In this video we go over the profit connect ponzi scheme. Profit connect targeted unsophisticated investors offering them 30% risk free returns from their quantum bitcoin mining computers. There was no quantum computer and it was all a scam. We delve into how they run the scam and how it was eventually uncovered.
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What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing. If you think the days of ponzi schemes are over in such dumb and blatant fraud is a thing of the past, then you are sadly mistaken. Ponzi schemes are uncovered all the time, even in the us most are not as big or widespread as bernie madoff's 65 billion scheme, but they have evolved to target smaller investors. Investing tens of thousands of dollars each especially with the rise in hype around blockchain, artificial intelligence and quantum computing.
Fraudsters have used these buzzwords to entice investors. Many offer outlandish returns and usually emphasize that their strategy has extremely low or no risk many times. They also promote their investment services aggressively using social media or even appearing on television, to talk about the returns that they promise. Today we're going to talk about one of the most recent such ponzi schemes uncovered by the sec.
This one pulled out all the stops hitting on all the soft spots of unsophisticated investors to swindle tens of millions of dollars from hundreds of individuals in may of 2018, a woman in las vegas named joy, kovar formed a company called profit connect wealth services. The company named herself as president treasurer secretary and director, a year later, she brought her son brent kovar on board to take the role of director. In the name of the company she opened. A total of eight different bank accounts at multiple different banks.
Joy is aged 86, her son brent, is age, 54 and also resident of las vegas. Their company profitconnect offered investment management services to small-time investors. The claims they made as to the investment strategy run by the company and the resulting return and risk profiles are truly outrageous. Profitconnect claimed to use a proprietary, artificial intelligence system running on a supercomputer to achieve higher than average returns without the risk exposure to the current stock market.
The markets that they claim to trade include foreign exchange stocks and cryptocurrencies by having multiple streams of revenue. This helped diversify the company's main source of profits, bitcoin mining they advertised to investors their primary product, offering which was a seat at their supercomputer ai engine. They called this the wealthbuilder supercomputer seat, apr account. Investors could open an account with the company and thereby purchase a seat at the supercomputer which entitled them to an amount of cycle time on the supercomputer system.
When an investor opened an account at profitconnect's wealthbuilder program, they paid an upfront lump sum amount. Then they were promised a fixed annual return between twenty and thirty percent. Investors could also choose to make regular monthly deposits where the guaranteed returns range from fifteen to twenty percent. They even offered a wealth builder youth account that targeted parents, grandparents, family and friends who want to give an investment as a gift to a child. This plan guaranteed a return of twenty percent. All the wealth builder programs promise returns that are quote fixed and locked in unquote. Profitconnect says that the returns of their products are not affected by the stock markets, foreign exchange, currency markets or asset markets, because they use multiple streams of revenue. Even if one income area experiences a slowdown, then the other profit streams would make up the difference.
Somehow, in other words, the company promised investors exactly zero risk. They portrayed themselves as being like a savings account paying a set apr with no risk, with the only difference being that their interest rate was between 15 and 30 percent. When profitconnect puts their logo on a wealthbuilder product, they certify that you'll receive an industry leading fixed apr return. That's both fdic and ncua insured and a peace of mind.
Money back, guarantee flaunted their supercomputer system as the engine behind the risk-free outsized returns. They said that their wealth builder accounts are not affected by market volatility, because the supercomputer system automatically guides the use of profitconnect's internal funds. The positions the supercomputer takes on can be long or short positions in foreign currency stocks, blockchain calculations, venture capital and even real estate. According to the company, in this way, they use the allure of an advanced technology to generate credibility for their investment strategy, but now there's alternatives.
The same disruptive technologies that the major financial institutions have been using themselves is now available for the little guy, like you and i and it's time for us to disrupt the old banking model disruption in the form of blockchain, artificial intelligence, super computing and soon to be Quantum computing and now all of these very disruptive, cutting-edge technologies are harnessed together by profitconnect, to make available respectable offerings to you, and i there's no comparison between the products the banks offer and what profitconnect offers. Don't let these numbers freak you out. I know they seem impossible: 20, 30 apr, but wasn't it also deemed impossible for a man to run a mile in under four minutes before 1954? Then, of course, roger bannister came along on the scene and he did it and now high school kids do a sub four minute mile, so not so impossible. After all, double-digit predictable aprs are now possible with a profit connect.
Wealth builder account purchase, that's also fdic and ncua insured with zero fees they also advertise would their offerings a money-back guarantee. Investors could supposedly withdraw their money in any quarter. They wanted backed by the fact that the company's internal financial reserves were significantly higher than all the seat purchaser's deposits combined. Additionally, all the investors funds are invested in the super computer's algorithms and the profits then deposited into an fdic ncua, insured business bank account at bank of america chase wells, fargo or navy federal credit union. Their website has many references to being fdic insured, even though in reality the only thing that is fdic insured is a bank account used by the company. The investment strategy and the wealth builder seats sold by profitconnect were definitely not insured by anything. In fact, profitconnect's bank accounts at navy federal and chase never even held any investor funds and wells fargo has never even seen a registered account for profitconnect. That's right.
Your profitconnect wealthbuilder purchase is fdic and ncua insured, both because of profit connects banking relationships. They ensure that your principal and monthly apr return are covered by fdic and ncua insurance within 90 days of your deposited funds being received and put into motion in order to attract customers. Profitconnect used extensive marketing. A central part of their marketing strategy was the use of paid promoters who used social media to solicit investors.
