Cash Plus

It looks like those who have loaned Cash Plus money in exchange for the 10-18% monthly return they were supposed to be getting are going to be unlucky as the FSC has issued a cease and desist order, according to the Observer and Gleaner.

The rule of thumb I use whenever I hear about these kinds of "earnings" is that any company that produces mega-returns on that level must result in either:
- headlines in the Wall Street Journal and Financial Times lauding their genius
or
- complete collapse at some point, with someone left losing their investment because it is essentially a pyramid scheme

I say this without knowing anything about the companies that are offering these high returns, because the world is such that one does not need to know the inner workings of a company that offers these returns to be able to predict one outcome or the other.

It's a little like being able to predict that a lead ball will fall if it's released in mid-air.

Some 18 years ago, I remember a conversation I had with a colleague of mine who had just signed up with NuSkin, a network marketing company.

We were all employees of AT&T Bells Labs which back then was the premier R&D lab of its kind in the world. I had the opportunity to rub shoulders with some brilliant people, many of whom had PhD's, and a few (who I never actually worked with in person) that even had Nobel Prizes.

We sat down for several hours to figure out that what this NuSkin thing was all about, and where it was headed.

We arrived at the conclusion that ALL networking marketing companies must experience one of two outcomes if it's based on bringing in more people in order to grow:
1. A LOT of people lose their investment slowly
OR
2. It fails quickly because too much success eventually leads to a shortage of new recruits, which creates a domino effect that causes the company to collapse

It didn't matter that there was a product being sold, as long as hyper-growth was dependent on bringing in more people.

Not that this was a problem per se -- except that apparently neither the new recruits nor the owners of network marketing companies seemed to recognize this dynamic. It IS a very difficult dynamic to distinguish. It took a bunch of highly trained engineering types several hours to arrive at this conclusion.

Whenever I have spoken to someone in a network marketing company I have never been able to explain what we discovered, unfortunately.

Which brings me to Cash Plus. There is no company that has ever produced the returns that Cash Plus did each month without an element of it being a pyramid scheme. There is no company that has beaten the DJIA's annual return on an ongoing basis many times over without that element being present.

Cash Plus' difficulties at the moment are typical of this kind of scheme.

The question I have is whether or not the other investment schemes are also falling into the same trap. The owners don't need to be malicious people to make this grave error in judgement that ends up costing people their savings. They don't need to be convicted felons. They can even be quite smart.

To the other companies that are providing 10%+ monthly returns in their investment clubs or other schemes, I'd recommend that they bring in an independent forensic team to verify that there is no pyramid element hidden in the structure of the organization. This critical step would assist everyone in clearing up the mystery, and help the owner/operators prevent a catastrophe for themselves and their investors.

It would dissipate some of the thunder-clouds that are growing around these companies.

Read more!

Cash Plus Felon

The front page news breaking today in the Jamaica Observer is that the founder and president of Cash Plus is a convicted felon, who served some number of years in prison in the U.S.

Click here to see the article.

Apparently, he returned to Jamaica to start the business that is currently the source of so much controversy.
My own take on it is that the recent revelations are bound to be damaging, but the problem is that the business is apparently having a difficult time in providing the double digit monthly returns that it promises its "shareholders."

The story I have heard is that people have been promised up to 18% returns each month. Anyone who is a student of statistics knows that based on simple compound interest laws alone that such returns are unsustainable.

It's the reason why Amway, Ponzi schemes and the like MUST have losers, because if everyone won, there would not be enough people on the planet to keep it going.

In like manner, CashPlus must spawn losers, because at that rate of growth, it would gobble up all the cash in the world in only a few years (someone else can do the math.)

This says nothing against Carlos Hill's integrity.  Instead, it's a law of the universe that 's bigger than any of us that just cannot be broken.

I fear the worst, and it would be a good move for him to declare that his investors should expect lower returns from this point on, to help cushion the blow they are bound to experience at this rate.

While returnees are welcome back here in Jamaica, as is their busines acumen, it remains to be seen whether or not this particular enterprise will stand the test of time. I am certain that his background must be giving his investors some pause for thought this morning, as they realize they are in business with an ex-con.

Read more!