Category: Money & Investments

Elizabeth Warren: “You Didn’t Build That”

I’m a believer in capitalism and working hard to make profit and succeed – but I find myself feeling almost like a left-wing socialist when put in the context of the American political system. The raw, unchecked power American corporations have over the political process – and thus over the laws the regulate their behaviour – is truly terrifying. Things are just broken, and they’ve largely remained broken since the financial meltdown of 2008. Not much has changed.

Elizabeth Warren is playing a vital role in power-checking the big banks and corporations that have, for the most part, completely abdicated their socially-responsible role in our society. Here’s a great article about Warren, and a great quote that sums up part of the problem:

“You built a factory out there? Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.” – Elizabeth Warren

https://www.youtube.com/watch?v=i-P-CoSNYaI

Concrete Equities and Wealthstreet Alberta Securities Commission Documents

I’ve had these documents for several years and had been meaning to put them up for public access – all text below is taken verbatim from the documents in question.

Alberta Securities Commission: Notice of Hearing (Oct 2010) [Download PDF]
To: Wealthstreet Inc, Colin Davis Jones (aka David Colin Jones, aka Dave Jones), Rachael Poffenroth
Allegations & Summary of Breaches:

  1. “Staff (Staff) of the Alberta Securities Commission (Commission) alleges that Wealthstreet Inc. (Wealthstreet), Colin David Jones also known as David Colin Jones (Jones) and Rachael Poffenroth (Poffenroth) (collectively, the Respondents) engaged in illegal trading and distributions of securities in Alberta to Alberta investors.”
  2. “Staff also alleges that Jones acted as an advisor in Alberta without being registered as an advisor, made prohibited and misleading or untrue representations to Alberta investors and engaged in unfair practices in transactions with Alberta investors.”

Alberta Securities Commission: Amended Notice of Hearing (Oct 2010) [Download PDF]
To: VARUN VINNY AURORA, DAVID HUMENIUK, DAVID JONES, VINCENZO DE PALMA
Allegations & Summary of Breaches:

  1. “Staff of the Commission (Staff) allege that Varun Vinny Aurora (Aurora), David Humeniuk (Humeniuk), David Jones (Jones) and Vincenzo De Palma (De Palma) breached the Act by acting as dealers without being registered in accordance with Alberta securities laws, and without an applicable exemption to the registration requirement, or by authorizing, permitting or acquiescing in such conduct by one or more corporate entities of which they were a director or officer.”
  2. “Staff allege that Aurora, Humeniuk and Jones breached the Act by making, or by authorizing, permitting or acquiescing in the making of, statements each knew, or ought reasonably to have known, were misleading or untrue in a material respect, or that did not state a fact that was required to be stated or that was necessary to make the statement not misleading, and that would reasonably have been expected to have a significant effect on the market price or value of the security in question.”
  3. “Staff allege that Aurora, Humeniuk, Jones and De Palma each breached the Act by trading in securities on his own account, or authorized, permitted or acquiesced in the trade of securities on one or more companies’ own account, in circumstances where such
    trades were distributions, without having filed a prospectus or preliminary prospectus for which a receipt had been issued by the Executive Director of the Commission (the Executive Director), and for which no valid exemption applied.”
  4. “Staff allege that Aurora, Humeniuk, Jones and De Palma each acted contrary to the public interest.”

Alberta Securities Commission: Notice of Decision (Dec 2011) [Download PDF]
To: Wealthstreet Inc, Colin Davis Jones (aka David Colin Jones, aka Dave Jones), Rachael Poffenroth
Recognition of Seriousness:

  1. “Jones, in our view, still does not recognize the seriousness of his misconduct. Communications to investors that are in evidence and his statements before us (on the few occasions that we saw or heard from him) demonstrate Jones’s persistence in contending that any issues with the Promissory Notes and the other securities sold through Wealthstreet were caused by global economic conditions and not his actions. He continues to accept no blame or responsibility for his illegal actions. When cross-examining investor witness KC, he implied that she was in a more balanced position with her current investments (through Wealthstreet) than she had been before meeting Jones. In fact, KC had gone from having retirement savings of over $200 000 and real estate equity of several hundred thousand dollars to apparently losing all of her savings and owing $540 000 on home equity lines of credit. In addition to not accepting responsibility for the financial harm he caused his clients, Jones seems unwilling or unable to appreciate the fact that his actions contravened Alberta securities laws and were contrary to the public interest.”
  2. “We believe that Poffenroth recognizes the seriousness of her misconduct and sincerely regrets both her involvement in Wealthstreet and the harm caused to Wealthstreet investors. She candidly admitted that she was not qualified to act as Wealthstreet’s president. She also testified during the Merits Hearing that she experienced “shock and hurt” at learning some of what Jones had done and how the investors had been affected. She appeared to accept the majority of the sanctions suggested by Staff as appropriate and expressed her intention not to be involved with public companies in the future. However, the evidence also indicates that Poffenroth had concerns about being under-qualified and being upset over some of Jones’s activities while still employed at Wealthstreet. Despite her concerns and reservations, Poffenroth continued for a time to act as Wealthstreet’s president and collect her generous remuneration. She later filed a claim with the Trustee for money owing to her from her wrongful dismissal claim. At no time did she report Jones or Wealthstreet to any regulators. We conclude that while some of her remorse and recognition of seriousness is genuine, some of that contrition stems from her desire to minimize the sanctions she might receive.”

