The “90% Stock Loan” scam won’t go away.
Exactly two years after the Dept. of Justice tried to block a $1 billion, nationwide tax fraud scheme, a federal judge in San Francisco moved to stop four people from selling the scheme, which already involved 1,700 customers and allegedly cost the U.S. Treasury an estimated $230 million or more.
DOJ: A federal judge in San Francisco has issued permanent injunctions barring four individuals from promoting what a government lawsuit describes as a complex tax-fraud scheme involving several entities located around the globe, the Justice Department announced today.
Despite the negative association, 90% stock loans are still being promoted.
We called and asked if we could get them at Investing Smartly of Castro Valley, CA, who advertises a 90% stock loan program on their website — “This program lets you have your cake and eat it too.” A man calling himself only “Dave” said the loans were “temporarily unavailable because of market conditions,” but said “we are hoping to offer them again in a few days.”
According the website, “with this program, you limit your downside risk to a maximum of 10% of the market value of the stock, while retaining the opportunity to participate in the upside movement of the stock.”
It’s not clear if this and other offerings still being pushed are fraudulent. But here’s how the DOJ explains the series of cases they stopped:
The government complaint filed in the case alleges that these four men and other defendants promoted a so-called “90% Stock Loan” program, using entities located in the United States, Hong Kong and the Isle of Man, that falsely purported to enable customers to contribute appreciated stocks or other securities in exchange for payments equal to 90% of the securities’ value without paying income tax on capital gains. Through this scheme, also known as the “Derivium” scheme, named after one of the companies involved, customers were allegedly told that they could avoid income tax because the transaction was a loan rather than a sale. But in fact, the government alleges, customers’ securities were actually sold to raise the funds to pay the customers.
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