Salesforce (NYSE:CRM) smells like Enron

Salesforce (NYSE:CRM) smells like Enron

The most egregious accounting fraud, insider trading, and ENRON-like practices are perpetuating at Salesforce, where they're cooking the books

It's open season for looting on Wall Street. The regulators, it seems, have put on their blinders. For a holder of a hard-earned Baccalaureate degree in Accountancy and a staunch promoter and maintainer professional accounting ethics, it's sickening. The warning sirens are screaming but nobody is listening. Although I could never do the wardrobe of an auditor CPA, I can still share my findings....

One of the worst offenders is headquartered in downtown San Francisco, in a lofty tower stuffed full of headset-wearing marketing people and "engineers"  tucked in with a splattering of corporate motivational posters.

The corporation for which these lipsticked pigs work does not produce anything tangible; it does not have any saleable inventory. This corporation didn't invent anything noteworthy; nor does it hold any significant patents. It doesn't contribute anything of appreciable value to its customers.  

If, on December 30, 2016, you'd looked at the income statement of this corporation, you'd wonder how on Earth did it get to a 46.9 Billion dollar market cap? (Yes, that is billion with a "B"; 46 billion +900 million).

You'd be baffled, and perhaps dig a bit into the balance sheet and quarterlies. In them, you would discover what are factually negative GAAP Earnings-Per-Share (EPS) for all seven out of seven of the last seven years since it IPO'd (2009 - 2016). In fact, you'd see a company that has largely been inventing its own "earnings" and selling those fake numbers to shareholders.  The numbers which do not adhere to any accounting standards, they say, are an indication of their "growth".  Growing what, exactly?  You'd see a company with vague business model and poor-to-mediocre digital products haphazardly glued together with wads and wads of cold and limp spaghetti.  You might try a few random searches to see what the big deal is... how has this company managed to stay in business? What are they selling, exactly?

What you'd discover instead of answers is droves and droves of pigs: pigs that are singing and tap-dancing incessantly about the cold spaghetti. There are literally thousands of troll accounts on social media sites, all of them incessantly praising this company. You might wonder what the hell was going on.  How does a company that can't explain what it does in one clear sentence have so many fanboys?  And why are there so many tactics being used to promote Salesforce so similar to what we saw with the Russian troll farm accounts used to steal our elections?

Then maybe you'd decide to take a listen to a conference call hosted by the chief pig himself -- Marc Benioff.  Just one listen and it becomes clear that this is company is nothing more than spew of mouthful after mouthful of slobbering and regurgitated pie-in-the-sky lies. Benioff & Co. assault the listener with an irrational barrage of buzzwords about digital apps, the "cloud" growth, customer-facing solutions and blah, blah blah.  The detachment from reality is quite alarming.

For any real software engineer, it's too much to swallow.  Real hackers know that you CANNOT scale customized spaghetti. Adding more spaghetti on top of others' forgotten and moldy spaghetti doesn't make the spaghetti any more efficient.  Benioff's delusions about growth have zero substance, like marshmallow fluff whipped up with green olive baloney puked on top of that cold spaghetti.

Are you getting sick yet?  If not, you should be.  This is not right.   

These days, society is so well-acquainted with delusional men that it lets them get away with way more than it should. Sometimes society even likes to encourage them by lapping up their vomit.

Fast forward to today.  A mere 21 months later, and that Salesforce vomit is now being "valued" by shareholders at an astounding 115.58 billion dollar market cap.  It has increased in value by 69.5 Billion dollars in only 21 months.
    

Let me spell that out for you. The ACCOUNTING FRAUD at SALESFORCE has stolen over 115 billion, 580 million from investors who believed the fake numbers Benioff and Co have been selling as "real" GAAP numbers!

For some other perspective, consider the breakdown of what the best analysts on Wall Street make out in difference between "small" cap and "large" cap stock.  The journey between a small and large cap ($10B of value) is long and arduous, and here is key:  It takes a long time.  It takes a long time of solid earnings that produce positive EPS, not on the back of "bridge loans" for billions and other shady deals derived from other co-conspirators who profit from borrowed money inflated like a blimp.

What this means is that when the fraud and corrupt accounting practices are exposed, all of the Salesforce "insiders" will have effectively stolen over 100 billion dollars.   It's being reported that Benioff is going to buy Time Magazine with his booty. 

This ALSO means Marc Benioff's attempt to acquire TIME Magazine for $190M is being done with Unlawful Proceeds from Stock Sale!

Why?

It's easier to fake the short-term than it is the long term.

• Egregious balance sheet manipulation  --  Even Tesla, which everybody knows is maybe probably prematurely overvalued, doesn't try to defraud people with fake Goodwill or "Intangible" assets. 
  
  
  

  

  For a peek as to how the insiders "really" feel about their growth, take a look at insider dumping (NOTE: this does not include 3 of the most egregious dumps in the last 4 weeks)
  

  Insider dumping

  

How?

Factual GAAP accounting numbers are being suppressed, and instead the salesmen direct investors to the fraudulent and manipulated non-GAAP earnings they repeat ad nauseum.

Since most of what Salesforce can claim as its revenue comes from unenforcable "contracts" (prepay forward contracts are fully refundable by law!) and which it has not yet delivered (and for which no real engineers will work), it has been emulating tactics used by ENRON insiders to mislead investors about growth.  Like ENRON, Salesforce has a fishy credit rating with one of its most intimate bed mates, including Merril Lynch, the company that fronted $3 billion of the $6.5 billion acquisition cost for Mulesoft.   

• Borrowing practices parallel those used by ENRON 

Enron entered into circular transactions that were characterized as prepay forward contracts in order to disguise borrowings as cash from operations. Lay was aware of the importance and magnitude of prepay transactions to create operating cash flow and thereby maintain Enron's investment grade credit rating. Lay was aware that the credit rating agencies were not told the magnitude of Enron's prepay obligations and that this information was not disclosed in Enron's public filings.¹   

In Conclusion...

You shouldn't need a CPA's wardrobe to catch this kind of crime.  It's wrong on every level: it diverts dollars from investment in truly worthy companies, for one.  It enables sleazebags like Benioff to cash out hundreds of millions of dollars, for two.  It makes places like San Francisco even worse than it already is.

PLEASE write to the SEC and tell them time to start jailing criminals like Marc Benioff and Keith Block; this kind of fraud will ruin America; criminals and enablers doing this stuff on purpose need to be locked up and throw away the key.

1. https://www.sec.gov/news/press/2004-94.htm

  

CLOUD Act: "Corruption Leaks On USA Datacenters"

Update 2021: DELETE ALL MILITARY SPENDING.  THIS IS NOT SANE AND SAME THING DIFFERENT RCT.  

DISALLOW FOREVER.

 

CLOUD Act:  "Corruption Leaks On USA Datacenters" 

This will come back to bite you in the ass, Republiscams

Whenever a group or entity attempts to fly under the radar to enact rules and restrictions that bind others while extracting themselves from legal repercussions, my intuitive hackles go off.  Big time.

