The Richs had been arraigned in December, 2005 for fraud and placed under various court constraints including the use of funds in their possession. The Oregonian noted they had violated those requirements, and the FBI apprehended the Bend couple on May 2, 2006, which has resulted in incarceration, probably until their trial scheduled for July 26. The Feds have accused the Richs of running a Ponzi scheme that scammed hundreds of investors for a total of $18 million, or more. Separately, the Richs face a civil suit by 22 investors for $3.3 million.
The PAC Equities website that I visited contained some pretty impressive stuff about Michael and Phyllis and their company. (If you had visited the Enron website back in its heyday, it, too, had some pretty impressive stuff. Incredible, but impressive.) PAC Equities’ website was very attractive — multi-color copy with professional photographs of the Richs and their personnel, beautiful scenery and impressive thirty-year career histories. It showed projects currently open for investment partners, renderings of future projects and a photo of construction in progress. The June, 2004 PAC Equities News entitled, “Legal Papers You Should Not Live Without,” and the May, 2004 letter from the President contained articles on revocable living trusts and other interesting subjects. The PAC Equities News dated July, 2004, headed, “Great News for Investor Partners,” “Returns on investments are being increased,” also contained some timely information on LLCs (Limited Liability Companies) and some news on projects, namely Pinnacle Tower Homes with a picture of the Pinnacle Point Meadows, and a picture of “Paul’s Dairy, a modern new dairy in Culver, Oregon,” noted as built with PAC Equities investor-partners’ help. It all looked and even “smelled” good to a reader until you did your due diligence. The Oregonian’s article noted that, in part, “…most of the housing and commercial projects never got off the ground and didn’t produce any income according to court papers.” How did the Richs (what better owner name for a company attempting to grow wealth for their clients) pull it off? How could two “30-year experienced real estate professionals” pull it off in Bend, Oregon? Their website information included: “Searching for a permanent home, we found a combination of small-town friendliness, including a healthy climate and growth pattern in Bend, Oregon in 2001.” Their prior homes had been Phoenix; Hawaii; Vancouver, British Columbia; Seattle and Olympia, Washington. Why would self-acclaimed, financially-successful real estate professionals perform a con game—a Ponzi Scheme, one of the oldest in the book and always eventually doomed to failure—when they could have done business the right way? Why do people do these things with the probable prospect they will get caught? How many places could the 69-year-old Richs start up again? The answers are simple; need, greed and corruption: Need—the need of the ever-present prospective investors seeking suitable investments; greed—principals who lack ethics and moral values; corruption—the wonderful ego attribute that cries out for attention and tells the world that the corruptors are smarter and more gifted than others. “Others may get caught, but not us.” Most investors want to “run with the rich kids.” In this case, the rich kids were Michael and Phyllis Rich. Look around your hometown or nearby metropolis today. There are probably many similar con games in progress. Why? You got it - Need, greed and corruption. Thou shalt not steal. Exodus 20:15 (Editor’s note: We’ll be covering similar stories and offering analysis on both the increasing “cons” in our society and the ever-present Need, Greed and Corruption in not only business, but government and society.)
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Bush Way Continues ... It’s instructive to match up President Bush’s actions and words with one or more of the above and apply them, at least, to the Dubai port contract issue, our entrance into the Iraq war and our (his) subsequent decisions and failings in Afghanistan and our non-action against our real threats – Iran, North Korea, nuclear proliferation, global warming, polarization of the American people, and non-acceptance of American leadership and values in today’s world community; take it from there. His constant support, praise and reward of those in his administration who have performed incompetently and worsened conditions bring us full circle to the newspaper article‘s key message, “…but you can’t be a good decision maker….” Wow! That says it all. President Bush’s dad listened to others and took their counsel. He was smart enough to assess difficult situations before he took action. Unfortunately, in the Bush family, the fruit has fallen far from the tree. I may have faults
Jimmy Hoffa
The Wonderful World of Jim Penn Professor Ferdinand Von Rumproast, MBA professor extraordinaire, was early for class. This signaled something special. He was also smiling, the third time this semester. “Class, in preparing for this session of Mergers and Acquisitions, I was searching for a BusinessWeek cover story, ‘Mergers: Why Most Big Deals Don’t Pay Off,’ when I discovered ‘Birds in Business’ by Avian Noncageus. Professor Noncageus’ premise brings a fresh perspective in understanding businesses and their leaders. He compares them with bird-like traits. “Erika, can you identify any bird-like trait that may reflect a businessperson’s attitude?” The question took her by surprise. “Well, I guess there are some who don’t want to recognize what’s happening in the business world. You could say they‘re ostrich-like, burying their heads in the sand.” The class threw out a few guffaws. “Erika, you get 50 percent for that answer. Your observation of some businesses and their leaders is correct, but it’s a common misconception that ostriches stick their heads in the sand. Their habitat doesn’t contain many hiding places. To fool an enemy into thinking that it’s a bush, an ostrich will drop its head and long neck to the ground.” The professor continued. “Noncageus believes that humans can learn much from birds. For instance, the eagle, a predator, prefers to hunt for its food, but the vulture, an equally large bird, prefers to feed on carrion. The owl, everybody’s symbol for wisdom, is a cunning night raptor. Then there are those who eat insects and vegetation like pigeons, cuckoos, swallows, turkeys and ostriches. “Can you match these birds with businesses or leaders?” Howard raised his hand. “Since we’re studying mergers, it would be helpful to know if both companies are predators. If so, are they of equal predatory strength? Knowing who’s the eagle and who’s the hawk will help us assess which leader will remain standing after the merger.” The professor stroked his chin for a moment. “Very good. Can a merger be successful when the candidates, or their leaders, are predator and prey, like an owl and a turkey?” |
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