MARKET SCAMS

[thepennyking]

HONG KONG A PORTLY FOREIGNER TURNED UP AT A BANK BRANCH IN NANNING
SOUTHERN CHINA LAST YEAR AND MADE A STARTLING OFFER HE WOULD LEND THE BANK
11 BILLION IN RETURN FOR A SIMPLE IOU

LIU MINSHAN PRESIDENT OF GUANGXI TRUST & INVESTMENT CORP ACCEPTED THE
OFFER IN CHINA'S BREAKNECK ECONOMIC ACCELERATION AN OPPORTUNITY TO LAY
HANDS ON FOREIGN CURRENCY WAS TOO GOOD TO PASS UP EVEN IF HIS COMPANY
WASN'T SUPPOSED TO BORROW FROM ABROAD HE ISSUED A MASSIVE PROMISSORY NOTE
BUT THE LOAN NEVER ARRIVED AND MR LIU RESIGNED LAST MONTH

HALFWAY AROUND THE WORLD MORE THAN 15000 POLISH POTATO FARMERS ARE STUCK
WITH THE NOTE MR LIU ISSUED THEIR AGENTS ACCEPTED IT AS PAYMENT FOR MOST
OF THEIR 1991 POTATO CROP ONLY TO FIND OUT THE NOTE WAS WORTHLESS

BEHIND BOTH DEALS SAY BUSINESSMEN IN CHINA AND POLAND IS A 45YEAROLD
CANADIAN BUSINESSMAN AND FORMER SMALLTOWN PREACHER ROBERT EARL PALM THEY
AND SOME OF THE PEOPLE HE DID BUSINESS WITH SAY MR PALM IS A REMARKABLE
PIONEER IN ONE OF THE HOTTEST TRADES TO TOUCH THE FASTEMERGING MARKETS OF
THE FORMER SOVIET BLOC AND CHINA FRAUD

IN THE CHAOS OF ECONOMIC REFORMS SWEEPING THE COMMUNIST AND EXCOMMUNIST
WORLD OPPORTUNITY FOR FRAUD ABOUNDS WESTERN DEMOCRACY HAS COST ME MY
LIVELIHOOD A POLISH POTATO FARMER COMPLAINED TO A CANADIAN TELEVISION CREW
IN FEBRUARY

OTHERS PUT THE BLAME ON MR PALM WHO IS THE TARGET OF AT LEAST THREE
LAWSUITS IN THE US AND CANADA MR PALM'S ACTIVITIES ALSO HAVE COME UNDER
THE SCRUTINY OF THE US FEDERAL BUREAU OF INVESTIGATION

THROUGH HIS LAWYERS AT ASHTON & LYON A BRITISH COLUMBIA FIRM MR PALM
REFUSED TO COMMENT FOR THIS ARTICLE

LAST MONTH IN WHAT APPEARS TO BE ONE OF THE LARGEST FRAUDS IN CHINA SINCE
THE COUNTRY LAUNCHED ITS ECONOMICREFORM PROGRAM IN 1979 THE COUNTRY'S
PUBLIC SECURITY BUREAU DISCLOSED THAT IT HAD ARRESTED TWO AMERICANS
FRANCISCO HUNG MOY AND RAYMOND LEE THEY ARE SUSPECTED OF PERSUADING
OFFICIALS OF A RURAL BRANCH OF AGRICULTURAL BANK OF CHINA TO WRITE 10
BILLION IN FRAUDULENT STANDBY LETTERS OF CREDIT THE COLLATERAL WAS ANOTHER
LETTER OF CREDIT ISSUED BY UNITED NATIONAL REPUBLIC BANK OF RUSSIA A
BANK THAT OFFICIALS IN MOSCOW SAY DOESN'T EXIST IN RUSSIA