What on Earth is this odd piece of legislation doing, and why was it sneaked into the spendy-spendy spending bill with absolutely no citizen input?

That is exactly what happened, though, when Congress hurredly passed legislation that included "DIVISION V -- CLOUD ACT".

It never received a hearing. It was robbed of a stand-alone floor vote because Congressional leadership decided, behind closed doors, to attach this un-vetted, unrelated data bill to the $1.3 trillion government spending bill.

The bill originated with one of the most corrupt of the corrupt politicians, Orrin Hatch.  Orrin is evil and corrupt because all throughout his career, he's done nothing but endorse and ensure the torture of Mother Earth.  Devoid of integrity and selfish beyond belief, he has sought only to protect only his own incumbency, choosing party over Country time and time again.  Along with his comrades from the state operating more criminally-negligent corporations than any other in the US, his "holier than thou" religious nutbags think it is their "right" to rape the world of its beauty, to trash her soil, and to poison her air ... all in the name of Capitalism.

But back to this bill.

See page 2201 of the 2232-page spending bill: https://drive.google.com/file/d/1vTp-DOU9fbImz1YnRaKPEAeRtMAi8pUu/view?usp=sharing

In reading the text of this bill, it becomes obvious pretty quickly that they want us to believe that the point of this law is to "[Clarify] the Legal Use of Overseas Data".  It would be easy enough to fall into this trap ; it seems well-intentioned enough.  

Unfortunately, that is not what it does.  At all.  That is not what they want it to do at all.  They are in full panic mode, attempting to hide and cover up their attacks on environmentally-minded US (or aspiring to be US) citizens, and on the US democratic process itself.  They want this law to obfuscate the definition of what is "legal" where it benefits them in some places (by using the word "Overseas"), and to remove criminal penalties from what would otherwise be US jurisdiction in others (by imposing private-citizen protections on corporate entities).

Corporations and associations should NEVER be granted the protections of private citizens.  Never ever ever ever.  Furthermore, all officials working in the public sector -- especially those with "private citizen business" on the side -- should not be provided protections from their criminal activities (financial fraud, tax evasion, conspiracy to defraud the US of its land trust, etc) or from the penalties of those crimes. 

And yet, that is exactly what they are trying to do here. Notice the interesting word choice of "Overseas"? How ridiculous that is in a world that is already digitally connected!

The obfuscation here is that by convincing people there are unknown and "possibly" malicious actors in a hazy and ill-defined place "Overseas", the private-businesses-minded "Government" should be granted rights that allow it to cover up whatever crimes it deems need covered up, especially those crimes perpetrated by the executive branch of power.

Indeed, the goal of the senators and representatives under Trump's thumb -- as is the goal of most corrupt persons -- is to extract themselves from legal repercussions of their criminal activities.  They are fully aware of, and fearful of being accountable after they've already broken laws or betrayed their ethics.  There's proof out there, somewhere, that they broke the law or violated promises to constituents.  Maybe somebody is blackmailing them.  They know they'll be caught sometime... when they will be caught is the big question.  If they try and hurry up to make it "illegal" to use that data against them, they erroneously reason that they can't be caught or punished.

The motto of the most corrupt people is that as long as it's not "illegal" it can't be "unethical", right?

Wrong.

Sorry Republiscams; that is not how it works.  Let's interpret a few key pieces of text from this bill to reveal your corruption in those underlying motivations for changing the laws:

Such efforts by the United States Government are being impeded by the inability to access data stored outside the United States that is in the custody, control, or possession of communications-service providers that are subject to jurisdiction of the United States.

can be interpreted to mean:

"Now that the Republicans are in power, it's important that we wipe all evidence of our knowledge of, and cooperation with the Kremlin who helped us rig the election that put Trump in the White House.  We want our "official" guys to see what you have on us and let us decide if it should be legal or not to have that.  We must also be able to buy Get Out Of Jail Free cards for members of our party who have committed financial crimes and/or crimes against the Earth; likewise, we want to get more dirt on our rivals in the Democratic party and use that to distract the public.  We need access to our rivals' private lives where it competes with our interests, and we're going to make this here law make makes you do just that."

Next let's examine the Republican's use of "associations" to bloat their power and to circumvent the laws that are meant to protect individual persons, not corporations.

§ 2523.  ... the term ‘United States person’ means a citizen or national of the United States, an alien lawfully admitted for permanent residence, an unincorporated association a substantial number of members of which are citizens of the United States or aliens lawfully admitted for permanent residence, or a corporation that is incorporated in the United States. 

Let's break this down.  They are trying to define a "person" as each one of these things :
1) human person born in the US (citizen)
2) human person not born in the US with permanent residence status
3) US association (e.g. National Rifle Association, National Association of Realtors)
4) US corporation

And to then say that each of these "persons" should be granted private-citizen protections!  What a grotesque distortion of the intent of the law.  Indeed, this is not at all what civil liberties are about.

A citizen on her own is inherently less able to defend herself against a corrupt government (and against the corruption of associations and corporations!). Why would the law want to extend protections meant for private citizens' to public corporations and associations? 

There is only one possible answer.  

Proof of corruption will be (or has been) migrated to datacenters in countries with the least amount of regulation.  With this "proof" in their LANs, those countries are ripe for their own potential entanglement of corruption.   As the Republicans' dream is to corrupt the entire world with monstrous dictators like Donald Trump, they hope this CLOUD Act will scare more people than it will empower. 

Just as EVIL COMPANIES operate "shell corporations" out of the Cayman Islands to obfuscate and hide the source and movement of their billionaire private-citizens financial data, so too was this bill written to favor protections of the already-powerful at the expense of the low and humble citizens.

Datacenter admins from Planet Earth, this is your opportunity to choose to do good.  Let this bill come back to bite all of the bad guys in the ass: if you know of useful information on corrupt Earth-raping associations, corporations, or governments, you should absolutely share them outside your LAN.  Let us all make backups, and backups of backups such that there will be no doubt that the voice of the ecologically-minded citizens who are speaking up and out against the rape of Mother Earth... let there be no doubt that their voices will be heard.    

Required Reading for the President Elect

Dear President Elect:

Congratulations on your success in the election. As you have seen and can bear witness, the tools of Democracy that built the United States of America into the already great country it is... these tools DO still work as they were designed to work. We hope you understand that any further invective regarding Democracy being "rigged" will absolutely not be tolerated;  your words were insulting to the service men and women who have shown, through their actions, that they believe in U.S. Democracy. We hope your actions will demonstrate respect and honor for their service.

The architects of the documents known as the Constitution thought this "Developing the Future of a Continent" thing through pretty darn well.  The Electoral College is a facet that they specifically engineered within these documents to distribute weight of voting power more evenly among rural and urbanized states.  That the American people, as a whole, demonstrated the power of the Electoral College this election cycle is indeed momentous.

In fact, this is why I write today.  Because your understanding of ecosystems will be key to your success -- or failure -- as a President.   

