Prime Bank Trading Programs, High Yield Investment Programs, Roll Programs and Private Placement Programs1. A definition.
During the past few years, there has been a significant increase in the number of reports received in connection with Prime Bank Instrument fraud schemes that has now assumed epidemic proportions. Some current estimates indicate that investors have been defrauded out of nearly ten billion dollars in the United States alone. These fraud schemes have attracted significant international attention, as individuals and organizations have lost billions of dollars throughout the world.
The symbols, names and products of the Treasury Department (Treasury) are misused in these schemes in several ways. Some schemes claim that:
the Treasury backs or approves such programs,
the Treasury has a "secret trading room",
the Treasury must approve the humanitarian projects connected to these schemes,
Treasury securities have been purchased for investors to guarantee against any loss, and
a particular scheme has a way to pool investor funds and buy and sell Treasury securities "just like the Rockefellers can".
NONE of these assertions are true.
"Prime Bank Instrument Fraud" is the general term given to fraud schemes that go by many different names, including Prime Bank Debentures, Prime Bank Guarantees, High-Yield Trading or Roll Programs, Standby Letters of Credit, International Chamber of Commerce (ICC) 3039 or 3034 Letters of Credit, Guaranteed Bank Notes, Discounted U.S. Treasury Securities and International Monetary Fund Backed Securities. In these schemes, the fraud artists purport to have access to a secret trading program sanctioned by the Federal Reserve Bank, the Treasury Department, the World Bank, the International Chamber of Commerce or the International Monetary Fund. Claims are made that a privileged few are invited to participate in the trading of some form of bank security such as bank guarantees, notes, stocks, or debentures, which can be bought at a discount and sold at a premium. It is often claimed that there are only 5 or 7 "traders" or "master commitment holders" authorized to resell these bank securities between the top 25 or 50 world banks. By conducting these "trades" several times a year/month/day, they claim to be able to produce exceptional returns, ranging from 6% to 100% per month. Legal documents associated with these schemes often require the victim to enter into "non disclosure and non circumvention agreements" and require the invested fund be "good, clean, clear and of non-criminal origin." These frauds often encourage the victim to send money to a foreign bank where it is eventually transferred to an account that is in the control of the con artist.
These various "prime bank" trading programs or similar trading programs that offer secret, private investment markets, which purport to offer above average market returns with below market risk through the trading of bank instruments are fraudulent. Offering such programs, or claiming to be able to introduce investors to people who have access to such programs, violates numerous federal law; including criminal laws. There are no "secret" markets in which banks trade securities. Any representations to the contrary are fraudulent.
In addition, investment programs in which a financial institution is asked to write a letter, commonly referred to as a "Blocked Funds Letter", advising that funds are available in the account, that they are "clean, and of non-criminal origin" and are free of "liens or encumbrances" for a certain time frame are frequently used to perpetrate fraud schemes. These letters have no use within legitimate banking circles.
It is illegal to engage in fraud in the offer or sale of a security. Under most circumstances, it is also illegal to sell securities that have not been registered with the U.S. Securities and Exchange Commission. A security includes the following items: "note", "stock", "bond", and "debenture" as well as more general terms such as "investment contract" and "any interest or instrument commonly known as a 'security'." In the leading opinion, the Supreme Court of the United States, held that the definition of a security includes an investment contract, which is "a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third party..." Designating such instruments as "loans" does not alter their legal status as securities. SEC v. W.J. Howey Co., et. al, 328 U.S. 293, 66 S. Ct.1100, 90 L.Ed. 1244 (1946).
2. Is it real? No! - How the Fraudsters Explain this Secret World.
The world of secret bank trading programs as depicted in the following link does not exist. While there is institutional trading of medium term notes and other debt instruments, there is no world of secret, off-book trading by large European banks where "traders" or "commitment holders" are invited into the mix. For a fairly common example of how this fraudulent world is explained to potential investors, please click here(920K, pdf file, uploaded 05-24-01). The more any explanation given to you resembles this explanation, the more likely you are being offered a fraudulent investment. For another explanation by fraudsters of how this secret world works and a superb rebuttal to this explanation, click here(40K, pdf file, uploaded 06-20-02). For an explanation about the origin of Prime Bank Fraud, click here(20K, pdf file, uploaded 06-20-02).
