Scam Site Explanation
of the Prime Bank Fraud Process
Note: Information contained herein is not an
endorsement. It is simply copied from the source as an example
of what they propose.
Introduction to Bank Debenture Trading Programs
What is a bank debenture trading program?
Also referred to as a secured asset management program, this is an investment
vehicle commonly used by the very wealthy where the principal investment
is fully secured by a Bank Endorsed Guarantee. The principal is managed
and invested to give a guaranteed high return to the investor on a
periodic basis. There is no risk of losing the investor's principal
This investment opportunity involves the purchase and sale of Bank
Debentures within the International Market in controlled trading
program The program allows for the investor to place his funds through
an established Program Management firm working-directly with a major
The investment funds are secured by a Bank-Endorsed Guarantee by
the Banking institution at the time the funds are deposited. The
Investor is designated as the Beneficiary of the Guarantee unless
otherwise instructed by the Investor. The guarantee is issued to
secure the Investor's principal for the contract period. This guarantee
will be Bank Endorsed with the Bank Seal, two authorized senior Officers'
signatures, and will guarantee that the funds will be on deposit
in the Bank during the contract period and will be returned fully
to the Investor at the end of the contract term.
The Investor is also guaranteed by the program Directors, by contract
that they will receive what is in effect a percentage of each trade
made by the Trade Bank. This can be in the form of a guaranteed profit/yield
paid on a periodic basis upon terms as set forth in the contract
The Instrument to be transacted under the Buy/Sell Program are fully
negotiable Bank Instrument. delivered unencumbered, free and clear
of any and all liens, claims or restrictions. The Instrument are
debt obligation of the Top One Hundred (100) World Banks in the form
of Medium Term Bank Debentures of 10 years in length. usually offering
7 1/2% interest; or, "Standby Letters of Credit" of one
year in length with no interest but at a discount from face value.
These Bank Instrument conform in all respects with the Uniform Customs
and practice for Documentary Credits as set forth by the International
Chamber of Commerce, Paris, France (ICC) in the latest edition of
the ICC Publication Number 400 (1983 Revision) and the newest implemented
ICC Publication 500 (1995 Revision).
What is the investors risk in this program?
As stated, the Investment funds principal is fully secured by a BANK
ENDORSED GUARANTEE (or, safekeeping receipt) which is issued by the
Trading Bank at the time the funds are deposited. The Investor is designated
as the Beneficiary of the Guarantee which is issued to secure the principal
for the contract period and all elements of risk have been addressed.
It must be stressed that, before an instrument is purchased, a contract
is already in place for the resale of the Bank Debenture Instrument.
Consequently, the Investors funds are never put at risk. The trust
account will always contain either funds or Bank Instrument of equal
or greater value. After each transaction period, the profits are distributed
according to the agreement and the process repeats for the duration
of the contract.
How often does the program to transactions?
Operations will take place approximately forty (40) International Banking
Weeks per year. with specific transactions taking place approximately
one or more times per week depending on circumstances"
there are 52 weeks in a year, there are only 40 international banking
weeks during which transactions take place. An International Banking
week is a full week which does not include an officially recognized
holiday. However, this does not preclude that transactions may occur
on short weeks that have a holiday.
Why are these "high returns with safety" programs not
The answer is that these programs have been available, though not widely
known for years, However, because of the extremely high minimum requirements
to enter them, only a few could qualify. The minimums have been 10 to
100 million dollars previously.
Only recently have the smaller minimums
been available so that more can qualify and yet have the opportunity
to earn exceptionally high and safe profit yields. Also, The Investor
must be "invited in" to participate in these very limited enrollment
Individual programs can quickly become filled and are then closed
to further Investor participation.
Leveraged trading programs
By leasing assets, usually in the form of United Sates government Treasury
Bills, for a fraction of their face value, the ability to purchase
and subsequently resell bank instrument in large quantities is possible.
This is the principal on which leveraged treading-programs revolve.
The leased assets provide the collateral against which the instrument
are purchased and resold, with the entire process taking only one or
two days to accomplish.
The large profits produced by trading programs is created by the
difference between the purchase cost and resale price of the instrument.
Even with a net profit of four per cent per transaction, the process
of buying and selling can be performed several times each week, providing
for profits which make the return on other investments pale by comparison.
A four per cent profit produced just once weekly for forty weeks
would total 160%.
By leasing assets, the profit is generated on a much larger amount
of instrument, greatly increasing the total dollar profit. For example,
if a four percent profit were generated on $100 million, the net
profit would be $4 million. Leasing assets typically requires the
payment of three percent of the face amount per month, in advance:
to lease $100 million in assets would require the payment of $3 million.
However, by using the leased assets, profits can be generated on
$100 million worth of instruments ($4 million), not just $3 million
($120,000). Even if just one transaction occurred during the month,
the profit created would exceed the cost of leasing the assets.
History and Development of Bank Instruments
Picture the world at war in 1944. All of Europe, except for Switzerland,
is pounding its infrastructure, manufacturing base and population
into rubble and death. Asia is locked into a monumental straggle
which is destroying Japan, China, and the Pacific Rim countries.
North Africa, the Baltic's, and the Mediterranean countries are clutched
in a life and death struggle in the fight to throw off the yoke of
occupation. A world gone mad! Economic destruction, mad, human misery
and dislocation exists on a scale never before experienced in human
history. What went wrong? How could the world rebuild and recover
from such devastation? How could another war be avoided?
Keynes, Harry White and Bretton Woods
This was the world as it existed in July 1944 when a relatively small
group of 130 of the western worlds most accomplished economic, social
and political minds met in upstate New Hampshire at a small vacation
town called Bretton Woods.
