Financial irregularities in regging.

[Kha Khan]

I made the following post on WWP regarding financial irregularities in regging. I thought it might be of some interest here, and I wonder if anyone has similar knowledge or experience.

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The one I recall involved the cross-guarantee of personal loans between Public that was coordinated and encouraged by Reges and other staff. It went something like this:

Public A is solvent and has good credit.
Public B is solvent and has good credit.

Public A wants to take out a personal loan from Financial Institution No. 1 to pay for auditing. Public A would not be able to get the loan from Financial Institution No. 1 despite his good credit unless he has someone else who is solvent and has good credit guarantee the loan. So Public A has Public B guarantee the loan from Financial Institution No. 1 to Public A.

Now Public B wants to take out a personal loan from Financial Institution No. 2 to pay for the training. Public B would not be able to get the loan from Financial Institution No. 2 despite his good credit unless he has someone else who is solvent and has good credit guarantee the loan. So Public B has Public A guarantee the loan from Financial Institution No. 2 to Public B.

Perhaps the most important part of the procedure follows.

When Public A takes out the personal loan from Financial Institution No. 1 based on the guarantee of Public B, neither Public A nor Public B disclose to Financial Institution No. 1 that the next day Public A is going to guarantee the debt of Public B to Financial Institution No. 2.

When Public B takes out the personal loan from Financial Institution No. 2 based on the guarantee of Public A, neither Public B nor Public A disclose to Financial Institution No. 2 that the prior day Public B guaranteed the debt of Public A to Financial Institution No. 1.

It was possible that the above might be accomplished without technically and legally committing fraud because the COS reges and staff may have found a flaw in the system.

When Public A guaranteed the debt of Public B, the paper work asked about Public A's income, assets and debts, but it did not ask about: (1) past, present and anticipated future guarantees of the debts of another; or (2) more generally, contingent liabilities. Depending on how the guarantee was written, Public A's guarantee of the debt of Public B was not a "debt" of Public A unless and until Public B defaulted. Thus, the COS reg and staff argued that the prior, present or anticipated future guarantee did not have to be disclosed because it was not a "debt" -- yet.

Likewise, when Public B guaranteed the debt of Public A, the paper work asked about Public B's income, assets and debts, but it did not ask about: (1) past, present and anticipated future guarantees of the debts of another; or (2) more generally, contingent liabilities. Again, depending on how the guarantee was written, Public B's guarantee of the debt of Public A was not a "debt" of Public B unless and until Public A defaulted. Thus, the COS reg and staff argued that the prior, present or anticipated future guarantee did not have to be disclosed because it was not a "debt" -- yet.

Now, take the above scheme and expand it to 3, 4, 5, etc., parties, with everyone cross-guaranteeing each other's debts. The expansion was factorial. That is, Public A guarantees the debuts of Publics, B, C and D. Public B guarantees the debts of Publics A, C, and D. Etc.

Also, once you have more than two parties you can have more than one guarantor for each debt. That is, Publics A and B guarantee the debt of Public C. Publics B and C guarantee the debt of Public A. You know, in order to give each financial institution peace of mind.

Of course, once Public A, B, or C, etc., defaults, and the relevant Financial Institution calls on the guaranteeing Public to pay the debt, then the whole house of cards collapses.

The above practices were sold and justified to the public in the same way incurring debt to pay for services was always sold and justified to the public. The justification was that the Training or Auditing would make you so much more able, and so much more able to earn more money, that you would not only easily pay off the debt (or not be called on to pay the pay the guarantee, or be able to pay the guarantee), so that the additional debt or contingent liability was of no concern.

You know, just like taking on debt to pay for medical school is not a disqualifying concern because of the income you will make after you become a licensed physician. Obviously, the same thing will be true when you become a certified Class IV Auditor, or you business booms as a result of your becoming a trained Auditor and/or learning LRH Admin tech.

Now, the beauty of the above from the COS perspective is that neither the COS nor the Reg is a debtor, guarantor, obligor, or signatory on any note, guarantee, loan application or other piece of paper. The COS and the Reg are invisible to the involved Financial Institutions. IF (and that is a big IF) one of the Publics spilled the beans, then a good attorney could sue the Reg and perhaps the COS on a conspiracy theory, but that would be unlikely, difficult and very hard to prove. The COS would have a large degree of plausible deniability. If necessary, the COS would throw the Reg under the bus. And probably do so citing a convenient LRH policy against engaging in financial irregularities.