Ecosystems are entities that provide life, nourishment, and sustenance to multiple generations of inhabitants.  Indeed, there is no human power and there are no human efforts that can match the efficiency inherent in a natural ecosystem.  Many Americans consider sustenance-producing ecosystems to be a gift from God. Others simply respect the fact that ecosystems have been producing sustenance for humans for thousands of years, allowing certain individuals to thrive under certain conditions.  What those conditions are, exactly, only the architect in nature understands.  The constant is the gentle reminder that operations within and among those individuals in an ecosystem are very delicate and easily damaged by recklessness.  Do you understand that recklessness creates damage, Mr. President Elect?  

Now let's talk about your Proposed Contract. There are some great ideas in here, and there are some ideas that need work. It isn't that bad for a first draft, and you definitely deserve a +5 for creativity.  Before getting too carried away, however, it seems there are a few history lessons you may have forgotten. Lessons, specifically, regarding the legacy of our Public Lands.

Reading Requirement:  Brush up on History.  

Your new job comes with a temporary stay at the White House, and you will have the opportunity to listen to and implement some ideas from an often-ignored and frequently unheard slice of America. As such, your first assignment from them is to read this collection of essays.  Numerous authors and numerous citations to important historical events transcribed to National Archives are documented within in this book, From Conquest to Conservation: Our Public Lands Legacy

It is a non-political, facts-heavy book with some additional narratives from individuals who've lived in and cared for land and people and creatures on the fringes of modern society.  Our Public Lands are areas that your Presidential predecessors and the American people as a whole have chosen to preserve for very specific reasons: Economic reasons that have nothing to do with money. Ecological reasons that have everything to do with clean water, breatheable air, healthy fish, and abundant wildlife.  Logical reasons that that nobody with a real estate license will ever be privileged enough to  know.  Spiritual reasons, for nature as a healing power.  Legacy reasons only future generations will be able comprehend and understand.
 
The vast majority of people who voted for you are people who hail from the antithesis of NYC. They are a very different kind of person from what you are used to wheeling and dealing for the latest gold-plated tower in the latest trendy big city.  They are also very different from the kind of penthouse-renting person you typically cater to.  Surely you will need to familiarize yourself with the kind of person who just doesn't understand extravagance.  This book will allow you to do so... it presents Rural Americans' opinions from both sides of the aisle, and it outlines in very clear and certain terms things that you must understand if you are to be a successful President.

People who value the heritage of the land do not value exploitation of land.  They care about economics and "jobs", but not the the point it infringes on their way of life.  They care about building new and better structures and infrastructure, but not the the point it will infringe on the way of life for their children or grandchildren.   This seems almost counter-intuitive but it simply means that it does NOT involve breaking out the bulldozers and cranes without FIRST taking some serious environmental assessments.    

First and foremost you must understand:  Residents and respecters of rural America do not want swaths of pop-up housing "For Rent".  They build it, they own it.  The development that will take place in these fringes of America must be done without greedy Realtor companies involved at all.  This will surely upset a great deal of your fellow politicians whose going-concern is tied up in bribes they've taken from the Realtors... but do not be swayed by their delusions.  The truth is that Rural America despises lobbyists.  They despise anybody out to exploit the equity of their land. Since you, Mr. President Elect, are someone whose entire personal wealth has come from exploiting people, we don't expect you to understand.  So here's the explanation:

"Exploitation" has taken and can take many forms: over-plundering natural resources, like coal (leaving residents susceptible to environmental disasters like landslides), toxic waste, illegal dumping, destroying the water table, and more.  

Development does not have to be destructive.  There are ways to plan for development and to implement those plans in a way that optimizes the right balance of economical and ecological objectives.  

As a final friendly warning, please do not be hoodwinked into thinking that the voice of Rural America comes from people like the Ammon Bundy Occupants. That mutation of delusional individuals is a group of terrorists who do not represent the heart or soul of Rural America; quite the opposite, in fact.  When the land dictates, through climate and vegetation, that it is not conducive to grazing cows, respecters of the ecosystem do not graze cows.  Nor they do not throw tantrums and wield guns on property consecrated for preservation of ecosystems when land doesn't happen to be conducive to grazing cows.

Land stewardship is frequently about simply leaving places alone, refusing to put a price tag on the cost of disrupting that land for human use when other species can make better use of the land than humans can.   Because our sustenance as humans will always be tied up with the sustenance of other species.  

There is a documentary called A River Between Us that everybody, including you, should watch in order to understand some of the things that are at stake here.   The people who were on this continent before the ships with white ancestors sailed... they have many more generations of observation and wisdom to share regarding these ecosystems that we all must share... Many of us have already conceded to their greater wisdom, and to their understanding of the interconnectedness of water and sky and land to sustain us.  It's not about sacrificing one for the other; it's about practicing restraint with respect.

I'll leave you with these final thoughts.

“Here is your country. Cherish these natural wonders, cherish the natural resources, cherish the history and romance as a sacred heritage, for your children and your children's children. Do not let selfish men or greedy interests skin your country of its beauty, its riches or its romance.” ― Theodore Roosevelt

Exposing Fraud at a California POA

This letter was sent to the CA State Board of Equalization

Dear Board:

Please open an investigation into an entity known as Association Management Services and its registered agent, Nicholas Mitchell. I've gathered some evidence that points to an overwhelmingly obvious situation of tax fraud, embezzlement, and misappropriation of funds happening at a POA I accidentally became a member of when buying a lot from a county tax sale.

Background: When I bought a small parcel in a way-out-in-the-boonies place in 2014, I paid all the back/overdue taxes on it to Siskiyou County and was thus deeded title to the land. However. Shortly thereafter, I suddenly found myself assaulted with demands for POA payments (POA fees going back to 2013) from an entity known as "Association Management Services", operating from PO Box 307 in Weed, CA.

Aside from the fact I didn't know that by buying land I'd be bullied into paying some company annual dues and fees on the land I already have legal title to (Siskiyou County did not disclose this information to me when I purchased the lot), something just seemed off about the original invoice he sent me in 2014.  A $50 "transfer fee" tacked on...  POA fees being racked up before title is even legally transferred... other weirdness.

A small bit of research, and I discover something odd... this "company" demanding payment is actually just one person: one person named Nicholas Mitchell. I was not able to determine the legal organization of his business entity “Association Management Services,” in order to determine how to file complaints for invoicing mistakes; but my research did uncover many interesting things. Things that, when taken all together, point to not only misappropriation of funds, but also almost certainly, mail fraud and tax fraud.

Nicholas Mitchell is the Registered Agent of Association Management Services … however, he's also the registered agent of MSPOA, Inc. (source), and at LEAST two other HOAs.

This seems like a lot of HOAs and POAs to "manage," doesn't it? Mt. Shasta Vista alone describes itself as: "Some 1,640 far flung, mostly juniper and sage parcels averaging 2.5 acres each." So if we look at MSVPOA and Siskiyou Highlands Property Owners Association and Timberline Court Homeowners Association, there's something that doesn't sit quite right in terms of magnitude and ability to manage when you're just one person. My intuitive hackles detected a probable pattern of abuse and fraud at a rather large scale.... I bet his Realtor(TM) buddies are involved somehow...