3. The Warnings.
Federal Reserve Board
http://www.federalreserve.gov/boarddocs/testimony/1996/19960717.htm
International Monetary Fund (IMF)
http://www.imf.org/external/np/sec/nb/1996/nb9614.htm
International Chamber of Commerce (ICC)
http://www.iccwbo.org/home/news_archives/1998/banking_instrument_scam.asp
Securties and Exchange Commission (SEC)
http://www.sec.gov/divisions/enforce/primebank.shtml
Federal Bureau of Investigation
http://newyork.fbi.gov/contact/fo/nyfo/fraudalert.htm#prime
Department of Justice Fraud Alert
Click here. (316kb pdf file, uploaded 05-24-01)
State of Connecticut
http://www.state.ct.us/dob/pages/primebnk.htm
4. Several varieties of the buzzwords or red flags are associated with these schemes.
There are many terms that are commonly seen in documents presented by fraudsters in the course of marketing fraudulent investment schemes. Fraudsters often mimic and misuse legitimate banking terms, given that there is a legitimate and purely institutional business in which the general public cannot participate. Many of the following terms are legitimate. These genuine terms then become misused along with those that have no meaning in the real world. They are thrown together in documents that contain a mix of fact and fiction, often confusing to the naïve investor. These include, but are not limited to:
Non-Cirumvention, Non-Disclosure
Good, Clean, Clear and of Non-Criminal Origin
Blocked Funds Investment Program
Prime Bank Trading Program
Federal Reserve Approved
Treasury Approved
Roll Programme
Irrevocable Pay Orders
Prime Bank Debentures, Notes, Guarantees, Letters of Credit,
Fresh Cut Paper
High Yield Investment Program (HYIP)
ICC 3034 or 3039 Letter of Credit
Off Balance Sheet Program
Other terms:
Prime Bank Debenture Trading,
Prime Bank Instruments, Notes, Guarantees, Trades or Letters of Credit
Prime European Bank Letters of Credit, Prime World Bank Debentures or Financial Instruments
Prime Insurance Guarantees
High Yield Debenture Trading, Financial Programs, Asset Management Programs
High Yield Investment Programs (HYIP), High Yield Promissory Notes or Bank Notes
Guaranteed Bank Notes, Intermediate Bank Notes
Roll Programs or Bank Debenture Roll Programs,
ICC (International Chamber of Commerce) 3034 or 3039 Letter of Credit
ICC 500 or 600 Bank Debenture Instruments
IMF (International Monetary Fund) Stand-by Letters of Credit
IMF Backed Securities, Bill of Exchange, Bill of Equity, or Backed Bonds
Discounted US Treasury Obligations, Renting or Leasing of Treasury Securities
Blocking of Assigned Treasury Securities, "Limited Edition" or De-Facto Treasury Securities
US Dollar Bonds, Federal Notes, Medium or Mid Term Notes or Bank Notes
Blocked Funds Letters or Investment Programs, Documentary Letters of Credit
Irrevocable Pay Orders, Collateral First Debentures, Money Center Bank
Fresh Cut Paper or Bank Debentures, Bank Paper, Seasoned Bank Debentures
Private Placement Programs, Private Trading Programs
International Certificate of Deposit (LCD), Irrevocable Bank Purchase Order (IBPO)
Irrevocable Corporate/Confirmed Purchase Order (ICPO)
Irrevocable Prime Bank Commitment, Zero Coupon L/C, Spot Trading
Common Catch Words, Phrases and Documents:
Although there are many different variations of the Prime Bank Instrument fraud scheme, most schemes include many of the following words, phrases and documents:
Secret trading program
Banks or Federal Reserve will deny any involvement in these programs
Non Circumvent / Non Disclosure Agreements
Funds are "Good, Clean, Clear and of Non-Criminal Origin"
Funds pooled together for minimum trade amounts of $10,000,000 or $100,000,000 (sometimes listed as "Ten [10] Million USD," etc.)