John Maynard Keynes, the man who had predicted
the current catastrophe in his book, The Economic Consequences of the
Peace, written in 1920, was about to become the principal architect
of the post-World War II reconstruction Keynes presented a rather radical
plan to rebuild the worlds economy, and hopefully avoid a third world
This time the world listened, for Keynes and his supporters were
the only ones who had a plan that in any way seemed grand enough in
foresight and scope to have a chance at being successful. Yet Keynes
had to fight hard to convince those rooted in conventional economic
theories and partisan political doctrines to adopt his proposals.
the end, Keynes was able to sell about two-thirds of his proposals
through sheer force of will and the support of the United States Secretary
of the Treasury, Harry Dexter White.
At the hart of Keynes proposals were two basic principals: first
the Allies must rebuild the Axis Countries, not exploit them as had
been done after WW 1; second, a new international monetary system
must be established, headed by a strong international banking system
and a common world currency not tied to a gold standard.
Keynes went on to reason that Europe and Asia were in complete economic
devastation with their means of production seriously crippled, their
trade economies destroyed and their treasuries in deep dept. If the
world economy was to emerge from its current state, it obviously
needed to expand. This expansion would be limited if paper currency
were still anchored to gold.
The United States, Canada, Switzerland and Australia were the only
industrialized western countries to have their economies, banking
systems and treasuries intact and fully operational. The enormous
issue at the Bretton Woods Convention in 1944 was how to completely
rebuild the European and Asian economies on a sufficiently solid
basis to foster the establishment of stable, prosperous pro-democratic
At the time, the majority of the world's gold supply, hence its
wealth, was concentrated in the hands of the United States, Switzerland
and Canada. A system had to be established to democratize trade and
wealth; and redistribute, or recycle, currency from strong trade
surplus countries back into countries with weak or negative trade
surpluses. Otherwise, the majority of the world's wealth would remain
concentrated in the hands of a few nations while the rest of the
world would remain in poverty.
Keynes and White proposed that the United States supported by Canada
and Switzerland would become the banker to the world, and the U.S.
Dollar would replace the pound sterling as the the medium of international
trade. He also suggested that the dollar's value be tied to the good
faith and credit of the U.S. Government not to gold or silver, as
had traditionally been the support for a nation's currency.
Keynes concept of how to accomplish all of this was radical for
its time, but was based upon the centuries old framework of import/export
finance. This form of finance was used to support certain sectors
of international commerce which did not use gold as collateral, but
rather their own good faith and credit, backed by letters of credit,
avals, or guarantees.
Keynes reasoned that even if his plans to rebuild the world's economy
were adopted at the Bretton Woods Convention, remaining on a Gold
standard would seriously restrict the flexibility of governments
to increase the money supply.
The rate of increase of currency would
not be sufficient to insure the continued successful expansion of
international commerce over the long term. This condition could lead
to a severe economic crisis, which, in turn, could even lead to another
However, the economic ministers and politicians present
at the convention feared loss of control over their own national
economies, as well as, run-away inflation, unless a "hard-currency" standard
The Convention accepted Keynes' basic economic plan, but opted for
a gold-backed currency as a standard of exchange. The "official" price
of gold was set at its pre-WW II level of $ 35.00 per ounce One U.S.
Dollar would purchase 1/35 an ounce of gold.
The U.S. dollar would
become the standard world currency, and the value of all other currencies
in the western. non-communist world would be tied to the U.S. dollar
as the medium of exchange.
Marshall plan. IMF. World Bank and Bank of International Settlements
The Bretton Woods Convention produced the Marshall Plan, the Bank for
Reconstruction and development known as the World Bank. the International
Monetary Fund (IMF) and the Bank of International Settlements (BIS).
These four would re-establish and revitalize the economies of the western
The World Bank would borrow from rich nations and lend to
poorer nations. The IMF working closely with the World Bank, with a
pool of funds, controlled by a board of governors. would initiate currency
adjustments and maintain the exchange rates among national currencies
within defined limits. The Bank of International Settlements would
then function as a "central bank" to the world.
The International Monetary Fund was to be a lender to the central
bank of countries which were experiencing a deficit in the balance
of payments. By lending money to that country's central bank, the
IMF provided currency, allowing the underdeveloped country to continue
in business. building up is export base until it achieved a positive
balance of payments.
Then, that nation's central bank could repay
the money borrowed from the lMF, with a small amount of interest
and continue on its own as an economically viable nation. If the
country experienced an economic contraction, the IMF would be standing
ready to make another loan to carry it through.
Bank of International Settlements
The Bank of International Settlements (BIS) was created as a new central
bank" to the central banks of each nation. It was organized along
the lines of the U.S. Federal Reserve System and it's principally responsible
for the orderly settlement of transactions among the central banks
of individual countries. In addition, it sets standards for capital
adequacy among the central banks and coordinates the orderly distribution
of a sufficient supply of currency in circulation necessary to support
international trade and commerce.
The Bank of International Settlements is controlled by the Basel
Committee which, in rum, is comprised of ministers sent from each
of the G-10 nations central banks. It has been traditional for the
individual ministers appointed to the Basel Committee to be the equivalent
of the New York "Fed's" chairperson controlling the open
The World Bank, organized along more traditional commercial banking lines
was formed to be lender to the world" initially to rebuild the
infrastructure, manufacturing and service sectors of the European and
Asian Economies, and ultimately to support the development of Third
World nations and their economies.
The depositors to the World Bank are nations rather than individuals.
However, the Bank's economic "ripple system" uses the same
general banking principles that have proven effective over centuries.