AGRICULTURAL BANK SAYS THE MEN IDENTIFIED THEMSELVES AS WORKING FOR MR
PALM BY THE TIME MESSRS HUNG MOY AND LEE WERE ARRESTED THOUGH THE
LETTERS OF CREDIT WERE IN CIRCULATION SCOTLAND YARD UNCOVERED 22 OF THE
CHINESEISSUED LETTERS WITH A SUPPOSED TOTAL VALUE OF 1 BILLION
SUGGESTING THAT THE REST OF THE 9 BILLION IN WORTHLESS PAPER ARE FLOATING
THROUGH THE WORLD'S FINANCIAL SYSTEM CHINA HAS ISSUED AN INTERNATIONAL
WARNING TO BANKERS AGAINST HONORING THE NOTES

MR PALM BALDING WITH A FRINGE OF GRAY HAIR DOES BUSINESS FROM AN OFFICE
IN AN INDUSTRIAL AREA OF THE BRITISH COLUMBIA CAPITAL OF VICTORIA ON
CANADA'S PACIFIC COAST PEOPLE WHO HAVE MET HIM SAY HE SPEAKS INTENSELY
ABOUT WHAT HE CALLS THE RELIGIOUS NATURE OF HIS WORK INDEED HE USED TO BE
A PENTECOSTAL MINISTER

HIS FORMER PARTNERS IN EASTERN EUROPE SPEAK SOMEWHAT LESS INSPIRATIONALLY
ABOUT THEIR BUSINESS WITH HIM AMONG THEM IS A UKRAINIAN TRUST COMPANY
BATKIVSCHINA WHICH CLAIMS IN A LAWSUIT FILED IN A US DISTRICT COURT IN
CALIFORNIA THAT MR PALM AND TWO OTHER MEN OWE IT 311 MILLION IN PAYMENT
FOR RUSSIAN CURRENCY THE THREE MEN BOUGHT A FINNISH COMPANY IS SUING MR
PALM AND OTHERS IN THE SUPREME COURT OF BRITISH COLUMBIA IN VANCOUVER OVER
ANOTHER CURRENCY TRADE

THE OWNERS OF MOSCOW'S PARKLAGUNA HOTEL CLAIM THAT MR PALM'S COMPANY OWES
130000 FOR KEEPING AN OFFICE IN THEIR HOTEL BETWEEN AUGUST AND DECEMBER
1992 ONLY PROMISES WE HAVE SAYS SVETLANA LEPESHKOVA FRONT OFFICE
MANAGER AT THE HOTEL PROMISES PROMISES PROMISES THAT IS ALL WE
TRUSTED THEM BECAUSE AT FIRST THEY PAID

INDEED SOME OF HIS FORMER BUSINESS CONTACTS AND THEIR LAWYERS SAY THAT MR
PALM IN DEALING WITH EACH OF THEM PUT UP MONEY OR COLLATERAL TO ESTABLISH
TRUST THEN GOT CAPITAL ADVANCES FROM THEM APPROPRIATELY MR PALM'S
VICTORIABASED COMPANY IS NAMED ADVANCE CAPITAL SERVICES CORP

A 1992 PROFILE BY DUN & BRADSTREET CORP BASED IN PART ON INFORMATION FROM
ADVANCE CAPITAL DESCRIBES THE COMPANY'S PRINCIPAL BUSINESS TERRITORY AS
INTERNATIONAL ADDING THAT IT HAS 200 EMPLOYEES 20 BRANCHES AND 25
SUBSIDIARIES HALF THE COMPANY'S ANNUAL REVENUE OF 18 MILLION IS LISTED AS
COMING FROM FOOD WHOLESALING AND 40 FROM LUMBERBROKERING AND METALMINING
AND EXPLORATION MR PALM HAS BEEN WITH THE COMPANY OF WHICH HE OWNS 25
SINCE IT INCORPORATED IN 1985 SAYS DUN & BRADSTREET AND IS ITS ONLY
DIRECTOR

