ALABAMA SECURITIES COMMISSION

770 WASHINGTON AVE, SUITE 570

MONTGOMERY, ALABAMA 36130-4700

TELEPHONE (334) 242-2984

††††† 1-800-222-1253†††††††††††††††††††††††††††††

FAX (334) 242-0240

E-MAIL asc@asc.state.al.us

 

 

FOR IMMEDIATE RELEASE

 

 

††††††††† Securities Commission Pays Back Fraud Victims

 

 

MONTGOMERY, ALABAMA(July 10, 2001)Joseph P. Borg, Director, Alabama Securities Commission signed a letter today returning $2.7 million to over 12,377 known victims who invested in MN Partners, Inc. loan program.This is Phase I of an aggressive effort to return seized money and assets to pay back an estimated 33,000 investor shares to citizens from Alabama, other states, and 16 foreign countries who fell prey to the former MN Partners, Inc. which operated out of Phenix City, Alabama.

 

In March 2001 the Alabama Securities Commission went into court and obtained a permanent injunction to close MN Partners, Inc. for violating the Alabama Securities Act by operating an illegal pyramid scheme.Borg said, "At the time MN Partners, Inc. was closed, assets were seized and a receiver appointed to inventory and manage MNís affairs.The Commission is making a strong effort to help victims receive their fair share of the assets seized from MN Partners, Inc.After the final accounting, remaining victims may receive anywhere from 50-80 percent of the original investment."

 

Borg said, "Phase I of the program returns investor checks, which were seized before being spent by MN Partners---this is a 100 percent refund.In 3-4 weeks Phase II will disburse the remaining seized assets after outstanding expenses spent or bills incurred by MN Partners, Inc. are accounted for or paid by the receiver.Phase I returns about $2.7 million to over 12,377 victims and Phase II will return an additional estimated $2.8 million to victims whose investment checks were cashed.The few investors who received more than they invested in loans from MN Partners, Inc. will receive a letter of notification with no disbursement."

 

Borg said, "The Alabama Securities Commission is always concerned when citizens invest hard earned dollars in programs that seem to good to be true." The MN "loan" program was a classic example of a combination Ponzi and Pyramid scheme.In this type of scheme the first few investors will receive promised returns, which will promote more investments.As more people invest, their money will be used to pay the first investors.As the number of investors grow there will not be enough money to pay returns to all the investors.Usually everyone but the first few investors lose most of their money.

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To invest into MN Partners, Inc. (MN) an individual paid a $300 loan fee or paid $100 and recruited two new members to enter the program.Then investors received a $50 loan, and every consecutive month received another loan twice as large.During the 9th month and thereafter when the monthly loan exceeded $10,000 per month, the investor then volunteered to loan back one-half of the proceeds for an additional 4% interest.†† After 12 months the investor would receive over $200,000 in loans.In one year MN promised investors $88,160.64 per month in spending cash after fees, principal and interest payments back to the company.The MN brochure promised even more--within two years a participant would net over $1,000,000 of non-taxable loans which would never have to be paid back.

 

An Alabama Securities Commission Special Agent, who is also a Certified Public Accountant noted that MN would have had to issue a large amount of new loans to keep their promise.For the first 20,000 members MN would need $10.36 billion over a two- year period and 34.5 million people paying the $300 application fee for the program.For MN to keep their promise to only 4 million of the 34.5 million customers, who theoretically would have funded the first 20,000 customers, MN would need over 6.8 billion new members paying the $300 application fee--this exceeds the present estimated world population of 6.1 billion human beings.

 

The Director of the Alabama Securities Commission cautions potential investors to thoroughly check out any investment opportunity.For inquiries regarding securities

dealers, to report suspected fraud, or obtain consumer information call 1-800-222-1253, or write:Alabama Securities Commission, 770 Washington Ave., Suite 570, Montgomery, Alabama 36130-4700, or email asc@asc.state.al.us. †††††††††† ††††††††††††††††††††††† ††††††††††††††††††††††† ††††††††††††††††††††††† ††††††††††††††††††††††† ††††††††††† ### 

 

FOR ADDITIONAL INFORMATION CONTACT:

Joseph P. Borg †††††††††††††† ††††††††††††††††††††††† ††††††††††† Daniel G. Lord

Director †††††††† ††††††††††††††††††††††† ††††††††††††††††††††††† ††††††††††† Education and Public Affairs Manager