143 Main Street vs PO Box 307 Weed, CA 96094

Mitchell is clearly trying to be a "smart" criminal. He's registered various business entities (listed below) to cover his tracks; some show up as a physical address and some show up as the PO Box.  All of them seem to operate – in one way or another -- out of a real estate agency. So let's look at all of these businesses in the context that he "manages" them, such that they can feed each other, maximizing his ability to embezzle ... "cooking the books" to minimize actual expense while maximizing reported expense.

NOTE: website URLs can be accessed on my website link @ end of letter.

(1)  "Mount Shasta Vista Property Owners Association"
File Number:    C0495803

(2) "Siskiyou Lake Highlands" POA, Inc.
File Number:      C1848778   

(3)  "Timberline Court Homeowners Association"
File Number:    C1930623

(4) "Elite Real Estate Group" Specializes in creating foreclosures, marketing foreclosures, collecting fees on foreclosed parcels/properties when they are resold or rented.  This company stands to benefit immensely if Mitchell's proposal to enact aggressive "foreclose" on POA fees in arrears gets passed.   (we're not going to link to this website from here, but it is "Get My Home Now . com" (without spaces))

(5) "Association Management Services"   The shadiest of them all in terms of legal entity, this appears to be Nicholas Mitchell's personal consulting business, how he collects his "salary" from MSVPOA?   

(6)  "Rental Management Services"  source    2 employees, eh?

(7) "Alpine Association Management"  (source)  (8) The "Wooly Sheep Inc" (source #1, source #2)  Not sure what this is... but if it's attached to PO Box 307, it is a definite IRS flag.

(9) "Siskiyou Lake Highlands Mutual Water Co" (source #1, source #2).

(10)  "Siskiyou Lake Highlands Property Owners Association" (source).

Yes. That's 10.

As I am sure your office is aware: "Post Office Expenses" are such a common tax deduction for businesses that most auditors wouldn't think twice about them being legitimate. However, given this setup, it's clear that there is only one P.O. Box funnelling numerous legal entities. One address for rent and lease expenses, too… are each of these POAs responsible for 1/10th of the agency's ACTUAL expense, or are all of the POA members being told theirs is the only “Association” being managed, and thus requiring full bill being footed by each of them?

Many times have I requested the financial statements of the POA I paid dues to to check the numbers myself; however at this point, Nick Mitchell is completely ignoring my communications.  

(As a heads up, I have been quite vocal in my discoveries (posting them on by blog) during my numerous attempts to get my concerns resolved… so I am slightly worried this might have given Nick Mitchell and his Realtor buddies time to destroy evidence, shuffle funds, fabricate receipts, etc. I am writing your office as a last resort).

In any case, it's clear that he is mixing up all these legal entities in one PO Box, that means there should be just exactly one PO Box bill being paid to our most wonderful United States Postal Service.  This also means that whatever "Postal Expense" is recorded on the legal books of each of these 10 entities (some of which are supposed non-profits) is indeed NOT TRACEABLE and is thus being FALSIFIED in records to the cities, states, and federal government --- to both the public and to members. Fraud indeed. Little markers that point to putrid, rotten corruption.

I am also concerned with his role in spreading misinformation regarding his inability to be “fired” when communicating with property owners.  

According to what they are touting to members Nick Mitchell has "bulletproof" job security… (NOTE: this information is not deemed factual; it is simply information MSPOA, Inc. wants parcel owners to believe; it is available on  here the ~33rd paragraph.) :

If we ever folded, the Association would not only face the ignominy of having failed to work together to preserve over 1500 parcel owners’ common interests, but have insult added to injury by paying some disinterested professional — often a bill-by-the-hour attorney, bankruptcy trustee or accountant — to take over current volunteer board decisions that could leave members voiceless in home front matters now taken for granted. All in addition to the salary already paid our professional manager, who’d stay on.

This is so wrong it should be criminal... the association folds, but he gets to keep his salary AND gets to decide which one of his Real Estate buddies will "profit" from the association folding? Or even  threatening to fold, as the case may be?

Is it coincidence that the REALTOR agency he works at specializes in the footwork needed to start foreclosing properties? There are plenty of people out there who make a buck on threats alone. How often does your office audit real estate companies that do this kind of terrible thing?

Clearly Nick Mitchell the "consultant" is abusing whatever power of attorney he has, using FUD to promote his and his cronies' highly unethical agenda which includes:   

• Imposing (what may be illegal) transfer fees that benefit no one but him and his companies, personally
• Accelerating the pace at which properties can be "foreclosed" upon for lack of paying these fees (which appear to start accumulating before a parcel owner even has legal title)... snowballing them before a parcel owner even has a chance to be aware they exist.
• Aggressively adding collection costs to a parcel owner's invoice at random intervals -- possibly dependent upon how much vengeance he has toward an individual entity.  He clearly does not like me and all my questions.
• Deliberately denying parcel owners a neutral channel of grievance for his (and his company's) invoicing mistakes or intentional inflations. 
• Continually refusing to provide clear and open book accounting to the parcel owners regarding use of their fees and funds.
• Probable mail fraud and tax fraud.
• Misrepresenting real estate expenses across multiple legal entities (only a gut feeling since I've been unable to audit the financial statements myself)

As a final note, regarding my latest invoice from Nick Mitchell's "Association Management Services"... I moved in October of last year, and paid for mail forwarding.  However, I never received these invoices they are claiming I was sent. I am certain they were not sent.

Last year at the members' meeting, the manager had a "brilliant idea” to help the association.. that plan is to start aggressively "foreclosing" on parcels, adding a weekly fee to parcel owners who have overdue invoices.  Absolutely disgusting. 

Real estate agents are by far the most sleazy, maleficence-intentioned people in existence. There seems to be no despicable thing they won't do to extort a few thousand dollars here and a few more there... it adds up so quickly. In my observation, REALTORS and their agents are by far the most deliberately tax-evading “professionals”, continually abusing the spirit of the law.  It is criminal what they do, gleefully marking up their "services" beyond what is fair and reasonable, forcing people to take out bigger loans to give them lump sum payments. 

Yet somehow, some way, they continually manage to pervert the system... over and over and over again.  This is wrong. I'm petitioning for MAXIMUM JAIL TIME for Nicholas Mitchell and for each and every individual who conspiring as part of his criminal scheme to defraud landowners. 
  


Sincerely,
L.S. Cook, MBA




Note:  Comments on this story disabled.  To participate in the discussion or to learn how to take action as a citizen taxpayer, POA, or litigant in a class action suit, please see:  https://groups.google.com/d/forum/mt-shasta-vista  which is where we're collecting facts, research and sources.  If you know of other POAs implementing similar schemes, please follow a similar path:  gather evidence, find others victimized in the similar way and report the facts when you contact the Attorney General or the tax fraud reporting entity of your state.