MR PALM FIRST CHECKED INTO MOSCOW'S PARKLAGUNA HOTEL IN AUGUST 1991 AS
RUSSIA WAS REELING FROM THE COLLAPSE OF MIKHAIL GORBACHEV'S GOVERNMENT THE
SUDDEN END TO CENTRAL PLANNING LEFT RUSSIAN CONSUMERS SCRAMBLING FOR FOOD
AND NEW RUSSIAN BUSINESSES SCRAMBLING FOR HARD CURRENCY UNDER SUCH
CIRCUMSTANCES A SEEMINGLY WEALTHY WELLCONNECTED WESTERN BUSINESSMAN MIGHT
EASILY FIND EAGER RUSSIAN PARTNERS

IN DEALING WITH THE UKRAINIAN TRUST BATKIVSCHINA MR PALM SHOWED OFF
LETTERS OF REFERENCE PURPORTEDLY FROM SENIOR RUSSIAN GOVERNMENT OFFICIALS
SAYS BATKIVSCHINA'S LAWYER PHILIP KAUFLER MR PALM ALSO BOASTED OF HIS
COMPANY'S TIES TO UNITED NATIONAL REPUBLIC BANK OF RUSSIA OR UNRB

BUT NO SUCH BANK EXISTS IN RUSSIA SAYS THE COUNTRY'S CENTRAL BANK UNRB
FINANCIAL STATEMENTS RECEIVED BY HODIMPEX LTD A POLISH CONCERN ARE
SIGNED AS AUDITED BY MCIVOR & ASSOCIATES THE VICTORIA ACCOUNTING FIRM THAT
AUDITS ADVANCE CAPITAL BUT CANADA'S OFFICE OF THE SUPERVISOR OF FINANCIAL
INSTUTITIONS SAYS THE BANK ISN'T AUTHORIZED TO CONDUCT ANY BUSINESS FROM
CANADA A BALANCE SHEET ISSUED BY THE BANK SEEMS ABSURDLY LARGE GIVEN UNRB'S
OBSCURITY ITS 18895 BILLION IN CLAIMED ASSETS AS OF NOV 1 1991 WOULD
PLACE IT AMONG THE WORLD'S 30 BIGGEST BANKS

A FINNISH COMPANY ENGINEERING OFFICE BERTEL ECKENGREN LTD ALLEGES IN ITS
LAWSUIT THAT IT CONTRACTED WITH MR PALM ADVANCE CAPITAL AND UNRB TO BUY
430 MILLION RUBLES IN EXCHANGE FOR 249 MILLION IN MAY 1992 BUT ECKENGREN
SAYS IT RECEIVED ONLY 71 MILLION RUBLES

SIMILARLY BATKIVSCHINA CLAIMS IN ITS LAWSUIT THAT IT AGREED WITH MR PALM
TO SELL 724 BILLION RUBLES TO A LICHTENSTEIN COMPANY CARTESA FINANCE
CORP FOR 311 MILLION IN DECEMBER 1991 WHEN THE DOLLARS HADN'T ARRIVED
AT BATKIVSCHINA'S BANK BY MID1992 THE UKRAINIAN COMPANY SAYS MR PALM
OFFERED IT 35 MILLION OF STOCK IN CARTESA A COMPANY THE UKRAINIANS SAY WAS
ALREADY IN LIQUIDATION BATKIVSCHINA IS SUING CARTESA ADVANCE CAPITAL AND
AN INDIANA COMPANY FOR 109 MILLION UNDER US PROVISIONS ALLOWING TRIPLE
DAMAGES IN SUITS THAT PROVE ELEMENTS OF RACKETEERING