The tie that binds: the bank of international settlements and
the World Bank
The directors of both banks are controlled by the ministers from each
of the G-10 countries: Belgium, Canada, France, Germany, Italy, Japan,
the Netherlands, Sweden, Switzerland, the United Kingdom and Luxembourg.
Bretton Woods under pressure
By 1961, the plans adopted at the Bretton Woods convention of 1947 were
succeeding beyond anyone's expectation. Proving that Keynes was right.
Unfortunately, Keynes was also right in his prediction of a world monetary
It was brought on by a lack of sufficient currency (U.S. dollars)
in world circulation to support rapidly expanding international commerce.
The solution to this crisis lay in the hands of the Kennedy Administration,
the U.S. Federal Reserve Bank and the Bank of International Settlements.
The world needed more U.S. Dollars to facilitate trade.
The U.S. was
faced with a dwindling gold supply to back such additional dollars.
Printing more dollars would violate the gold standard established by
the Bretton Woods agreements. To break the treaty would potentially
destroy the stable core at the center of the worlds economy, leading
to international discord, trade wars, lack of trust and possibly to
The crises was further aggravated by the belief that
the majority of the dollars then in circulation was not concentrated
in the coffers of sovereign governments, but rather in the vaults or
treasuries of private banks, multinational corporations, private businesses
and individual personal bank accounts.
A mere agreement or directive
issued by governments among themselves would not prevent the looming
crisis. Some mechanism was needed to encourage the private sector to
willingly exchange their U.S. Dollar currency holdings for some other
form of money.
The problem was solved by using the framework of a forfait finance;
a method used to underwrite certain import/export transactions which
relies upon the guarantee or aval (a form of guarantee under Napoleonic
law) issued by a major bank in the form of either documentary or
standby letters of credit or bills of exchange which are then used
to assure an exporter of future payment for the goods or services
provided to an importer.
The system was well established and understood
by private banks, government and the business community world wide.
The documents used in such financing were standardized and controlled
by international accord, administered by the members of the International
Chamber of Commerce (ICC) headquartered in Paris.
There would be
no need to create another world agency to monitor the system if already
approved and readily available documentation, laws and procedure
provided by the ICC were adopted. The International Chamber of Commerce
is a private, non-governmental, worldwide organization, that has
evolved over time into a well recognized organized, respected and,
most of all, trusted association.
Its members include the worlds
major banks, importers, exporters, merchants, and retailers who subscribe
to well-defined conventions, bylaws, and codes of conduct over time,
the ICC has hammered out pre-approved documentation and procedures
to promote and settle international commercial transactions.
In the ICC and forfeit systems lay the seeds of a resolution to
the looming crisis. Recycling the current number of dollars back
into world commerce would solve the problem by avoiding the printing
of more U.S. dollars and would solve the problem by avoiding the
printing of more U.S. dollars and would leave the Bretton Woods Agreement
If currency, dollars, could be drawn back into circulation
through the private international banking system and redistributed
through the well known "bank ripple effect", no new dollars
would need to be printed, and the world would have an adequate currency
The private international banking system required an investment
vehicle which could be used to access dollar accounts, thereby recycling
substantial dollar deposits. This vehicle would have to be viewed
by the private market to be so secure and safe that it would be comparable
with U.S. Treasuries which had a reputation for instant liquidity
Given the "newness" of whatever instrument
might be created, the private sector would prefer to exchange their
dollars for a "proven" instrument (United States Treasuries)
but selling new Treasury issues to the would not solve the problem.
In fact, it would exacerbate the looming crisis by taking more dollars
out of circulation. The World needed more
dollars in circulation.
The answer was to encourage the most respected and creditworthy
of the world's private banks to issue a financial instrument guaranteed
by the full faith and credit of the issuing bank, with the support
from the central banks, lMF and Bank of International Settlements.
The worlds private investment and business sector would view new
investments issued in this manner as "safe". To encourage
their purchase over Treasuries, the investor yield on the new issues
would have to be superior to the yield on Treasuries. If the instruments
could be viewed as both safe and providing superior yields over Treasuries,
the private sector would purchase these instruments without hesitation.
The crisis was prevented by encouraging the international private
banking sector to issue letters of credit and bank guarantees, in
large denominations, at yields superior to U.S. Treasuries. To offset
the increased "cows" to the issuing banks, due to the higher
yields accompanying these bank instruments, banking regulations within
the countries involved were modified in such a way as to encourage
and or allow the following:
- Reduced reserve requirements via off-shore transactions.
- Support of the program by the central banks. World Bank, IMF
and Bank of International Settlements.
- Off-balance sheet accounting by the banks involved.
- Instruments to be legally ranked "para passu" (on the
same level) with depositors funds.
- The banks obtaining these depositor funds would be allowed to
leverage these funds with-the applicable central bank of the country
of domicile in such a way as to obtain the equivalent of federal
funds at a much lower cost. When these "leveraged funds'" are
blended with all other accessed funds, the overall blended rate
cost of funds to the issuing bank is substantially diminished,
thus offsetting the high yield given to attract the investor with
substantial funds to deposit.
The bank instruments offered to investors were sold in large denominations
often $100 million through a well established and very efficient
market mechanism, substantially reducing the cost of accessing the
funds, The reduced costs offset the higher yields paid by the issuing
Major commercial banks soon came to realize that these instruments could
serve as more than a "funds recycling and redistribution tool",
as originally envisioned. For the issuing bank, they could provide
a the means of resolving two of the bankers major problems: interest
rate risks over the term of the loan, and disinterthediation of depositor
Bankers, now for the first time, had available a reliable method
of accessing large amounts of money in a very cost efficient manner.
