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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: donjuan_demarco who wrote (61374)	10/25/2000 12:25:35 PM
From: StockDung	Read Replies (3) \| Respond to of 122087

PROMISSORY NOTE FRAUD troubleshooter.com -------------------------------------------------------------------------------- I came across a scam the other day on my radio show that you need to know about. It involves insurance agents who sell promissory notes. First some background: A promissory note is basically a loan. When a lender loans money, they get a promissory note (sometimes just called a note). That note has a face value – which is the amount of money borrowed, plus any origination fees. And it yields a certain amount of interest depending on the agreed upon terms. Notes can run anywhere from 30 days to 30 years. Usually when a note is made, the lender secures the note with collateral. That means the borrower has to put up something of value, so if the note is not paid the collateral is taken by the lender. When collateral secures a note it is called a secured note. Examples of secured notes are home loans (where the home is collateral), cars (where the car is collateral) and equipment (where the equipment is collateral). In these cases it is said that the lender has a "secured interest" in those items named as collateral. Promissory notes become a real problem when lenders don’t have a secured note, especially if the borrower is a deadbeat. There is virtually no way of collecting on an unsecured note if the borrower declares bankruptcy. This brings me to the topic of FRAUD. Recently insurance agents around the country have been selling unsecured promissory notes. The agents tell their clients it is an investment. They tout the notes as "good investments" because the interest rates are usually pretty high. But clients fail to realize those rates mean nothing if they can’t collect! Here is a typical case scenario: An agent sells an elderly woman a promissory note with a face value of $100,000 yielding 12%. He tells the woman that his insurance company stands behind the note and that the borrower is a respected corporation raising capital for expansion. The woman hands a check over to the agent for $100,000. The agent gets a handsome commission. The agents forwards the money to the borrowing corporation. The corporation pockets millions of dollars from other victims and then goes out of business. The corporation says they tried to make a go of it but the business just didn’t pan out! They say this to get around charges of fraud – afterall business failure is not a crime. When victims try to ask the insurance company for help – since it supposedly guaranteed the note, they find that the insurance company is either non-existent, out of business or somewhere in another country. The victims never collect. TIP: Never buy an unsecured note and if you buy a secured note and even buying a secured note can be risky if you don’t know what you are doing.