BUT THE SCOPE OF THESE DEALINGS PALES IN COMPARISON TO ACTIVITIES LINKED TO
MR PALM IN CHINA SHORTLY AFTER HIS MEETING AT GUANGXI TRUST IN APRIL 1992
ADVANCED CAPITAL APPARENTLY TURNED TO AGRICULTURAL BANK OF CHINA ONE OF
CHINA'S FOUR NATIONAL BANKS WHICH HAS A BRANCH IN HENGSHUI A TOWN
SOUTHWEST OF BEIJING LIKE GUANGXI TRUST AGRICULTURAL BANK'S HENGSHUI
BRANCH ISN'T ALLOWED TO CONDUCT INTERNATIONAL BUSINESS BUT THE BANK SAYS
ITS HENGSHUI BRANCH MANAGER WAS OFFERED BY MESSERS HUNG MOY AND LEE A 10
BILLION STANDBY LETTER OF CREDIT FROM UNITED NATIONAL REPUBLIC BANK OF
RUSSIA IN EARLY 1993

IN RETURN MESSRS HUNG MOY AND LEE ASKED THE BRANCH TO WRITE 200 SMALLER
STANDBY LETTERS OF CREDIT WITH FACE VALUES TOTALING 10 BILLION THE
LETTERS WERE WRITTEN AND SIGNED APRIL 1 ALL THE LETTERS OF CREDIT WERE
LABELED AS BEING BACKED BY UNITED ASIA GROUP A NEW YORKREGISTERED
COMPANY OF WHICH MR HUNG MOY IS PRESIDENT ACCORDING TO AGRICULTURAL BANK
IN MAY AGRICULTURAL BANK WARNED BANKS WORLDWIDE NOT TO ACCEPT STANDBY
LETTERS OF CREDIT FROM ITS HENGSHUI BRANCH A MONTH EARLIER IT HAD WARNED
THEM NOT TO ACCEPT A STANDBY LETTER OF CREDIT FROM ITS BRANCH IN SANYA ON
THE ISLAND OF HAINAN THE SANYA LETTER OF CREDIT WAS VALUED AT 80 MILLION
WITH A VALIDITY OF 20 YEARS IT LISTED NO BENEFICIARY

BUT HODIMPEX A BUDDING FIRM OF POLISH FOOD BROKERS GOT THE WARNING TOO
LATE IT HAD STRUCK A DEAL IN FEBRUARY AND MARCH 1992 TO SELL ADVANCE
CAPITAL 316 MILLION OF POTATOES AND OTHER FOOD FOR DISTRIBUTION AS
HUMANITARIAN AID IN THE FORMER SOVIET UNION THIS WAS THE FIRST CASE FOR
OUR COMPANY TO BE INVOLVED IN SUCH BIG BUSINESS SAYS ANDRZEJ JANICKI
SENIOR ADVISER TO HODIMPEX'S MANAGEMENT BECAUSE HODIMPEX HAD NEVER HEARD
OF ADVANCE CAPITAL IT ASKED DUN & BRADSTREET TO INVESTIGATE ITS CORPORATE
AND PAYMENT HISTORY A COPY OF THE DUN & BRADSTREET REPORT RECEIVED BY
HODIMPEX INDICATED ADVANCE CAPITAL'S PAYMENTS TENDED TO BE SLOW BY ONLY 11
DAYS

SO BETWEEN MARCH 30 AND MAY 18 HODIMPEX SENT 373 MILLION OF FOOD TO THE
FORMER SOVIET UNION MAINLY TO BASES OF DEMOBILIZED SOVIET SOLDIERS IT THEN
STOPPED THE SHIPMENTS BECAUSE ADVANCE CAPITAL HAD STILL PAID NOTHING ON
JUNE 8 ADVANCE CAPITAL TOLD HODIMPEX IT COULD DRAW 125 MILLION FROM THE
GUANGXI TRUST PROMISSORY NOTE IT WAS LATER HANDED THE STANDBY LETTER OF
CREDIT FROM THE SANYA BRANCH OF THE AGRICULTURAL BANK THE FOOD BROKER LATER
DISCOVERED THAT BOTH DOCUMENTS ARE WORTHLESS

http://www.isip.msstate.edu/publications/courses/ece_8463/projects/1998_spring/data/lm_training/wsj9...