These funds could be held as deposits at a predetermined cost over
a specific period of time. This new system to promote currency redistribution
had also given private banks a way to pass on to third parties the
interest rate and disinterthediation risks formerly borne by the bank.
The use of these instruments providing instant liquidity and safety
has worked amazingly well since 1961. It is one of the principal
factors which has served to prevent another financial crisis in the
In recent years, smaller banks not ranked among the top 100 have
been issuing their own instruments. Considering the dollars volume
and the number of instruments issued daily, the system has worked
There have been few instances where a major bank
has had financial problem. In all cases, the central bank of the
G-10 country concerned and the Bank of International Settlements
have moved quickly to financially stabilize the bank, insuring its
ability to honor its commitments.
Funds invested in these instruments
rank para passu with depositors accounts, and as such, their integrity
and protection is considered by all the institutions involved as
fundamental to a sound international banking system.
The bank instruments program designed under the Kennedy Administration
is still used very effectively to assist in recycling and redistributing
currency to meet the worlds demand for commerce.
Insufficient gold supply
Another significant change of the Bretton Woods Agreement came in 1971,
when the volume of world trade using U.S. dollars as the medium of
exchange,. finally exceeded the ability of the United States to support
its currency with gold.
The restraints of the gold standard at $35
per ounce established under the Bretton Woods Agreements placed the
United States in a very precarious position. As Keynes had predicted,
there was not enough gold in the U.S. Treasury to back the actual number
of U.S. dollars then in circulation. In fact, the treasury was not
really sure how many paper dollars actually were in circulation.
they did how, however, was that there was not enough gold in Fort Knox
to back them. The problem was that the U.S. Treasury was not the only
institution aware of this fact. All G-10 countries were aware of this.
If demand were placed upon the U.S. Treasury at any one time to exchange
all the Eurodollars for gold, the U S. Treasury would have had to default,
thereby effectively bankrupting the United States government
France, the United Kingdom, Germany and Japan were concerned about
their substantial holdings in U.S. dollars. If just one of these
countries demanded gold for dollars. Then a meeting between ambassadors
to the U.S took place with Connelly ,who was then Secretary of the
U.S. Treasury, and Undersecretary of the Treasury, Paul Volker. Connelly
listened to the ambassador and said, " I will answer you tomorrow".
Nixon, Connolly and Volker, in an ultra-secret weekend meeting with
the brightest of the nation's bankers and economists gathered to
ponder "tomorrow's" answer. Honoring the demand meant certain
death to the U.S. as an economic super power.
Not meeting the demand
would have catastrophic results. Was there a way out? What if the
U.S. unilaterally abandoned the gold standard and let its currency
float in the market? Nixon and his advisors viewed the dilemma in
terms of two mutually-exclusive alternatives: increasing the value
of U.S. gold reserves and maintaining a gold-backed economy, or considering
the repercussions to the worlds economies if the U.S. dollar were
no longer backed by gold.
To resolve the crisis, the U.S. needed to unilaterally abandon efforts
to maintain the official price of gold at an artificial level of
$35 per ounce the same price that existed in 1933. Gold in 1971 had
a market value of approximately $350 to $400 per ounce in the commercial
world market, or about 10 times the official price.
By letting gold
seek its market price, the U.S. Treasury's gold would automatically
become worth approximately 10 times its value at the official price.
Under these circumstances, any government bank or private investor
would have to exchange $350 to $400 U.S. dollars for an ounce of
gold at the market price rather than one U.S. dollar to acquire 1/35th
of an ounce of gold at the old official price. An ounce of gold would
rise in exchange value by a factor of ten, and the U.S. Treasury's
gold supply would increase correspondingly.
In addition, once the gold standard established at Bretton Woods
at $35 per ounce was abandoned, why reestablish it at $350 an ounce?
The same problem would eventually arise again, and Keynes would be
Why not adopt Keynes' original idea of a currency, being
backed by the good faith and credit of its government, its people,
the national resources and its production capacity? The United States
needed to let its currency "float" in value against all
other world currencies and not tie it to gold. Market forces would
set the dollar's value through its exchange rate with other foreign
currencies. Nixon and his advisors also realized that business world-wide
had long ceased conducting international trade through gold and silver
Therefore, taking the dollar off the gold standard and
allowing its value to float in relation to other world currencies
would create currency risks for international trade transactions,
but it would not preclude or stall international commerce. The world
of international business had, in practice, already abandoned the
gold standard years before, considering it cumbersome and unworkable.
Moreover, the other Western nations had neither the economic nor
military power to force the U.S. to honor its commitment to the gold
standard and, therefor, could not prevent it from abandoning the
Based upon a clear understanding of these two interrelated realities.
Nixon and his advisors determined to abandon the gold standard and
allow the U.S. dollar to "float" in relation to other nations'
currency. The exchange rate would no longer be determined by an artificially-maintained
gold standard, but rather by the value placed on each currency in
the foreign exchange market
Nixon and Kennedy
The system for controlling currency supply, established by the Kennedy
Administration, became an indispensable tool to the Nixon administration.
The IMF and the Bank of International Settlements insured that the
U.S. dollar would hold its value in the international market and was
recycled from countries with a positive balance of payments back into
the world economy. The illusion of U.S. dollar backed by gold was gone.
The preceding information explains the
use of bank instruments as an alternative investment vehicle
to United States government notes, and how and why the process
of issuing bank instruments used in trading programs began and
RISK FREE CAPITAL ACCUMULATION
by the means of participation in a
BANK DEBENTURE FORFEITING PROGRAM
PROFIT FUNDING (DEPOSIT) LOAN TRANSACTION
In the United Sates of America the supply of money or credit regulated
by the Federal Reserve, an independent body which came in to existence
by an act of congress in 1913, and in part by means of the recognition
and authorization granted by de International Chamber of Commerce
and certain key International Money Center Banks.