Criminal Charges Laid in Concrete Equities Investment Scheme

I’ve been waiting for this moment to arrive for a very long time – Canada’s criminal justice system is finally going after some of the individuals involved in stealing millions of dollars from investors:

“Mounties have charged two men in fraud scheme that allegedly bilked Canadian investors out of $23 million…Mounties have charged David Nelson Humeniuk and Varun Aurora with three counts of fraud over $5,000 and one count of theft over $5,000. Humeniuk alone is also charged with one count of theft and money laundering for taking $1 million of investors’ money for his personal use. The St. Albert man was arrested and released on a promise to appear in a Calgary court on Feb. 27. A Canada-wide warrant has been issued for the arrest of Aurora, who also goes by the name “Vinny.””

Here’s the full story over on the Calgary Sun, and a short news clip:

Varun "Vinny" Aurora Wanted by Police

I wonder if any of the other ex-Concrete Equities people will be next?

 

Concrete Equities PDF Documents

Clearing out some old Evernote folders, I wanted to publish these Concrete Equities-related documents for search engines to index.

SEARCHABLE-PDF-Dave Humeniuk Statement of Defence Aug 28

PDF-Dave Humeniuk Statement of Defence Aug 28

SEARCHABLE-PDF-Aug 21 Statement of Claim and Affidavit

PDF-Aug 21 Statement of Claim and Affidavit

Letter to El Golfo Investor, dated November 2, 2010

E & Y Feb 16, 2011 Letter to Mexico Investors

Basi Affidavit v5 (Filed May 26, 2010)

Dave Jones’ Wealthstreet Dragon Fund Now Worthless

Since a few people email me every month asking if I know anything about the status of the Dragon Fund, I thought it would be helpful if I published this letter I received from Olympia Trust Company last month. It officially declares that the Dragon Fund is defunct and worthless. If you need the documents required to remove this investment from your account, please contact Olympia Trust Company at 1-877-565-0001.

Dragon-Fund-Defunct-Dave-Jones-Wealthstreet

Making it Easy for Your Potential Customer to Use Your Service

This is the first post in a while that deals with the topic of business…this is a subject I want to start to explore more on this blog. I don’t feel blessed with much spare time at the moment, but it’s important for me to continue to write somewhere, lest I become too rusty. So here goes…

I was in Mexico recently on vacation, and on the way through the airport in Puerto Vallarta I was reminded again what a clever design the airport has for encouraging people to spend their last few pesos. You literally have to walk through several stores on your way to your gate. Not near them, but through them. It’s less obnoxious than it sounds, and it’s effective. The point is, by the time you get to your gate, you’ve probably spent your last bit of cash. There’s also the thought that most travelers have of not wanting to return home with useless paper currency they can’t spend unless they come back.

After passing through these stores, you finally make it to your gate. In this area there’s a small, two-chair massage station business that offers travelers 15 minute back/neck massages. If you’re sitting at the gate and you’ve got the time, why not, right? That was my thinking, and having a pre sit-on-my-butt-for-five-hours-massage seemed like a great idea. I was practically relaxing already as I walked up to the two massage chairs. The women greeted me with a smile, I smiled back, and before I could say anything my eyes caught a fairly large sign that read:

CASH ONLY

I was quite taken aback by this. Cash only? Really? People are getting ready to board their plane, have walked a gauntlet of stores designed to coax the last pesos out of their wallet, and this business is expecting people to pay for their service in cash? I felt a rush of disappointment come over me, and to my dismay I practically scowled at the woman as I said “Do you think most people have cash on them as they’re about to get on the plane?”. I threw up my hands and walked away, no doubt leaving her somewhat stunned. Anyone who knows me understands that hiding my feelings is something I’m rather poor at.

In that moment, I was a customer who was excitedly looking forward to paying for a service and in an instant I became someone who was turned away because of a poor decision the owner made. It certainly wasn’t the fault of the woman working, but she lost a paying customer and the tip she would have pocketed.

The lesson here? Meet your customers where they’re at in every way possible. If you set up your business in a location where people are unlikely to have cash, take credit cards. Be flexible. Don’t let payment terms be the thing that gets in the way of you making a sale. You’ve done your work, you’ve paid for a prime location, you’ve trained your staff, you’re ready to make some profit. Why destroy all that by being a cash-only business in a place where people are unlikely to have cash?