I recall one Sea Org member who was allegedly notorious for this. He would allegedly engage in such, or similar, questionable practices, bring in a lot of money, and be a hero. Until things blew up and there was a scandal, at which point he was thrown under the bus, busted, RPFed, and eventually transferred to another Org. At which point, you guessed it, he began to engage in such, or similar, questionable practices, brought in a lot of money, and became a hero....

[HelluvaHoax!]

I made the following post on WWP regarding financial irregularities in regging. I thought it might be of some interest here, and I wonder if anyone has similar knowledge or experience. The one I recall involved the cross-guarantee of personal loans between Public that was coordinated and encouraged by Reges and other staff. It went something like this:snipped

Hey KK!

While it is not a typical lending transaction, there is nothing about it that is out of bounds from a regulatory perspective. These are CONSUMER loans, either personal line of credit or collateralized debt instrument.

If it's a personal line of credit (credit card, personal loan from bank, etc.) these are typically not co-signed as the institution relies on the creditworthiness and assets of the principal borrower.

However, in a collateralized loan (auto loan, business loan) the underlying asset represents the most weight from the lender's perspective. If an additional signer puts the risk/reward in proper ratio, they make the loan. So, here a co-signer can and does often push it over the top (favorably).

As you say, the co-signer is not required to disclose contingent obligations (the co-guarantee) so there is nothing wrong with anyone doing that any number of times if THEY FEEL that they wish to take the risk of the borrower defaulting. Just like a person walking into a casino takes the risk of whatever they do with their own money.

Where did you think that a regulatory violation might have happened? In the US, the state agency which controls the type of loan would investigate any irregularity, if reported. In fact, they regularly audit lenders for compliance even without complaints.

There would have to be something that was a regulatory violation for any action to happen on it. Tell us more.....

[Kha Khan]

Where did you think that a regulatory violation might have happened? In the US, the state agency which controls the type of loan would investigate any irregularity, if reported. In fact, they regularly audit lenders for compliance even without complaints.

I was not thinking of a regulatory violation. I was thinking of common law fraud and breach of contract. It all depends on what questions were asked, and what representations were made, in the loan application, guarantee application (if any), and guarantee.

For example, if a guarantee application asked about prior contingent liabilities, or asked about debts and defined the word "debt" as including contingent liabilities, and the prior guarantee was not disclosed, that would be fraud.

Similarly, if the guarantee required disclosure of, or recited, all prior prior contingent liabilities, or debts and defined the word "debt" as including contingent liabilities, and the prior guarantee was not disclosed, that would be fraud.

Basically, the rule is that if you are not asked for information, and don't volunteer the information, there is no fraud. If you are asked to disclose information, and disclose false or incomplete information, that is fraud. So it depends on the individual paperwork.

Also, at least in California (and I'm sure the law is similar elsewhere) there might be potential liability for nondisclosure under California California Civil Code § 1710(3), which provides:

A deceit, within the meaning of the last section, is either:
* * *
The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact.

I can see a Court concluding that the parties' engaged in suppression of a fact -- i.e., the prior or planned future guarantees -- after giving information of other facts which were likely to mislead for want of communication of the suppressed fact.

[GoNuclear]

I was not thinking of a regulatory violation. I was thinking of common law fraud and breach of contract. It all depends on what questions were asked, and what representations were made, in the loan application, guarantee application (if any), and guarantee.

For example, if a guarantee application asked about prior contingent liabilities, or asked about debts and defined the word "debt" as including contingent liabilities, and the prior guarantee was not disclosed, that would be fraud.

Similarly, if the guarantee required disclosure of, or recited, all prior prior contingent liabilities, or debts and defined the word "debt" as including contingent liabilities, and the prior guarantee was not disclosed, that would be fraud.

Basically, the rule is that if you are not asked for information, and don't volunteer the information, there is no fraud. If you are asked to disclose information, and disclose false or incomplete information, that is fraud. So it depends on the individual paperwork.

Also, at least in California (and I'm sure the law is similar elsewhere) there might be potential liability for nondisclosure under California California Civil Code § 1710(3), which provides:

I can see a Court concluding that the parties' engaged in suppression of a fact -- i.e., the prior or planned future guarantees -- after giving information of other facts which were likely to mislead for want of communication of the suppressed fact.