Money Center Banks
comprise the top 250 banks worldwide, as ranked by net assets, long
term stability and sound management. The Money Center Banks are also
referred to a the top 100 or fewer (as for example the Fortune 500
or Fortune 100) and are authorized to issue blocks (aggregate amounts)
of Bank Debenture instruments such as Bank Purchase Orders (BPO's),
Medium Term Debentures (MTDs) such as Promissory Bank Notes (PBNs
Zero Coupon Bonds (Zero's), Documentary Letters of Credit (DLCs),
Stand By Letters of Credit (SLC's) or Bank Debenture Instruments
(BDI's) issued under the International Chamber Of Commerce (not to
be confused with your local Chamber Of Commerce) is the worldwide
regulatory body for the International banking community, and sets
the policies which governs the activities and procedures of all banks
conducting business at international levels.
Capital accumulation by banks of bank debenture trading (forfeiting)
programs: (Reference ICC No. 500 revised 1995)
Authority to issue a given allotment of the above described banking instruments:
over and above those regularly employed as an accommodation to customers
regularly engaged in international trade: is issued quarterly for each
issuing bank, according to the Federal Reserve's or Central Bank's review
of each bank's portfolio.
The prices of these instruments are quoted
as a percentage of the face amount of the instrument, with the initial
market price being established when first issued. Thereafter, as they
are resold to other banks they are sold at escalating higher prices,
thus realizing a profit on each transaction, which can take as little
as one day to complete.
As these instruments are bought and sold within the banking community
the trading cycles generally move to the higher level banks to the
lower (smaller) banks. Often they move through as many as seven or
eight trading cycles, until they are eventually sold to a previously
contracted retail customer or "Exit Buyer" such as a pension
fund, trust fund, foundation, insurance company, etc., that is seeking
a conservative, reasonable yield instrument in which they "park" or
invest, for a certain period of time, the larger sums of cash they
By the time these instruments ultimately reach the "retail" or
secondary market level they are of course selling at substantially
higher prices than when originally issued. For example, while the
original issuing bank might sell a "Zero" at 82 1/2% of
its face value, by the time the "Zero" finally reaches
the "Retail/exit" buyer it can sell for 93% of it's face
Since these transactions are intended for use by large financial
institutions, they are denominated in face amounts commonly ranging
from US $10 million, and up. For currencies other than US Dollars,
usually Swiss Francs or German Marks, the Central Bank or other regulatory
authority corresponding to the Federal Reserve of the country issuing
the currency, uses similar procedures to control the availability
of cash and credit in their own particular currencies.
There has been a lot of interest expressed by persons seeking to
learn more about risk free Capital Accumulation, by participating
in a FORFAITING Program. Essentially we are discussing a Money Center
Bank instrument or Bank Debenture Purchase and Resale Program, in
which these monetary securities are bought at a beneficial lower
price and then sold in the money markets, at a higher price, before,
a transaction is committed to the traders, they always ensure that
they have a guaranteed EXIT SALE. (another party willing to purchase
the bank debentures at an agreed higher price, at the conclusion
of a number of trading cycles).
If no Exit Sale is available and
agreed to before the transaction starts, then no program will take
place as the trader must always protect his position, and that of
his clients. This is of course is the ultimate safety factor for
This type of transaction is known as a FORFAITING PROGRAM, and is
often referred to by insiders as a "trading program", because
once a program is started it will normally move through several cycles,
accumulating profits at each trading cycle.
The process is made possible because the trader commits to the purchase
of many millions of dollars in either Bank Purchase Orders (BPO)
or Medium Term Notes (MTN's), at a substantial discount off the face
value of the securities. Sight Draft Letters Of Credit are pledged
to secure the transaction and the discounted price of the bank instruments
or bank debentures made available to the trader by the issuing Money
Center Bank might for example, the as low a eighty cents on the dollar
or less, depending upon market rates at any given time.
The first transaction might have some other trader willing to pay
eighty three cents for the short term use of the funds, which revert
back to the first trader often in a matter of hours. Each trading
cycle earns profits at a few cents on the dollar, but the transactions
are in the millions of dollars, and when one considers the probability
of four, five or more trading cycles per month, then it is not difficult
to realize the profitability of this type of transaction.
The internal trading of these banking instruments is a privileged
and highly lucrative profit source for participating banks, and as
a result, these opportunities are not generally shared with even
their very wealthiest clients. It would the difficult, at best to
entice investors to purchase Certificates of Deposit yielding 2.5%
to 6% if they were aware of the availability of other profit opportunities
from the same institution, which are yielding much higher rates of
The banks always employ the strictest Non-Disclosure and
Non-Circumvention clause in trading contracts to ensure the confidentiality
of the transactions. They are rigidly enforced, and this further
accounts for the concealment of these transactions from the general
public. Participation is an insider privilege.
As a result, virtually every contract involving the use of these
high-yield Bank Instruments contain explicit language forbidding
the contracted parties from disclosing any aspect of the transactions
for a period for five years. As a result there is difficulty in locating
experienced individuals whom are knowledgeable, and willing to candidly
discuss these opportunities and the high profitability associated
with them, without severely jeopardizing their ability to participate
in further transactions.
One needs to have the appropriate banking connections and relationships
to control the transactions from the beginning to end.
For this purpose it is not uncommon to have:
- A purchasing bank which represents the buyer (trader) on the
purchasing side of the transaction and which is also acting as
the "holding Bank"
- A Fiduciary, or "Pass Through Bank"
- An Issuing or "Selling Bank".