On the flip side, there was a great business that snagged $25 from me easily: it was a small, tastefully designed kiosk with a large flat-panel TV, and small but powerful Bose speakers playing music from a violin/piano duet called Arcano. They seem to do strictly covers, mostly pop/rock (like this), and since I’m always looking for good music to serve as a back-drop to periods of focus, I handed over my Visa and walked away with two CDs in less than two minutes. That’s how you run a business!

The Groupon Experience: Three Business Owners Share



I’ve long held that Groupon, or any online coupon offering like it, is like juggling a flaming knife for a business owner: only the truly skilled will survived. full article here.

ASC Rules David Jones and Wealthstreet Breached Alberta Securities Laws

“An Alberta Securities Commission (ASC) panel has found that David Jones, sole director and shareholder of Wealthstreet Inc., breached Alberta securities laws by acting as an advisor without being registered and engaging in an unfair practice by unreasonably pressuring at least one investor to purchase securities through Wealthstreet.   The panel also ruled that Jones, Wealthstreet and former Wealthstreet president Rachael Poffenroth illegally traded in and distributed securities of Wealthstreet, and that all the conduct was contrary to the public interest.” – Alberta Securities Commission Web site

“A Calgary financial advisor well-known for his market reports on local radio and TV stations provided “disastrous” and “unconscionable” advice to some investing with him, the Alberta Securities Commission ruled Monday, adding David Jones used “scare tactics and falsehoods” with at least one client.” – The Calgary Herald

Not much to say is there? Dave Jones worked very hard to sell a lot of financial products to a lot of different people, and now he’s seeing the impact of his actions. Let’s not forget former Wealthstreet President Rachel Poffenroth – she was right there alongside Dave Jones. Now that the trial is done, sanctions will be determined at a later date.

Dragon Fund Update, July 25th, 2011

I received this via email today. If you’re an investor with money in the Dragon Fund, here’s what’s going on (which is to say, still not much):

July 25, 2011

Dragon Fund Update

Recently Dragon Fund and the trustees of the fund have been served with an Amended Statement of Claim which has included MacLeod Dixon. This amendment has created a conflict of interest between our legal counsel (MacLeod Dixon), ourselves and the fund.  MacLeod Dixon is no longer able to represent the fund as this is a conflict of interest.

New legal representation for Mike Arnold and Tina Zowtuk has recommend we resign as trustees . Due to the Amended Statement of Claim the new legal counsel can represent us personally but not the fund.

We are currently asking for individuals to put their name forward to take on the trustee role of the Dragon Fund LP.  If we are unable to replace the trustees internally the fund will have to appoint an external trustee.

If you are interested in becoming a trustee please forward your contact information.

Regards

Mike Arnold
Tina Zowtuk

The Groupon/Coupon Bubble Will Burst Soon

I posted the above status update earlier today, and when asked to explain myself on Facebook, I wrote up a rather lengthy explanation that seemed worth of turning into a blog post…so here it is (slightly edited for clarity).

I’ve talked to a few small businesses now that have used these new coupon services, and in every case so far, they’ve been financially maimed by them. Some due to their own ignorance or poor financial understanding, some by the salespeople at the deal companies.

A carpet cleaning company used Kijiji and the salespeople wouldn’t allow him to put a limit on the number of coupons sold – because they wanted to gain as much revenue as possible from it of course. They charge 50%, like everyone seems to, and still tacked on another 2.5% in credit card processing fees. Talk about adding insult to injury. Thankfully for him, only 150 people ordered the carpet cleaning – he was smart enough to spread out the appointments, only booking the Kijiji deals three times a week. That makes it frustrating for customers like me to get the service in a timely fashion – it took two months for me to get my booking in – but given that he’s working at 77.5% off his normal price, he’s only breaking even on supplies and travel costs…so his labour is free. Hard to feed a family on that!

In my case he made some money – I had him do two sets of stairs, which weren’t a part of the deal – but he said nearly every time people only want what the coupon covers. So as soon as he hits 500 square feet of carpet cleaned, he stopped.

Most businesses hope for repeat customers, but the type of customers that use deals like these are usually the kind who aren’t willing to pay for a service at full price in the first place. So you end up with people using your service at no profit to you, and you don’t get many new customers out of the deal. There are some exceptions: the guy that did our carpets did such an amazing job I’ll absolutely use him again, paying full price and b happy about it. I think that’s rare though.

Some deals can scale, no matter how many coupons are sold. I just bought a $10 for $20 at Old Navy for example. Old Navy could sell 10,000 of them and their stores could handle the extra traffic just fine. But the small carpet cleaning business, if he suddenly has 500% more clients than before, it soaks up all his excess capacity (good) but also uses up all his future capacity for the next six months (bad), at no profit. I heard of a cleaning company that went bankrupt because they sold too many coupons – again, because the company wouldn’t let them restrict the number of coupons sold – and it was easier to go bankrupt than to absorb the losses of the poor business decision of using the coupon service.