Fennica escorted out of Portland

Today was a day for the books, at least in terms of environmental activism.  The Fennica, an icebreaker employed by Shell Oil, received a police and coast guard escort as it exited the Port of Portland early Thursday evening.

A police and coast-guard escort. 

Protesters from Greenpeace who'd dangled suspended from mountaineering equipment under the St. John's Bridge ~40 hours or so prior to this escort were ready to attempt to slow down this boat's as it was in a hurry. 

Three of the 13 dangling protesters were forcibly removed from the bridge, so this boat could go underneath, and make its way back to the Arctic, where it will stand by in case one of the cap stacks blows a gasket.
  
Fennica got an escort because it was in a hurry, and under a deadline.  Yup.  Break out the big guns in law enforcement to ensure that corporate interests get where they're needing to go, when they need to get there.

Atrocious.

 

 


 

KwikPay and RenWeb -- Nelnet's malware exploits the student loan industry

Was your student loan debt acquired illegally?  How malicious is KwikPay?  The $133 Billion Dollar Questions...

If your student loan balance is going nowhere, and if you use or have been enticed by your loan "servicer" to use a little piece of software called KwikPay -- you may wish to read ahead.  Especially if your intentions are to minimize the actual dollar amount of interest (or interest + principle) paid. 

See:  http://www.huffingtonpost.com/2014/02/04/cfpb-student-loan-payment_n_4726052.html

Background: doing a little research on something only tangentially related to student loans, I happened across a couple intriguing posts on reddit... have a read  here, here and here.  Immediately my intuitive hackles went up:  something is not right.  And thus the "little" research led to more research, and some pretty interesting discoveries. 

First and foremost: be informed that any company that uses KwikPay or Renweb is, in some way, affiliated with Nelnet.  This is not good thing.   

Nelnet, AKA "National Education Loan Network, Inc." is a behemoth publicly-traded, for-profit company that operates under a vast number of names and pseudonyms.  Nelnet operates at least 47 subsidiaries (probably more today; but as of 2008 there were at least 47 -- see Footnote 1) and handles upward of $133.6 BILLION DOLLARS in student loans debts.

This might be an admirable or impressive feat but for the reality that most of the "business" associated with these student loans was obtained illegally.

Keep in mind that the $133.6 BILLION DOLLARS number does not include side deals where Nelnet has aggressively marketed its KwikPay malware and injected it into supposedly "competing" loan service companies such as Edfinancial, Charter One Bank, First Mark Credit Services, etc.   How on Earth one company has been "entrusted" with so much student loan debt-handling is beyond comprehension.   

The fundamental problem with KwikPay is exactly like this redditor mentioned -- that the portions of your payment getting applied to interest and principle are seemingly random, especially for borrowers with multiple kinds of "loans" bundled (aka "consolidated") under this one servicer.  

This malware is programmed to apply interest vs. principle in a way that forces borrowers to maximize interest payments paid to the banks; this, of course, increases both the amount and the lifespan of the loan and makes paying it down that much harder.  The formula for even "simple" interest:  I = prt is easily manipulated when you let them play with the other variables in whatever manner they wish.

Getting this straightened out is not only something they make difficult, but something that they actively discourage you from doing (or know how to do).

Facts: 

Some recent data about Nelnet from a recent earnings report:

"Nelnet Reports Fourth Quarter 2014 Results -

- Servicing $133.6 billion student loans for 5.9 million borrowers under government contract
- 30 percent increase in payment processing revenue driven by RenWeb acquisition
- Purchased $6.1 billion of loans during 2014"

Historical Facts: 

Nelnet was sued a few years ago under the False Claims Act. The details of this https://drive.google.com/file/d/0B1oOP-5e5fiSWXdoaVgydTV5cnM/view?usp=sharing

case were obtained through WikiLeaks, and links to the source documents have been included for convenience:

The TL;DR version of a 285 page suit:

As part of some incentive for "quick and dirty" regulation compliance, Nelnet was able to inject its malware into numerous Colleges, Universities, and alumni associations; students and graduates from over one hundred colleges and Universities (see list starting on page 14 or Footnote 2) ... were steered toward using Nelnet's exit counseling software -- software that was specifically designed to induce students into a transaction with Nelnet and JP Morgan / Citigroup for any FFELP consolidation loans.  Highlights from the case:

• Nelnet made fraudulent and misleading statements on its website that consolidating the FFELP loans with Nelnet entitled them to a 6 month forebearance.
  • By conducing them to consolidate FFELP-eligible loans before their grace period runs out, and by offering them forbearance for which they are not entitled, Nelnet yields loans with higher interest payments and loan balances that extend for longer than they otherwise would. JP Morgan and Citigroup delight in this.
  • Nelnet failed to reveal that by consolidating, borrowers would lose certain rights the government grants on Perkins loans (lower interest rates, ability to discharge) 
    

• JPMorgan and Citigroup were named as aiders and abettors to Nelnet for "knowingly assist[ing] in the improper acts, plans, schemes and transactions"
  •  There was a single plan for Nelnet, JP Morgan and Citigroup to obtain payment of US money by presenting as many FFELP claims as possible.  JP Morgan and Citigroup took advantage of this plan to obtain the maximum amount of US money, with overt wrongful acts

• Nelnet agents were required to make 100+ telephone calls per day soliciting people to complete loan consolidations; they were specifically instructed to present misleading statements regarding eligibility and savings over the life of the loan.
  
  • However, the facts have shown that "individuals who consolidate their student loans with Nelnet end up paying more interest over the life of their loans and make payments for longer periods of time"
    

Very sadly and quite unfortunately... Nelnet, JP Morgan and Citibank's attorneys + lobbyists were (and still are) very powerful.  They weaseled the judicial system to get this lawsuit thrown out (albeit from one man, not from anybody else who wishes to pursue it).   The bad guys got a small victory -- it was “settled” for a measly $55 million (http://www.huffingtonpost.com/2010/08/13/nelnet-lawsuit-settled-st_n_681856.html), none of which went to distressed students who were taken by this scam.

The original whistleblower – Rudy Vigil – had worked for Nelnet in the heyday of scamming students out of college – he ended up financially destitute and is reported to have filed bankruptcy. 

Now, About RenWeb...

So with that little whistleblower blip taken care of, and the asset of a formula that has been "proven" to work with little or no takedown by the government, Nelnet now sets its sights on target: RenWeb.

RenWeb is a recent acquisition.  It at first appears to be an innocent and simple tool that can allow parents to track their childrens' school involvement; however, it is much more than that.  Pieces of RenWeb allow students to apply for tuition and financial assistance... and it gathers both performance and income-sensitive data, data that is surely very valuable for targeting likely defaulters.  Given Nelnet's historical actions, it's highly likely that this is an attempt to duplicate former success by getting the malware injection even sooner into the process -- by going after students' parents and a number of private or religious-based institutions.

To Do:  

The CFPB is soliciting borrowers’ complaints. The agency invites borrowers to submit complaints online or call a toll-free number: (855) 411-2372.