In this manner each bank is knowledgeable only with regards to its
portion of the overall transaction, and receives a nominal, and reasonable
fee for its services, from its respective clients. Further complicating
the structuring of profit-oriented programs involving the instruments
is the differing tax and banking rules and regulations in various
jurisdictions around the world .
For example, in those jurisdictions
where regulations may not permit banks to directly purchase these
instruments from other institutions, or conversely where profitability may the
actually enhanced through tax incentives, "Profit Funding" (Deposit
Loan) Programs collateralized by bank instruments, have been developed
to structure these transactions as loans, rather than simple "Buy
and Sell" transactions.
For example, in Germany, where progressive
tax rates mitigate against high interest rates, the concept of an
Emission Rate lower than the face value of the loan has been widely
used to further enhance a lenders profit Suffice it to say that a
wide range of methods have been developed to maximize the net after-tax
profit for all parties involved in such yields.
The key to safety and profits
As is quite evident from the forgoing, the key to profitability of these
Bank Instruments lies in having the contacts, initial resources, and
where withall to purchase them at the level comparable to the issuing
bank, and thus receive the maximum discount while also having the necessary
resources and contacts to negotiate the instruments to the most profitable
level of the retail or secondary markets.
As one might imagine, those
contacts are most zealously guarded by those traders regularly and
commercially involved with these instruments. As a result, the real
secret of successful participation lies in not the how, why and wherefore
of these transactions, but and more importantly, in knowing and developing
a strong working relationship with the "Insiders", the principals,
bankers, lawyers, brokers, and other specialized professionals whom
can combine their skills and run these resources into lawful, secure
and responsible programs with the maximum potential for safe gain.
As a result of years of successful associated business, our principals
have established personal contacts, and sources of information which
can provide current, reliable information regarding:
constantly changing availability of Money Center Bank Instruments
from the original issuers.
sources of information which can provide timely and reliable
information regarding the ever changing customers, in the "retail
or secondary markets".
ability to ensure the all-important exit sale.
Armed with this information and the financial capacity to control
a purchase and resale of these instruments, a window of opportunity
is thus made available to circumvent needless intermediaries, and
to profit from the enhanced "spread" between the issuing
price and the final retail price.
"Too good to be true"
From time to time a potential American or Canadian Investor, when first
presented with the opportunity to participate in a Western European
Capital Accumulation Program or Loan Deposit Transaction may be very
skeptical about the existence and authenticity of such programs. This
is quite understandable, but it invariably means that the potential
- Not familiar with the profit opportunities that qualified European
Investors have enjoyed for the past 50 years.
- Not at all familiar with the type of program proposed, and
not able to ask the right questions.
- Thinking he is being offered something for nothing, which as
we all know is absolutely impossible.
- Saying to himself. "If this is such a good deal why don't
the Europeans keep it to themselves, why do they invite me to
- Not really understanding the procedures involved, and the important
safeguards which are in place to protect his invested capital
at all times, against loss.
And last, but not least, the potential investor has all too often
not taken the time to read and understand the very comprehensive
literature provided and as a result may rush to the wrong conclusion
and lose an important opportunity.
The truth is that there is no smoke and mirrors involved. All
of the programs are conducted under the specific guidelines set
up by the International Chamber Of Commerce (ICC and your local
Chamber Of Commerce is not affiliated), under its rules and regulations
generally known as ICC 500. The ICC is the regulatory body for
the world's great Money Center Banks in Paris, France. It has existed
for more than 100 years, and exerts strict control on world banking
The U.S. Federal Reserve, is a very important member, but unlike
most other central banks, operates independently of the ICC, and
as a result the vast majority of U.S. citizens have not been made
aware of the money making opportunities already available for fifty
years to qualified European Investors through ICC-affiliated banks.
However, it should the pointed out that a few major U.S. banks
do participate from within their banking operations based in Switzerland
and the Cayman island, but they do not normally make their programs
available to Americans living in the United States, and the chances
are very great that your local branch manager has absolutely no
knowledge of them, and may even deny their existence.
Only the worlds most powerful and stable Money Center Banks take
part in these programs. At the end of each year, commencing on
December 15th, the West European Money Center Banks engaged in
FORFAITING and Deposit-Loan transactions close their counters to
new transactions, and make commitments as to the types of programs
and the amount of money that they will commit to those programs
for the coming years. The first consideration for any participating-banking
- The preservation of the Investor's capital as the primary and
- Well secured and managed investment programs, with the potential
for high returns to the participating investors.
- The constant maintenance of the client's confidentiality and
trust against any and all unwarranted intrusion from any unwelcome
- The ongoing fiscal stability and ethical integrity of the European
banking structure. No runaway speculation in stocks or real estate,
no inflationary fiat paper money supplies printed by an irresponsible
debt-ridden government, and no politically inspired tinkering
leading to savings and loan and banking collapses, or economic
crashes, so as to endanger the overall investment and business
environment, and the life savings of private investors.
Once the banks have defined the programs for the coming year they
are made available to qualified individuals through principals,
or as they are also known, "providers". The banks themselves
are NOT allowed to take part in the management of the programs,
this would lead to a massive cartel generating huge unregulated
The banks do, however, manage to make substantial profits
from the program in the form of fees. Program management is the
job of the Providers, and there are only a few of them in all the
world-wide banking industry.
The providers themselves is also NOT allowed to trade or do business
on their own behalf, so this presents an opportunity for qualified
investors to take part and to profit as the initiators of the various
transactions. Until recently these privileged opportunities were
not offered outside of the Western European markets, but as the
world economy has continued to grow, and more real money pours
into the safety of West European markets they need to put this
capital to work earning profits.
