Monday, March 31, 2008

Blue Chip's Mark Bryers at top of shaky pyramid
Mark Bryers, architect of the Blue Chip pyramid
scheme, in better times.

Securities Commission - What we do
Commerce Commission - Fair Trading Act
Bryers has clear conscience -

From the Blue Chip website (more)

At Blue Chip, everything we do is about helping our customers to build the future they want. Here are some of our clients’ stories which explain how Blue Chip has helped make a difference".

Gordon and Margaret Taylor

"At our stage in life we need our investments to be making money - not losing it!"

The column inches given over to discussing the Blue Chip fiasco would rival the length of a million toilet rolls stuck end to end and reaching to the moon and back.

Like alot of financial collapses though, investors or the public don't seem a hell of a lot wiser as a result of all the chatter.

In Blue Chip though, what is clear is that Mark Bryer's and his management built a pyramid scheme where he was at the top while his investors pumped cash into keeping him there.

Like every pyramid scheme of the past the only people who make money are those at the top and those that get in then get out first. Bryer's is still worth more than NZ$70 million according to the National Business Review.

These arrangements can go well when economic conditions are good but in this case, when the "asset", real estate, being invested in starts to lose its over inflated value, those at the bottom of the pyramid are going to lose.

Many have lost their life savings after either being greedy, trusting or naive. I recall going to an investment day at the Ellerslie Racecourse some 4 years ago, all the banks, share options people,brokers, finance companies, gold sellers etc were there.

So was Blue Chip.

While many of the above mentioned were quite "pushy" in their sales patter, I distinctly remember the Blue Chip people meet my quick gaze at their stand and from then on the push to buy was relentless, aggressive and quite slick-and their lawyers were there!

I felt decidedly uncomfortable with everything about their pitch but can understand why some caved into their charms.

But I digress.

The fact that property deals were arranged so that overly large deposits on overinflated unbuilt housing was paid directly into Blue Chip coffers and not into the normal trust situation and signed off by buyers after getting "advice" from Blue Chip's own lawyers, should at least raise the ire of the Securites Commission who have so far been deathly silent on this matter.

In my humble opinion, at the very least the Fair Trading Act has been breached and action needs to be taken. The Commerce Commission, who agonize over the likes of The Warehouse sale saga haven't made a public statement. The Fair Trading Act(1986) basically states that you cannot hide or be untruthful about what you are selling or be devious or sly in hiding the nature of what is being purchased; i.e. small print is not an out for the dodgy seller and it should have been crystal clear about what those Blue Chip real estate buyers were signing.

Like others have been saying though, I suspect we have only seen the tip of the pyramid uncovered, and just like an iceberg most of what lurks underneath is looking decidedly crooked.

I fear though, that Mark Bryer's and his merry bunch of tuggers at Blue Chip will get away with this errant behaviour and not even get a lick of a taste of the anguish that they so clearly deserve, and their former clients are now suffering from.

It is time for the talking to stop and action to start, lets not let another economic vampire go free.

Related Share Investor reading

New Zealand Financial Oversight bodies fail Blue Chip investors
Money Managers Saga-3 story wrap
Money Manager's First Step gives investors the middle finger

Recommended Amazon Reading

Forensic Accounting and Fraud Investigation for Non-Experts

Forensic Accounting and Fraud Investigation for Non-Experts by Howard Silverstone
Buy new: $40.00 / Used from: $32.05
Usually ships in 24 hours

Essentials of Corporate Fraud (Essentials Series)

Essentials of Corporate Fraud (Essentials Series) by Tracy Coenen
Buy new: $26.37 / Used from: $24.64
Usually ships in 24 hours

c Share Investor 2008