(Hampton, NH August 1, 2012). Author Barry James Dyke maintains that main stream media, religious affinity fraud and financial celebrities misinform the public about financial risks in investing. The author comments, “Main stream media (including non-profits) gets a large chunk of its advertising and sponsorship revenue from large Wall Street banks and huge asset managers such as Fidelity and Vanguard that sell mutual funds to fund American’s retirement plans. Regrettably you will not find any consistent investigative journalism about the multitude of financial risks involved with mutual fund investing—because these companies are a huge advertiser base who make a lot of money selling stocks and mutual funds. www.thepiratesofmanhattan.com.
Dyke adds, “Writers and commentators in financial publications and main stream media also enjoy special privileges as they are exempt from the definition of “investment advisor” under SEC regulations which pertains to the subject of offering investment advice. As long as the information media outlets provide is considered “incidental” to their business, they receive essentially legal immunity. Regrettably, the business cable television shows in particular often drum up hype for new public offerings such as Facebook, Zynga and Groupon. Rosy economic predictions from the media is great for investment banking, asset managers and venture capitalists looking to exit their investment stakes—but can be a disaster for retail investors looking for impartial advice. “The proof is in the pudding, “claims Dyke.”Facebook the most hyped stock of all time on CNBC, in two and one half months lost 44% percent of its value or $40 billion in market capitalization.”
Misinformation and hype from main stream media is further compromised with the practice of religious affinity fraud. Affinity fraud includes investment frauds that prey upon members of identifiable groups such as religious, ethnic and professional groups. Affinity fraud often enlists respected community figures or religious leaders to exploit the scam or misinform followers. What makes religious affinity frauds troublesome is that victims of fraud or misinformation are reluctant to come forward. Joseph Borg, the Securities Regulator for the State of Alabama said an in article “Fleecing the Flock” (The Economist January 2012) that roughly half of the “affinity frauds” based in the South are faith-based.
Ephren Taylor II used affinity fraud. He was introduced to the near Atlanta 25,000 congregation mega-church NewBirthMissionaryBaptistChurch near by Pastor Eddie Long. Long let Taylor pitch the congregation members they could get 20% returns investing with Taylor’s promissory notes and sweepstakes machines. The $11 million that was raised by Taylor from the congregation was allegedly used to pay other investors and pay for Taylor’s personal and company expenses. [In July the SEC made a partial settlement with Taylor. Taylor, Long, the church and IRA administrators Equity Trust are being sued by investors for various claims, breach of fiduciary duties and so on].
Bernard Madoff perfected the use of religious affinity fraud using the country club to lure wealthy Jewish victims in New York, Florida and Israel into his $60 billion Ponzi scheme. To top it off, Madoff enlisted J. Ezra Merkin, a prominent Jew in the Modern Orthodox community to solicit investors. [An ultra-wealthy middleman, Merkin ran a major feeder fund Gabriel Capital Group that did business with Madoff. Nicknamed “Ezra the Wise”, Merkin was a Harvard Law grad, a Carnegie Hall Trustee, the non-executive chairman of GMAC (General Motors Acceptance Corp-now taxpayer owned Ally Bank) and a fund raiser for private equity titan Steven Feinberg of Cerberus Capital Management which once owned automaker Chrysler and GMAC].
Merkin used his connections to defraud institutions such as New YorkLawSchool, BardCollege, Harlem Children’s Zone, Homes for the Homeless, YeshivaUniversity, Kehilah Jeshurah Synagogue, the MaimonidesSchool, Ramaz , the SARAcademy and the Metropolitan Council on Jewish Poverty. In June 2012, Merkin paid a $410 million settlement to Madoff victims for Gabriel Capital’s role in Madoff’s Ponzi scheme.
R. Allen Stanford, now in jail, used affinity fraud to sell his bogus high-yield certificates of deposit in a $7 billion Ponzi scheme. Stanford used religious groups as well as South Baptists to promote his scams.