This has allowed for the door to the opened for the first time
to American and Canadian Investors and provide them with a unique
opportunity to accumulate capital a confidential manner; and to
decide for themselves how and where that capital will be disbursed.
In the course of a calendar year a number of programs are introduced,
by Money Center Banks in London, Antwerp, Amsterdam, Frankfurt,
Vienna, Zurich, and other major West European banking centers.
These programs are open only for as long as it takes them to become
fully subscribed. Once the committed funds are exhausted then the
program closes, and will not the re-opened that year. Each program
comes with it's own parameters and requirements, and will not the
changed, nor subject to alternate proposals by potential investors.
In every transaction your funds are secured by Money Center Bank
Guarantees. A Money Center Bank Guarantee is a collateral document,
issued by the major West European Bank that is underwriting the
transaction. This document absolutely and irrevocably protects
the safety of your capital while it is taking part in a capital
accumulation program, or FORFAITING transaction.
of bank SLCS and guarantees
Economist / Accountant of a Major US Corporation under direction
of its Board of Directors)
Please note Bank Guarantees
or SLCs are short hand terms and are trade jargon, the proper
name for such is BANK DEBENTURES.
The driving force behind
the financial instruments under discussion in this paper is the
U.S. government through its monetary agency, the Federal Reserve
Board. The U.S. dollar is the basis of the world's liquidity
system since all other currencies base their exchange rate on
it. Quite simply this means that the U.S. is the world's central
As the world's central banker, the U.S. has an enormous
responsibility to maintain stability in the world's monetary
system. As well, the U.S. as the most powerful nation has accepted
the role as the champion and promoter of democracy in all of
its endeavors. While the U.S. has many tools to do this, one
in particular is relevant for the purposes of this discussion.
The Federal Reserve Board
(Fed) uses two financial instruments to control and utilize the
amount of U.S. dollars in circulation internationally: Standby
Letters of Credit (SLC) and Prime Bank Guarantees (PBG).
The Fed's domestic tools
to control credit creation are interest rate policy, open market
operations, reserve ratio policy and moral persuasion. In the
domestic context, these tools are not always as effective as
the Fed would like them to be. Part of the reason for the less
than perfect effectiveness is due to the substantial stock of
U.S. dollars in foreign jurisdictions. Several of the Fed's domestic
tools cannot be used by it in other countries. For examples,
the Fed cannot change foreign reserve ratios.
Furthermore, a significant
amount of credit creation occurs in U.S. dollars in foreign countries,
particularly in the Eurodollar market. The Fed cannot control
the credit creation in foreign markets through its use of domestic
policy instruments. Internationally the currency of choice is
the U.S. dollar as it is considered the safest currency, especially
in times of political crisis. Consequently those holding the
dollar do so for reasons which are less sensitive to economic
Because foreign banks
readily accept U.S. dollar deposits, those funds, which in the
domestic context are the basis of M1 money supply, in the foreign
context, they act more like the near money features of M3. This
means they are infinitely more difficult to control. The offshore
market has grown substantially in the last two decades for a
number of reasons. First, huge quantities of U.S. dollars associated
with the drug trade slosh around the international monetary system,
and second, wealthy individuals concerned about high taxes and
preserving their wealth opt to keep their assets in offshore
This significant stock of U.S. dollars cannot be
effectively controlled by the U.S. with its normal domestic policy
tools. Finally, currency futures markets can be another difficult
area to control because of the substantial amount of leverage
that is available. For example, for as little as $1500 dollars,
it is possible to short or go long for over $150,000 U.S. dollars
versus the D Mark. All other major currencies have a similar
leverage on the dollar.
This means that someone
with $1500 U.S. dollars can take the other side in a Fed move
to stabilize the currency. Since the currency does not have to
be delivered, but the contracts are rolled near the expiry date,
it is possible to create substantial pressure on the dollar in
either direction. (The Hunts learned this the hard way when they
tried to corner the world silver market.) To control U.S. dollars
outside the U.S., the Fed resorts to Standby Letters of Credit
or, as they are popularly known, SLCs.
In its more familiar
domestic form, the SLC is a financial guarantee or performance
bond issued by a bank for a fee on behalf of a customer that
wishes to borrow funds but in unable to do so cheaply in credit
markets. A bank guarantees the borrower's financial performance
to the lender by issuing the SLC. Since the bank is in a better
position to assess credit risk and demand collateral, the issuance
of this form of guarantee is a natural service that a bank provides.
In the international markets the use of SLCs is somewhat different.
It simply is a money-raising
device where the financial guarantee is almost meaningless. Banks
issue these SLCs on behalf of the Fed; in other words, the Fed
is the customer of the bank. Obviously there is no credit risk
here. The net proceeds from the funds raised are immediately
wired to the Fed. Using this method, the Fed can reduce the U.S.
dollars in circulation in foreign jurisdictions. Using a different
method, the large stock of expatriated dollars is employed by
the Fed to promote U.S. foreign policy.
For example, during the
G7 meeting in Tokyo in April of 1993, the U.S. committed financial
aid to Boris Yeltzin to the tune of $6 billion. These funds do
not come form the U.S. Treasury, nor is the merit of the loan
debated in the U.S. Congress.
Instead, the U.S. taps the
international pool of U.S. dollars through an instrument called
a Bank Guarantee (PBG). Essentially the instrument has the features
of an SLC except it is longer dated with 10 and 20 year maturities.
Unlike SLCs which sell at a discount and bear no interest, PBGs
bear a coupon payable annually in arrears.