The entire system is based on fraud because it is based upon FRAUD, acronym for Federal Reserve Accounting Unit Devices. Now I am not arguing that the redge/Cof$ aren't instigating fraud, they most certainly are, but, you cannot out lie, out cheat, or outsteal the banksters and/or their partner, a bankrupt and in receivership corporation known as the United States and/or their private collection agency, a trust out of Puerto Rico, known as the IRS.

There are multiple levels to this fustercluck that is going on regarding Cof$, redging people into bankruptcy, the banksters, the current monetary system, the current legal system, etc.

On the top level ... Cof$ is a con game in the first place, pretenting to deliver higher states of awareness and freedom for mere dollars, when they don't.
Next level down ... the redges, who are the past masters at applying closing techniques to separate Cof$ public dupes from their money
Next ... the Cof$ public dupes who ALLOW Cof$ to part them from their money, when, probably, deep down, at some level, they know better or at least should know better. My guess is that at some point we all went along with buying into a lie because it was an enticing and tempting lie to buy into
Next ... the borrowing ... you, me, all of us ... deep down we knew better, but, we lied to outselves with "with the increased ability I will pull in the money to cover this"
Next ... the co signers were willing suckers
Next ... the bankers were greedy and went along with it, going for short term profit
Next ... the bankers have ANOTHER scam going, which is the nature of the money system. NO MONEY WAS LENT OUT WHATSOEVER THAT WASN'T CREATED BY THE BORROWERS SIGNATURE.
Next ... the banker never gave full disclosure to the borrower as to how the system works or inform the borrower that he has a right to demand back the promisory note, the original, upon tendering in full ... instead, this became an asset to collateralize other loans ... this is a way more sophisticated game of the same nature with the multiple loan guarantors all vouching for each other. The name of the game on either side is asset "creation" although the banksters are far more skilled at this than the public
Finally ... WE THE PEOPLE, who have abdicated our sovereignty over our own monetary system by not watching Congress like a hawk, allowing such things as the Federal Reserve System, the 16th ammendment (which supposedly grants the authority to collect an income tax) the 17th ammendment (effectively disenfranchising state legislatures from representation in the federal govt. ) the abrogation of the gold standard, and suckering virtually everybody into the status of "subject" via the wide spread, defacto enforcement of a legally 100% voluntary system known as Social Security.


Pete

[JohnMccMaster]

I remember Brighton Org back in the 90's had a pair of Reg's that worked in tandem. One was the ED (and not an official reg) and one was the Reg and the EO, interestingly. They used to target a public they knew (because they snooped their bank accounts) had money and gradually gain their trust and cream them for every penny they had. It was scandalous.

I remember them both cheering ecstatically when they regged about £25,000 out of some Russian bloke that was on-lines there.

They were celebrating the mere fact that they'd got this guy to get his father to send him £25,000 before 2 PM on a Thursday. I remember a comment one of them made to him, "You're such a knowing thetan to have made sure you were born to a Russian banker."

I thought, "So this is what these people are all about." And left.

What I found objectionable about this practice was that:

A) When you make a payment to an Org. that money just sits on your account, it doesn't go into CoS coffers. You have to buy something.

So what they did was to browbeat the public into buying taped lectures and books you didn't want such as the R&D volumes so they could transfer the cash into the CoS account and the staff could get paid a bit of it.

And when that public became skint as a result and hadn't done the auditing he'd/she'd paid for and their case was worsening they (Brighton Org) would change their opinion of said public overnight and consign them to being low toned or tried to reg them for staff.

The staff talked about public and mocked the lower-toned ones behind closed doors, even though they were the ones keeping the Org afloat financially.

Brighton Org and Campbell Tarbet (Ex-EO and reg and almost declared once) and Nigel McEnery (Ex- ED of Brighton Org) need investigating for their years of fraud at Brighton Org. and held accountable.

[thetanic]

What I found objectionable about this practice was that:

A) When you make a payment to an Org. that money just sits on your account, it doesn't go into CoS coffers. You have to buy something.

So what they did was to browbeat the public into buying taped lectures and books you didn't want such as the R&D volumes so they could transfer the cash into the CoS account and the staff could get paid a bit of it.

Actually, they spend the money the week after it's received. There is no savings account where unused advanced payments are kept.

The reason they want to spend it is a) it's a refund risk; b) the bookstore person needs to get stats; c) the person selling the books gets commissions and that's what they live on.