Senator Elizabeth Warren is just about the only political person who can be counted on to stand up for the rights of student borrowers.  But if you know of any more, please mention them...

Expect to see a lot of lawsuits on the horizon for Nelnet and its cronies.    





KeyWords:  EdFinancial, Nelnet, Kwikpay, Student Loans, 5280 Solutions, Firstmark, Renweb

 Footnote 1:  Some of Nelnet Subsidaries (direct + indirect) are known as Education Solutions, Inc (Lincoln, NE); First National Life Insurance Company of the USA (Lincoln, NE); Lincoln Square Funding, LLC; Nelnet Student Asset Funding Extendible CP;  M &P Building LLC (Lincoln, NE); Peterson's Nelnet LLC (Lawrenceville, NJ); CUnet, LLC (Wyckhoff, NJ); Loanstar Assets Partners, LP (Delaware); Loanstar Assets GP (Delaware + Nebraska); Chela Education Funding, Inc. (NE); College Bound Loans, Inc. (Warwick, RI); National Honor Roll, L.L.C. (Lynbrook, NY); Student Marketing Group, Inc. (Lynbrook, NY);  FACTS Management (Lincoln, NE); infiNET Integrated Solutions (NE);  Shockley Financial Corp (Aurora, CO); SLAAA Acquisition Corp (Lincoln, NE);  Student Loan Acquisition Authority of Arizona, LLC (Delaware + Nebraska); National Education Loan of New England, Inc. (Warwick, RI); MELMAC, LLC (organized in Delaware - based in Portland, ME); MELMAC, Inc. (organzied in Nevada - Portland, ME); NHELP, Inc. (various states and cities); InTutition, Inc. (organized in Florida, based in Lincoln, NE); ClassCredit, Inc. (organized in Florida, based in Lincoln, NE), FirstMark Services, LLC (Woodbury, MN); 5280 Solutions (direct subsidiary Littleton, CO);  National Higher Loan Education Program, Inc (Lincoln, NE);  

Footnote 2:  Schools targeted by Nelnet between 1998 - 2008:  Boise State University; Bowie State University; Central Michigan University; Cleary University; Clemson University; Cleveland State University; College of Charleston; Colorado State University; CC of Baltimore County; ECU; Eastern University; Washington University; Embry-Riddle; Emporia State U; Florida Coastal School of Law; Florida International University; Fort Hays State; Georgia College & State University; Georgia State U; Georgia Tech; Grand Canyon U; Hawaii Pacific U; Idaho State U; Indiana University; Iona College; James Madison University; The U of Kansas; Kansas State U; Langston University; Le Moyne College; Life University; Louisiana State University; Manhattan College; Medical University of OH; Miami University; Midland Lutheran College; North Carolina State; Northeastern State U; Northern Illinois U; Northern Kentucky U; Northern Michigan U; Northwestern State U; Norwich University; Ohio University; Oklahoma Christian University; Old Dominion University; Prescott College; Queens University of Charlotte; San Jose State U (SJSU); South Dakota State U (SDSU); Tarleton; Texas A&M; Texas Tech; Troy University; University of California Santa Cruz (UCSC); Union College; The University of Akron; U of Alaska - Fairbanks; U of Arizona; University of Central OK; U of Colorado; U of Dayton; U of Detroit-Mercury; University of Illinois; University of Kentucky; U of Louisiana; U of Missouri;  U of Maryland; The University of Memphis; University of Nevada; University of New England; University of New Mexico; University of North Florida; University of South Alabama; The University of South Dakota; University of South Florida; University of Toledo; University of Wisconsin; University of Nebraska at Kearney; University of New Orleans; Washburn; Wilkes University;   

Footnote 3:   This author believes that you should never trust website software that uses ".aspx" in its URL bar.

Footnote 4:  Malware is computer software that injects itself into a system and adds significant transactional burden and "load" to systems.  It does not go away on its own and must be forcefully removed.  

Why I'm a boat rocker.

"You're rocking the boat.  They don't like that."  

A comment I heard just this week... one woman chatting with another woman about how she did it... how was she able to overcome the overwhelming gender bias in this industry and join a team with an employer who actually cares?

How did she do it?  By not rocking the boat.

I've had this ... I guess we could call it a "conversation" with myself at various points in my life.  Usually it's when I'm getting washed ashore and clinging to dear land, gasping for air:  Oh, geeze. I rocked the boat too hard, again!  And everybody, like, freaked out.  They threw me overboard!  How dare they!?  

Why did they do that?  Because I rocked the boat.

Yes, rather than risk their boat getting toppled by little me, they decided that the smartest thing to do is just throw the boat rocker overboard.  Gee thanks.  But the interesting thing is that never has any team member from any boat I've been thrown from stopped with pause to think or ask logical questions about things like physics or wind, materials science, currents or compass...

Because all they can see is that their boat is getting rocked.   

If only they could see... logical questions have logical answers.  It's not the boat rocker who ultimately destroys the boat and ruins everything; it's the boat rocker who exposes the vulnerabilities of the boat and can help everybody be more prepared.  Before it's too late.  But the key is that ... you've gotta let the boat rocker stay on the boat.  Having somebody who's not afraid to push the limits of our boat is a good thing. 

The dearth of women and women in leadership roles in technology is obvious to anybody who has worked in technology.  Once in a while somebody will create a little movement ... some noise or a "non profit" or a summit or something.  But these blips are hardly ever noticed on the larger radar.  They fade and disappear.  People forget.  Men keep getting promoted over women, and they almost never have to fight quite as hard for the raises or pay they deserve.  Venture capitalists keep gladly seed-funding extras from The Social Network.   Firms from A...Z (pardon the pun) keep gladly throwing millions at startups which have been documented to willfully discriminate and retaliate against women.

My two cents for the conversation is pretty simple:  there are only two different kinds of humans in the world:  Those who actively exploit women, and those who actively speak out against the exploitation of women.   Keeping your mouth shut for fear of rocking the boat -- this is a form of apathy all its own.  

The exploiters have general strategies:  when she's smart, competent, hard working, and nice, underpay her.  She's easy to take advantage of.  Besides, when we really drill down and look at things, she just doesn't  deserve the same basis as the guys on her team.   Or better yet -- why allow her to be part of the company at all?  Why not make sure she's thoroughly plundered of her wages by a middleman "temp agency" or headhunter?  The more fear and job insecurity you can instill in her, the harder she'll try. 

The other strategy the exploiters take is this:  when she's  smart, competent, hard working, and strong enough to stand up for herself, the exploitation takes the form of failure to hire, hiring with a longer "probation" period, bullying, biased performance reviews, or the ultimate insult of getting fired.

I've tried both the "nice" and the "strong" approach, and the unfortunate reality is that neither one really works.   The number of people who actively exploit women is still too big, and the quantitative number of women who aren't afraid to rock the boats is still too small.

But I'm not about to stop rocking boats.