Like the SLC, it is a
form of guarantee ensuring the lender will receive interest as
is due and be repaid the principal upon maturity. It is important
that the U.S. has these tools to control the dollars that increasingly
grow off its borders. The Fed operates its currency stabilization
so effectively through the use of SLCs that it seldom resorts
to intervening in the foreign exchange markets.
Rather than the U.S.
government tapping the domestic savings pool to assist foreign
governments, it is able to tap the international pool of expatriated
U.S. dollars that leak away from its shores in hundreds of millions
Commonly asked questions
Some people say they've never found a program that works,
how do I respond?
A few people may tell you that in the past, a program they (or one a
friend or colleague) have entered did not perform. So the programs available
do not perform; the programs presented have the highest likelihood of
Other people say these programs do not exist, how can I
convince them these programs are real?
Only programs which provide for a meaningful guarantee for principal
are considered. If there is no possibility for the loss of principal,
why would anyone spend the time and effort to promote a sham that didn't
earn any money?
I have a client who is a skeptic, how should I approach
Full disclosure is made to the potential joint venture partner upon the
receipt of Proof of Funds, Letter of Intent, and Letter of Authority.
These three documents do not cost the client anything and do not put
funds at risk. The client can then perform their own due diligence, including
talking to the parties involved. In this way, the client is then able
to convince themselves that the programs operate as stated.
How do I explain my role in this to a prospect?
You are in the role of finding joint venture partners to participate
in one or more Bank Debenture Trading programs. Your efforts are directed
toward finding these joint venture partners.
Why can't I accept "up-front" fees?
Fees taken in advance lead to a high degree of skepticism and in some
How do I build trust in these programs?
Once funds have been prove to exist the client is encouraged to perform
their own due diligence. By doing so, the client is relying on themselves
to gather the facts and make a decision.
What about brokers I bring in?
Other brokers under you will receive whatever portion of your commission
you designate in the Agreement you sign with them.
Are client references available?
The transactions which a client enters are kept in the strictest confidence
by all parties which is consistent with a five-year period of non-disclosure
contained in most joint ventures. Joint venture partners expect that
since these transactions are not public, their involvement remains
confidential. Similarly, a joint venture partner brought in by you
would not want to the contacted by others considering becoming a joint
What exactly are bank credit instruments?
Bank credit instruments are conditional bank obligations, similar to
a check cashable under certain circumstances, issuer credit worthiness
being the criteria. In these instances, they are general obligations
of the issuing institution, without reserves for repayment being set
aside. Stipulation is not as direct liability in the balance sheet
but in the Notes to the financial statement a contingent liabilities.
While not secured obligations, the implications would the quite serious
for the banking industry if a major institution defaulted on any payment
due, secured or unsecured.
How is the investment (transaction) risk contractually eliminated?
Prior to purchase, at a known cost effected contractually, there
must the a buyer in place for a profitable resale. This buyer must
have demonstrated proof of funds, If all these conditions are not
met there is no transaction and hence, no loss is possible.
Since the original purchase and resale are contractual, most executions
are simultaneous, like a double escrow involving real estate. At
all times, the commitment is either (1) 100% in cash. or (2) pre-sold
instruments. Hardly any risk in either situation.
Concurrent with the closing (instantaneous in most instances),
any debt incurred to finance the purchase is paid off; the loans
is on a non-recourse basis with the lender relying solely on the
instruments held as collateral for security; a process called FORFAITlNG.
There's no publicly available instrument even remotely comparable;
whey aren't some of the largest institutions (pension funds
and insurance companies) major investors? In addition, why
have these instruments and programs never been the subject
of articles in investment publications?
Most money managers, oriented only toward commonly-known investment are
unaware and have not been exposed. Further, they do not realize the differences
in (1) the type of investment vehicle. (2) how it is issued, (3) the
frequency of the transactions. (4) the requirements for investing, (5)
how to perform due diligence, and (6) the lack of knowledge by the general
Because of this lack of knowledge, the returns sound "too
good to the true" when compared to public-type investments. In addition,
reported sources of these types of instruments deny their existence;
however, some of these institutions are investors, according to managers
The main reason for this lack of knowledge is that all United
States banks deny the existence of these programs or dismiss them
as scams. There are only five domestic issuers; all are large money-center
banks and their abilities are known only at the highest level within
the banking community (meaning that most banks are completely unaware).
These issuers cannot acknowledge the existence of such programs
because (a) they are concerned that Publicity about raising capital
might the deemed a public offering and the subject to regulation
by the SEC and (b) disintermdiation (the switching by large depositors)
from low-paying deposits to those with much larger profits.
In addition, there are several other reasons, including that:
issuers are European,
programs are privately offered, not publicly
who introduce the programs are not banks
for these Programs is by word of mouth
are not subject to regulations of the SEC (and therefore
do not appear in printed materials)
issuance is irregular with different values
is no visible exchange media with public quotations
large size of the offerings would not create public interest
is no readily available referencing
investors are anonymous in general be buyers in the secondary
markets; however, the Comptroller of the Currency has regularly
testified that these instruments do not exist.
For all these reasons, there has never been any media exposure.
No responsible journalist would publicize either the instruments
or programs when the sources deny their existence and there is
no supporting evidence. In fact, chaos would the the end result
if the programs or instruments became publicized. There would the
the potential of regulatory problems and the disruption of established
relationships with substantial depositors.
Who are the most likely investor prospects?
Any qualifying individual or institutions, including the managers of
retirement and profit-sharing plans, insurance companies, trust companies,
charitable trusts, corporations with surplus funds, savings banks,
money managers, portfolio managers, investment bankers, private bankers,
and business managers.
What are the major attractions of this type of investment?
The large returns are not even comparable to any other form of investment
yet the security and liquidity offered is second only the obligations
of the United Sates government.