Iraqi Dinar Scam
(Update - November 11, 2013) The collateral criminal proceedings that have led to our civil class action lawsuit being stayed are coming to a head with a criminal trial date being set. Our civil lawsuit/ proposed class action was initially stayed back in December of 2012 pending resolution of the collateral criminal case that had been filed against the same defendants that were named in our civil action. The collateral criminal proceedings are now set to go to trial on December 2, 2013.
(Update - December 4, 2012) The civil lawsuit/ proposed class action has been stayed pending completion of the collateral criminal proceedings in federal court. You can read the order by clicking HERE
(Update - September 21, 2012) View the Class Action Complaint that has just been filed by clicking HERE
(Update - September 21, 2012) If you wish to join the class action, please fill out the form to the left of this page.
(Update - September 20, 2012) IF YOU HAVE BEEN AFFECTED CONTACT US NOW TO PARTICIPATE IN THE CLASS ACTION
DINAR DREAMING - Toledo
I had lunch with a friend this week. He knows I handle many securities cases and so he asked me what I knew about Iraqi Dinars. I told him very little but took the bait and asked him “Why?”.
He explained that he invested $3,000.00 in Iraqi Dinars. He said everyone in the small town west of Toledo where his business was located, were buying Dinars from a guy in Toledo. And that the hourly employees of a large Toledo company were investing heavily including through the use of their 401(k)’s. My friend explained that once the Dinar was “revalued” his “investment” would be worth $10,000.00. I told him I would get back to him.
With the little information he provided I was able to identify the “guy in Toledo” and quickly form an opinion as to this “investment”.
Turns out my buddy had the only sensible position on this matter. He could easily afford to lose what he invested, and he thought of it as buying a lottery ticket. Little chance of winning but if it did it would win big.
Turns out the “guy in Toledo” who I will call Fred is a slick marketer. He claims through a well developed website, you tube videos and weekly conference calls with “experts” where investors and potential investors can listen in and participate. He has a relationship with an “expert” on Iraqi Dinars from California. They also market that only investors will be able to participate further in the economic turnaround of Iraq by being able to become investors in an Iraqi Hedge Fund that will make further money from the turnaround (only a $750 fee to secure your placement).
Classic. We see the use of experts, selling to affinity groups, claiming scarcity, stating that you have to act now to become an insider… All a scam. Fred uses economics to explain how the Dinar must be revalued so that the country of Iraq can sell its oil. Fred tells you how it once was trading at three times the value of the dollar instead of the pennies it now trades. Fred neglects to tell you that the “value” of Dinar to the Dollar was not set by the market, but by a guy named Saddam Hussein who set the value simply by proclamation.
The Iraqi Dinar scam has been around since the first Gulf War.
In this case what is known as a hard currency scam. Hard currency meaning physical dollars. Fred makes his money by selling you actual Iraqi Dinars at a huge mark up. Typically they are sold at somewhere like one million Dinars for $1,200. Try to trade your Dinars in at a reputable dealer and they will offer you approximately $650 for your million Dinars.
The other method to gain trust and reputation that Fred uses is to say that his company is a “registered currency trader”. The closes I can get to a registered currency trader is a registered money service business. If you want to become a registered money service business it’s pretty simple. Just complete a form and if you complete it correctly and send it to the IRS you to can be one. No exam, no training. What this business relates to is similar to a business that accepts Western Union payments. It has nothing to do with trading currencies. So if you know what a registered currency trader is please let me know.
While we are on that subject, let’s talk about registration. As in the actual legal kind. To sell investments you normally have to be a registered investment advisor or affiliated with a registered broker dealer. After checking the various financial oversight organizations, it seems that neither Fred, nor his company, nor his expert from California are registered as true financial professionals licensed to sell securities.
Well what about the “investment”. The Ohio Revised Code is quite clear upon what is a security. A security includes “…the currency of any government other than those of the United States and Canada”. Therefore an Iraqi Dinar is a security. In Ohio to sell a security it must either be registered with the State of Ohio or the Securities and Exchange Commission, or be exempt from registration based on a few exemptions. Even if exempt the seller of the security must still file notices with the State and the SEC and follow all sales rules associated with the exemption. These rules include not selling to any person who is not an accredited investor, failure to provide full financial disclosure as to the risk of loss, etc. Fred and his company have not filed with the State of Ohio or the SEC.
One way these marketers of hard currency try to get around these laws is to claim they are selling currency based only on its numismatic value. A collectors value not an investors value.
Based upon the marketing materials I reviewed, Fred is selling Dinars for investment purposes claiming that people will make a lot of money upon a revaluation which may never occur, that they must act soon to get in on the ground floor and secure your position in the follow up hedge fund, that he couldn’t refrain from sharing this wonderful insight any longer and that he had to share it with other good people. I would not be surprised to find that Fred is an involved person in his church and that a good portion of the congregation, including the pastor and the endowment fund, have money invested with Fred. The other tip is received was that Fred was planning a party for his investors to celebrate this wonderful “blessing”. The last guy I knew who threw parties for his investors in Toledo is sitting in jail with his son for running a ponzi scheme.
Could I be wrong? It's a possibility. But the M.O. in these fraud schemes is always the same Please remember us and feel free to contact us when you can’t get a call back after asking that your money be returned.