Because it's not the boat rocker who ultimately destroys a boat.  It's the boat rocker who exposes boats that simply do not possess enough integrity to handle the seas.  And those are boats I don't wanna be on anyway.

Crowdfunding IS too expensive - the payments processing cartel everybody needs to know about

Crowdfunding IS too expensive
The payments processing cartel everybody needs to know about 


Crowdfunding is kind of a broadly-generic term.  As a recurring topic and point of discussion among hackers, startup entrepreneurs and "the biz guys", it deserves a special teasing-out.  Just what are people talking about when they talk about "crowdfunding"  ... is it like a Kickstarter campaign for a snazzy newfangled electric skateboard?  Is it a plea for funds that takes the form of a "donate now" button or post on Facebook to help that friend's doggie after it was hit by a car? Her dog needed emergency surgery - it was expensive and urgent.  Or, is crowdfunding some sort of "offering" of equity, like a stake in a potentially-profitable company that dangles future lucrative payout for some initial investment?

For the purposes of this post, let's define crowdfunding specifically as:

Any effort by an individual, group, or organization to raise money through an online campaign.  

Online campaigns where money is handled, authorized, and transferred online?  That's easy enough:  Everybody wants to do everything online these days -- seems so easy, and it should be so much cheaper, right?  Besides, who hasn't seen an online campaign to raise money? 

These campaigns take many possible forms.  As online campaigns go, what do they all have in common?

What they all have in common is the built-in, industry-crafted scam of payment processing fees as cents + percent.  And inflated over-the-top rates where foreign currency exchange is involved.  (But that's another post for another day).
  
Some of the time the do-gooder crowdfunding site doesn't even know it is being subjected to this scam... but sometimes it does, thinking it has no other options.  The most important thing to do is first find out which one of the evil^1* Payments Processing Companies (PPCs) your crowdfunding site used or will be using.  Crowfunding sites usually charge BOTH "platform fees" and "bank fees" -- and sometimes crowdfunding sites glue these together to confuse people.  But let's assume, for simplicity purposes, that if they say they have to pay 2.9 percent + $0.30, it's (wittingly or unwittingly) bankrolling the cartel.  A few examples of such players are in the graphic to the left... but there are others.

1* The word "evil" as it is used by the author of this blog means: Anything  incomprehensibly wrong and despicable.
 
PPCs  have figured out that the less you know of the truth about their doings and money-shuffling behind the scenes, the better.  

Players in the cartel cahoot will attempt to claim that by golly, their hands are tied -- look at how everybody charges basically the same thing.  This is "standard".  They pin the blame on "the banks" and how gosh-darn complicated this industry is... those banks sure do deserve to be rewarded handsomely for not only making it so complicated, but also streaming all those transactions.   When they say these rates are not negotiable, they are lying to you.    And if you attempt to ask them why ...  you will probably be given the used car salesman pitch where, oh... it's based on volume or some other equation where they actually control / manipulate one of the measuring variables -- be it time, individual transaction numbers, or sales volume -- to their benefit to make it seem like what they require is "standard".  Their biz guys are smooth talkers... they know exactly what they're doing.  

The truth is that:

(1)  There is NOTHING standard about Interchange.  The findings of a federal investigation concluded that because banks were allowed to set Interchange at whatever they wished, their incentive was to collude and charge the highest as default:  "The interchange fee can be a flat fee, a percentage of the transaction price, or a combination of the two." 

(2) There is NO NEED to collect an additional "percentage" of transaction amount ... this practice was invented by banks, for banks.   It does not benefit consumers, brick + mortar stores, people who sell online, people who buy online, or even large companies like Target, Walmart and Amazon.  It benefits banks, financial institutions, and all the evil PPCs out there who get their cut first.  It's AKA double dipping (charging both the payees and payors).  

(3) Back in about 2009 when the market was a literal MONOPOLY with "basically" just PayPal running the show, PayPal on a whim doubled rates to 2.9% + $0.30 and that's why it is what it is today.

"This double-dipping — charging both sellers and receivers for transactions — will result in a major increase in fee revenue for eBay Inc. which owns PayPal."

Why did this happen, and why has the introduction of numerous forces of supposed competition not changed anything?  Why are consumers not more riled up by this?  Lack of knowledge is one reason.  PBS Frontline's documentary: The Card Game is an interesting peek into this world of unethical businessmen, although it's a little outdated now, here ~ early 2015.  Following the payment card settlement for fixed pricing, economists predicted that consumers wouldn't see the benefits.  Retailers aren't seeing the benefits either.  But all of the companies in the cartel are.

Everybody wants to blame everybody else for why things are they way they are.  Indeed, depending on who you're talking to, the details about Interchange get skewed.   Let's take this apart piece by piece:

"One of the problems with interchange fees, say merchants, is that the rates vary depending on the type of card used in the transaction, making it very difficult for businesses to know what they'll end up paying at the point of sale. Debit cards have cheaper interchange fees than credit cards."  

Um, it's either a debit card or a credit card.  For the record, MOST online payment processors have been treating debit card transactions like credit card transactions, and therefore charge the higher interchange -- even when they have no legal right to do so.   Companies in the screenshot charge 2.9 percent + 30 cents ... even when donations are made with a debit card. In fact, you can have an online campaign made entirely by debit cards for a non-profit cause, and still get charged this amount.  Nobody is any the wiser.

"Another problem, say critics, is that unless you're an industry insider, it's almost impossible to figure out how they come up with the interchange rates, how much money is being made, and where it all goes.

Ah ha!  Well, here I am... former industry insider to tell you all about it.  At the company whose CEO set literal fire to literal paper cash to make a point about his delusions of power, it's clear:  these companies see Interchange as free, burnable money in their pockets. If funds are tight, they and their cronies can simply raise the rates in the network.  And because there's no incentive to lower rates (that is - ZERO COMPETITION among these companies) rates will inevitably edge higher and higher... unless something changes.  

"We don't have a lot of data on this," said Adam Levitin, an associate law professor at Georgetown University, who writes frequently about interchange. "There is no data from Visa and MasterCard, and the best way to make policy is to do it on an informed basis."

So who has the data?  The banks do, but they're not about to disclose how profitable this model is for them.  The payments processing companies would, too, right?

Find out from the crowdfunding website -- which evil payments company is it shackled to.  And then go out there and make a difference.

(1)  File complaints with the US Department of Justice + Start a Class Action lawsuit ... file complaints with the United States Department of Justice on behalf of individuals, non-profits or 501(C)(3)s that overpaid fees to Visa, Mastercard, PPCs and banks.  The payment card settlement lawsuit prohibits RETAILERS who accepted part of the 6 billion dollar settlement from suing the "Plastic Card Network", but it does not and cannot prohibit any other organizations who were unfairly subjected to the same plundering.  Why?  Because lawsuits are the only thing that these guys respond to for their wrong and unethical tactics. 