Monroe Beachy—for decades a respected figure in Ohio Amish and Mennonite communities has become the Amish Bernie Madoff. Beachy claimed that he was investing peoples’ money in plain vanilla government bonds. Bankruptcy filings in 2011 revealed that Beachy was investing in risky mutual funds including T. Rowe Price Spectrum Funds, The Pioneer Fund, Fidelity Magellan and $1.4 million in high-yield junk bond funds.
Finally, the author documents in his new book, The Pirates of Manhattan II: Highway to Serfdom how pop-star financial celebrities routinely misinform the public about mutual fund investing by dismissing or side stepping the multitude of financial risks. Notable financial celebrities such as Suze Orman, Jane Bryant Quinn and Dave Ramsey routinely misinform the public about the possible downsides of mutual fund investing.
Evangelical Christian Dave Ramsey takes misinformation about mutual funds to new heights, using the Christian community church platform to spread the misinformation. On his website www.daveramsey.com, about The Lampo Group, his company, it states, “The Lampo Group, Inc. is providing biblically based, common-sense education and empowerment which gives HOPE to everyone from the financially secure to the financially distressed.” Ramsey claims, “Millions of people have gone through Dave Ramsey’s Financial Peace University (FPU). They’ve worked a plan, rewritten their stories, and changed their futures.”
Ramsey who is reportedly worth $55 million, is a master marketer. He uses a national syndicated radio show which claims 4 million listeners each week. His book Financial Peace claims it has sold over a million copies. From 2007 to 2010, Ramsey was a financial commentator on Fox Business News. He uses his Endorsed Local Providers (ELPs) and his Financial Peace University (FPU) to promote his agenda which amongst other things sells actively managed mutual funds to his followers.
Dyke admits Ramsey has some good insight about getting out of debt. Ramsey, however, is fleecing the flock about the mutual funds projected rate of returns. Ramsey claims again and again in his books and teachings that people can get 12% on their mutual fund returns.
The truth is quite different. The author states, “The idea that a retail investor in an actively managed mutual fund can get a 12% rate of return is an illusion of biblical proportions. Dalbar of Boston found that actively managed mutual funds have only yielded returns of 3.6% over a twenty year period. The S&P 500 Stock Index over the past twelve years has gone nowhere. A recent study 2012 study by Bill Gross of PIMCO found that since 1912, stocks had returned at best 6.6%, and that is with a boat load of risks, headwinds, uncertainties and other factors.” The author continues, “a giant pension plans such as the $248 billion California CalPERS pension plan only got a 1% rate of return for the last fiscal year ending June 30, 2012. Ramsey’s prophesy about 12% rates of return in mutual funds is a pipe dream.”
The author concludes with the irony that one of Ramsey’s publishers Thomas Nelson was involved in the orgy of debt-propelled private equity Wall St. finance a few years back. “Dave Ramsey preaches against debt, yet fails to inform his vast audience how his Thomas Nelson, the publishing company of Total Money Makeover was weighted down with $307 million in new debt in 2006 with the $473 million leveraged buyout by InterMedia Partners. [Thomas Nelson founder Sam Moore alone made $62.7 million in the buyout financed with debt]. I wonder how Ramsey’s listeners would feel if they really knew that when they purchased his Total Money Makeover that earnings on book sales were being used to pay for junk bond interest payments which enriched insiders as well as Wall Street financiers.” In July 2010, Thomas Nelson was sold a second time to another private equity titan, Kohlberg & Company. In 2011, Kohlberg & Co. sold Thomas Nelson a third time to Rupert Murdoch’s News Corp which also owns Christian publishing giant Zondervan and Harper Collins. The transaction makes News Corp—which is embroiled in an enormous illegal phone hacking scandal in Great Britain—the world’s largest Christian publisher.
To contact Barry James Dyke may email him at castleassetmgmt@comcast.net or via telephone 603-929-7891. www.thepiratesofmanhattan.com For the latest video about the author, “The House Always Wins” by the AmericanCollege, how Wall Street always wins, click here.
http://www.thewealthchannel.com:80/videos/the-house-always-wins