Interest rates guaranteed from 6% to 100% to 1000% per month
Trades with only the top 10, 25, or 50 banks in the world, such as Barclays or Credit Suisse
Program backed, approved, or sanctioned by the Federal Reserve Bank (FED or FRB), the International Monetary Fund (IMF), or the International Chamber of Commerce (ICC) or the Treasury Department
"Trader", "Facilitator", or "Broker"
Only 5 to 10 "traders" in the world have access to this program; Trader will conduct 40 trades per year.
Percentage of the yield will go to charity, social programs, or humanitarian efforts
US Government Agencies will deny the existence of these programs because the Government does not want your money to leave the US
US Government Agencies attempt to seize the funds for themselves
"Due 1, 5 or 10 years and 1 day"
"108" bank to bank certificate which guarantees the principle + 8% annual interest
Other catch words and phrases that have been associated with these programs include:
"Funds of non-criminal origin, are legally owned by or assigned for the participation in a specified High Yield Asset Management Program"
Principal is guaranteed and/or secured by letters of credit
"The funds will remain in a bank account that only you are signer on. These funds will be used as collateral."
Offshore trust accounts / tax free interest
Can obtain proceeds through Visa debit cards
Advised to remove from legitimate pension/WA accounts and send funds to self directed pension companies who collateralize the funds with a note, and are then invested in Prime Bank Instruments
Our "Facilitator" has access to the worlds top "trader"
"Trader" "Trading Bank" "Exit Buyer"
The way all banks or big banks make their money
Trades are sometimes referred to as "Tranches"
Only a select few are invited to participate in the trading program
Originally established by the elite families such as the Rockefeller's, Getty's, Rothschild's and the Carnegie's.
Fractionalize or collateralize the funds
Fractional banking laws
Hypothecation with insurance companies ($1.2M needed for insurance company to "hypothecate" $l00M needed for the trade)
Investment periods quoted on contracts would be "90 banking days", "one year and one day", or "five years and one day"
Program developed to level out the yo-yo syndrome in the banking industry
"The information contained in this document is for information purpose only and is not intended as a solicitation nor an offer to sell any form of securities"
Invested funds are fully secured by a Bank Endorsed Guarantee
"Cash" Wire Transfer
C&F ASWP
Comfort Letter
"Conditional" S.W.I.F.T. Payment
CUSIP Number
Discounting L/Cs
"Trades are specifically established at a term of 1 year and 1 day, so it does not have to appear on the bank's balance sheet"
Foreign Bank Advice
Irrevocable, Divisible, Assignable, Transferable, Fractionable, Revolving, Confirmed L/C Payable 100% At Sight
Key Tested Telex (KTT)
Market to Buy or Sell L/Cs
Proof of Funds
Proof of Product
Ready, Willing and Able (R,W & A)
Soft Probe
2% Performance Bond
* Pre-advise issued by bank
Bank responsible commitment of funds
Other things to look for that should make one worry:
A claim that the "promoter" has a steady business relationship with a large international bank
A refusal to give "full disclosure" of all involved
The expression "mandated agent"
Standby letter of credit (SLC)
11 Warning Signs:
1. Name dropping.
2. Buzzwords.
3. Excessive secrecy.
4. Over-reliance on authentication.
5. Excessive disclaimers.
6. Unwarranted appearance of professionalism.
7. Big player behind the scenes.
8. Yields are too high.
9. Lack of transactional basis.
10. The existence of a secondary market where these investments can be laid off quickly and profitably.
11. Flawed documentation.
5. Helpful links and Investigative Help:
For investigative help in the United States, please contact your local FBI Office.
For phone numbers of the various FBI field offices, see http://www.fbi.gov/contact/fo/fo.htm.
For the FBI Internet Fraud Complaint Center (IFCC), see http://www1.ifccfbi.gov/index.asp.
For the FBI National Crime Information Center (NCIC), see http://www.fbi.gov/hq/cjisd/ncic.htm.
For investigative help in London, please contact either:
Metropolitan Police Fraud Squad (New Scotland Yard), Broadway, London, SW1H OBG, Phone 011-44-207-230-1220, http://www.met.police.uk/fraudalert/prime.htm
or
City of London Fraud Squad, 37 Wood Street, London EC2P 2NQ, Phone 011-44-207-601-2575. http://www.cityoflondon.gov.uk/citypolice/index.htm