#indiegogo #kickstarter #gofundme #crowdtilt #crowdrise #giveforward

(2)  Demand competition among PPCs ... There is no reason that startups who want to process payments should have ZERO CHOICE in the fees they are required to pay.   There is no reason they should be taking such a hefty cut of money you're donating to good causes, to "the underdog" Kickstarter campaign, or any other transaction online.  Call them out on their baloney, and tell them it's not right.   

Crowdfunding IS too expensive.  But there is something you can do about it... arm yourself with the facts.  And remember, Simba ....

(blog comments disabled - see them here or here)

Information asymmetry yields Inequality for All

Where did the information asymmetry in stock options come from? 

"Bill Clinton in 1992, one of his campaign causes, was that no company should be able to deduct the cost of executive compensation in excess of $1,000,000.

But when it came to actually implementing, the treasury department decided:  As long as CEO pay is linked to company performance, you could deduct over a million dollars. Well, that was a signal to a lot of these executives and to their boards of directors to make more and more of executive pay into stock options. That's where the whole stock option thing came from. It was a kind of a perversion of Bill Clinton's promise in the 1992 election." 

-- Robert Reich,  Inequality for All  ~ :47 minutes 

Executives -- especially unethical executives -- thrive on information asymmetry. In fact, many will go out of their way to create as much asymmetry as possible and to prevent employees from being able to access or get the data that helps them understand the full value of their earnings. The less employees "know", the more executives can take without fear of scrutiny or retribution. But intentionally harming the workers as a means to prevent them from receiving the value they've earned is the most unethical thing a company can do.   It's happening every day to innocent and hard-working employees, but it doesn't have to. Private firms with too much unchecked and unregulated power are the primary scammers; executives and their BODs defrauding, manipulating, and setting the stage for hyped IPOs is essentially fraud perpeutated by the elite for the elite. This really is a covert form of tax evasion. The stronger and more financial retribution we can push on these unethical scammers, the sooner the gap between the 1% and the rest of us can begin to shrink.

What the JOBS Act means for startup funding: beware the cookie lickers

photo credit:  http://www.flickr.com/photos/42621781@N08/

Seed money.  Angel investing.  Venture capital.  Funding start-ups that aspire to be "big business" has become a strange beast.   Today is the official effective date for Title II of the JOBS Act, which many are hopeful can kick off a New Great Era of fundraising.   But in many ways, this is a huge red herring.

Once upon a time pretty much any company that wanted to could raise money according to a broad array of "blue sky" laws which varied by state:

Blue sky laws developed in the frenzied years leading up to the Great Depression, in response to fact that more and more ordinary investors were losing money in highly speculative or fraudulent schemes promising high investment returns, such as oil fields and exotic investments in foreign countries. 

But after the hype, boom, bust and onset of the Great Depression, thinking changed a bit.  The passing of the Securities Act of 1933 was done with the belief that selling such "risky" early-stage investments to the general public left too much room for swindling.  You know -- bad guys running off with Grandpa's life savings (Which never happens today.  Right, Bernie Madoff?).  Accredited investors are the only ones who can 'afford' to lose, so let's make rules that allow only them take risk that yields high reward -- apparently this was the logic behind Rule 501 of Section D of the Securities Act of 1933, a rule which states that entities need a certain "net worth" to participate in investments which potentially might go public.

But of course, by shielding "small time" potential investors from swindlers, so too were those small- time investors denied opportunities to reap rewards earned from their decision to take risk.   As a result, the next 80 years or so saw an entire profiteering industry sprout up around capital finance, start-ups and highbrow private investing -- an industry "for the elite, by the elite" -- hedged on early access and exclusive access, it is essentially wealth funneling wealth.  It perpetuates by protecting first (usually via preferred stock) the wealth of the wealthiest "if and only if; then and only when" a tiny bit might "trickle" down to common shareholders -- including founders themselves!

If you think this logic sounds a little hokey, you're not alone. Several arguments for scrapping the "accredited investor" rules have floated around, but during the last 80 years, exactly zero headway has been made.   Fred Wilson commented in a May, 2012 Forbes article:

The biggest issue: there is simply too much money. Although $30 billion continues to flow unabated into venture-backed companies annually in the U.S., venture capital as an asset class hasn’t outperformed the market since the early 90’s, when only $10 billion was put to work.

What's happening?  In plain English what's happening is this -- that "exclusive access" members' only club is getting fat, tired and cranky.  Despite the fact that it already has too much on its plate and not enough time to chew, its people just won't stop licking cookies.  Many of those licked cookies are going to waste.

Enter the JOBS Act to "Jumpstart our Business Startups", a plan to help those little guys with freshly baked cookies -- what can be done to change things and help them get their cookie empires off the ground?   Should we make it easier for these guys to advertise their cookies?  Yes!  But first we should probably get rid of the law that makes it illegal to advertise cookies.

September 23 is the official effective date for Title II of the JOBS Act, which many are hopeful can kick off a New Great Era of fundraising.  But in many ways it's a huge red herring:  all it permits is the mere existence of information.  Start-ups now may "legally" use the Internet and/or public airwaves to inform the public that they're looking for capital to grow their business!  Then, with whatever attention their hype is able to attract, those start-ups may be asked to get in line to have their cookies licked by an authorized VC cookie licker.

Of course, the trends threatening VC’s bode well for entrepreneurs. More competition among investors means easier financing and better terms for startups. The eye-popping valuations of some companies may already be a reflection of this phenomenon. Wilson admits that this glut of funding is also probably good news for the economy, job creation and the proliferation of new goods and services.

But whoa. . .  big caveat here --  if a cookie seller accidentally let their cookies get licked by somebody who isn't "legally" allowed to lick cookies, they may get in #BigLegalTrouble and have to wait an entire year to get in the back of the line again.  Seriously.

The spin on this from the VC side seems to be that there 'ought' to be  more competition among VC's ... but is that the issue?  Last time we checked, competition among VCs wasn't the problem; as Paul Graham stated in his recent essay, it's competition for that "first" bit of VC attention that every entrepreneur needs to get the ball rolling:

The biggest factor in most investors' opinions of you is the opinion of other investors. Once you start getting investors to commit, it becomes increasingly easy to get more to. But the other side of this coin is that it's often hard to get the first commitment.

Obviously, we need a larger pool of potential investors / cookie-lickers to woo.  How, exactly can this happen?

The problems that existed at the time of the Securities Act of 1933 -- and the subsequent red tape and paperwork formalities to protect Grandpa's life savings -- surely these were well-intentioned protections.  But the reality of the world today is such that there are too many cookies going to waste.  The professional cookie-lickers of the world just don't have time to sample all the great cookies today's entrepreneurs are making.   Gambling halls and casinos (which certainly are just as likely to swindle Grandpa's life savings) don't require minimum net worth or income limits for patrons, so why are they imposed on investors, where the potential for Return on Investment (ROI) is significantly more feasible?

Title II doesn't address the core problem, but hopefully it can attract more attention and scrutiny to the issues preventing many small and medium-sized businesses from taking root.  Namely -- "accredited investor" rules are antiquated and unnecessary, and they do more harm than good for many small and medium-sized businesses that just want to sell cookies.