Was Bernie Madoff a Great Southern Advisor?
I’m home sick today, fingers crossed it’s a cold and not swine flu. I wonder if as a Biota investor I can be assured of getting some Relenza. Perhaps they should include that as a perk for shareholders?
Anyway, with time on my hands I read the June issue of Vanity Fair which featured “Hello, Madoff!” The Madoff Chronicles Part II: What the Secretary Saw. There are some interesting parallels between the Ponzi scheme operations of Madoff and the operations of Great Southern.
Madoff used feeders, basically investment advisors who received large payments for funnelling investor funds to Madoff. It is not apparent how complicit these feeders were in the whole Ponzi scheme, but at the very least they pushed these investments based on the commissions they received. Does that sound like your accountant or financial advisor? Those advisors, who many rely on for impartial advice, received 10% commissions for pushing people in to MIS, schemes which any basic due diligence would have raised red flags on.
The returns promised were unrealistic verging on the impossible.
It is unlikely Madoff directly advised Great Southern, but it appears they used the same playbook. There are many people who should be held accountable and each investor should accept some responsibility themselves.
I think it is time to compile a list of accountants and financial advisors who recommended Great Southern or other MIS schemes to their clients. I’ll start the list, please add any that you know, quoting the firm rather than individuals.
BMK: I left this firm after my accountant persistently tried to push MIS schemes on me. Coincidentally the only equity investment I recall him ever recommending was Babcock & Brown.
What to learn from all of this:
- Do not trust anyone who is receiving commissions for products they advice on. The conflict of interest is too great.
- Structured products are structured to make other people rich at your expense. In general avoid all structured products.
- If returns appear too good to be true they probably are.
- Investing for tax minimisation is a poor reason to invest.
Please leave a comment with any accounting or financial advice firm who recommended a MIS investment to you.
Finally I will be attending the creditors meeting in Melbourne on Wednesday 27th May. I wish to ensure TREES holders are represented on the Committee of Creditors. If anyone wishes to discuss this please leave a comment or contact me using the form at the bottom.
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Phil Escott
It was Phil Escott who suggested I should get involved in the trees. I do not deny that I thought it was a great idea considering I had a huge tax debt ahead of me to pay.
However, as a green neck on these matters, it was the only company that he suggested, and the only adviser he put me in contact with to purchase into an MIS.
As he WAS my accountant at the time, and my track record with accountants wasn’t great – he came recommended by a friend – and given that as a designer I’m not supposed to know anything about financial matters I did consider his recommendation had more merit than if my Great Southern had knocked on my door to offer me the same advice.
I never did find out if Phil Escott received a commission. The whole process was all very touchy feely to the tune of $30000 in 2006 cows.
As Phil is not my accountant anymore, I’m not surprised that I haven’t heard from him during this whole fiasco. However, I do think it is rather shocking that the man who physically sold me these cows, and then $15000 in trees a year later has not even bothered to make a call. Perhaps he is too busy counting commisions to bother.
Robert Bourne of Quadrant Securities.
I’m not in a capital city but there were hundreds of people at the project transform meeting in our town. It seems woodlots were pushed very heavily in this area. A lot of commissions paid.
He also recommended managed funds in the technology sector just 2 months AFTER the tech bubble burst. They were falling at 20% per month at the time.
Financial advisors always underperform the market, if they manage to perform at all. NEVER LISTEN TO THEM.
Tulare Financial Planners Pty. Ltd.
Kent Town SA 5067
Highly recommended cows and gum trees up to 2008 project.
Sold us altogether 80 woodlots, 2000 to 2008.
Declined to give any advise on ‘Project Transform’!
OMEGA FINANCIAL PLANNING IN PADDINGTON (SYDNEY). PUT ME INTO THE TREES AND COWS. THEY ACTUALLY MADE ME FEEL GUTLESS FOR NOT GOING INTO GREAT SOUTHERN IN A BIGGER WAY. IF I BUMP INTO THE LITTLE TURD OF A FIANCIAL PLANNER IN THE STREET, LOOK OUT.
The comment listed above by Simon Evans has no basis in fact and could be considered libelous.
I am more than willing to state the exact facts concerning Simon Evans total investments and the advice he recieved, which give a very different picture than what he has stated.
Richard, thanks for your comment. If you wish to write a longer article or comment in defense of financial planners who recommended Great Southern or Timbercorp products then I am happy to publish it to provide balance.
Rather than the facts surrounding one person’s investment I think readers would be more interested in the bigger picture. For example what percentage of clients assets you recommended be invested in these products. Any evidence supporting the value added benefits of financial planners. Whether you continue to take any commissions for products and so on. They are a few suggestions, but feel free to write about what you’d like.
Simon Evan’s statement should be withdrawn from the website as it is completely untrue and I am at a loss to appreciate how you can allow can allow unsubstantiated, untruthful allegations to be misrepresented as facts.
Richard,
Simon was expressing an opinion. I think it is him and not me you should be discussing this with. However, I would never wish to allow complete untruths to remain on my site and so will remove Simon’s opinion if you verify each part is completely untrue.
You’ve stated Simon’s comment is completely untrue. I’ve broken down his comment below, can you please confirm whether each of the following is true or not.
1. Port Financial Services, (PFS) Fremantle. WA. is or had been associated with the Sentry Group.
2. PFS recommended MIS products and received commissions for doing so.
3. PFS was a believer in the benefits of Project Transform! (whatever that means) I guess did you recommend clients swap holdings for shares? What was your position on Project Transform?
You’ve stated all those things are completely untrue. I am left puzzled as to why Simon would have left such a comment if they are all untrue. Can you please confirm each statement is untrue.
Richard
I am unsure whether Simon’s comments are defamatory or not. I offer this advice.
“One of the best responses to defamatory comments is a careful rebuttal. If people who make defamatory comments are shown to have gotten their facts wrong, they will lose credibility. But this only works if people have roughly the same capacity to broadcast their views.”
As I stated in my first reply to you I am happy to publish as a comment or a full article your rebuttal.
Trevor Cutler of Quadrant Securities in Albury Wodonga strongly recommended (over several years) the purchase of tree lots through Great Southern Blue Gums. We took his so called professional advice and “invested” in several lots.
I would like to see an investigation of the commisson/kick backs that financial advisors received. How much investigation did Quadrant undertake before placing Southern on their recommended to invest in list?
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