Promoters were paid up to 20 for each referral, which could go up based on things like total number of referrals. In a month overall, from 2018, through 2021 profit connect paid out 3 million dollars to promoters that accounts for more than a quarter of the total funds. From investors that profitconnect ever received the promoters often lied and deceived in their efforts to convert consumers. One promoter claimed that profitconnect had surpassed 1 billion dollars in sales in 27 months.
An outright falsehood. Another promoter touted profitconnect moving into a new 27 000 square foot data center. That was either false or misleading, because profitconnect in reality did not even have use for a data center and, in fact, did not have any high performance computing capabilities whatsoever. Here's profitconnect trying to describe their own data center and here is where the real magic happens.
The data center that tube you see circled in red and the sales office on the left, uh left-hand side of the screen, represents a miniature of one of the 250 20-foot tubes that comprise a 27 000 square foot data center vegas was strategically chosen to be ground. Zero for profit because since the 90s, millions of dollars have been invested to connect fiber optic providers to a single center in the southwest valley and in the process made las vegas one of the most connected places in the country. Remember success, loves speed. The working machine circled in red is a smaller version of what's housed in the data center.
This one miniature machine can generate over four hundred thousand dollars in profits per year to cover all operating expenses for the sales office, rent utilities, staff etc. Each future office will be self-funded just like this one, and that's why you don't get charge fees like other accounts, anyone can see that the cylindrical tube that they claim to be one of their high-tech supercomputers is nothing more than a decorative pillar at a mall. You can even see a mannequin in the background behind the window of a clothing store. Investors might be surprised to hear that their brand new 27 000 square foot data center is located in the hallway of a shopping mall. Who knows what this is, but it's definitely not a quantum computer generating four hundred thousand dollars of profit per year. Profit connects promotional campaigns through its promoters and through its own marketing, was shameless. They even portrayed themselves as a kind of generous disrupter. They claimed to be taking back the industry, profits that today's banking institutions keep for themselves and giving them back to investors and here's.
What the old mighty banking gods are currently willing to offer us today and, of course, anything juicy over 1.5 percent usually comes with a ton of strings. You'd. Think that with what the banks are willing to offer us today that the gross domestic product had somehow plummeted over the years, but as you can see, it hasn't, or maybe that the money in circulation's diminished, but that's not true either the truth. Is banks leverage our money on deposit every single day and loan it out or invest it at a ten to one ratio? They're, a huge trader in foreign currency markets and they've invested in the latest technologies like ai and super computing to earn enormous returns on our deposits.
Don't believe me whose name happens to be on the tallest buildings in almost every major city in america, banks right? What about jpmorgan chase 2019 just last year, 36.4 billion dollars in profit, wells, fargo, 4.6 billion dollars in profit last year, and what about good old bank of america, 27.4 billion dollars in profits just last year and trust me when i say these types of profits? Don't come from the monthly maintenance and overdraft fees that you and i get charged for do that banks make huge profits with our deposited money and offer us interest that amounts to dust in return. But then, where did all those millions of dollars of investor money? Go? Three million dollars went to paying promoters. Much of the rest of it was withdrawn into the personal accounts of joy, kovar or spent by brent kovar. A million dollars was withdrawn and given to various individuals associated with profit connect, 1.7 million dollars was spent by joy kovar.
On credit card purchases of clothes, a new car and other spending from just april to june of 2021 joy also transferred more than a million dollars from profitconnect's bank account to her own personal account. Brent kovar spent 250 000 of investor money on things like professional photography and clothing and about half a million dollars towards a new luxury house. Finally, 1.6 million dollars was spent by credit cards in the name of profitconnect. These purchases included 350 000 assigned to brent kovar. For things like restaurants and amazon purchases, on a single day in april of 2021, brent spent over 23 thousand dollars at costco using profit connect investor money. All in all, the majority of the twelve million dollars raised from investors was spent for joining brent's personal use or on promoters who brought in the investors in the first place in july of 2021, the sec shut down this ponzi scheme and froze what little assets remained Within the operation, the director of the sec's los angeles office said that this case underscores that investors should be wary of anyone offering double-digit returns with no risk. At a hearing scheduled for july 26th, a court will decide what will happen with joy and brent kovar. Their three-year campaign to scam hundreds of investors has finally come to an end.
Alright guys that wraps it up for this video. If you enjoyed the content, make sure to smash the like button and subscribe for future uploads. Also, leave a comment saying how you would detect that this operation was a sham in the meantime. Thank you so much for watching and we'll see in the next video wall street millennial signing out.
I checked this out after a rep talked to me and found lots of interesting info which the rep told me not to believe it.
Funny bit of RACISM 🙂
Or Reverse-Racism or whatever…
How many people would signed up if they had used the voices of the founders (Black snd Latino) on that educational video???
I you wanna sound trustworthy, you better sound White!
If I had access to a machine that provided 30% returns, I would just sit on it. Absorb the profits and then poop gold.
Also, not sure how they got anyone to bite with a website using the 'SCAM' theme.
Any ponzi scheme should result in life sentences with no possibility of parole. They should be put in general population as well. No country club prisons. The other inmates im sure will take good care of them.
The commercial is almost completely incomprehensible. The clearest point reasoned was that they seem to be suggesting we should be upset that banks have names on their buildings. lmao, if you give people money after seeing that maybe that's just the test and you're failing it
They should have just gone to a venture capital firm and said: "AI, Quantum, blockchain" and they would have been fully funded by lucky dumb money funds. Just look at all the idiots that invested in WeWork.
Profit Connect reminds me of Bitconnect back in the 2017 crypto bull market. Bitconnect was another big ponzi scheme that took many ordinary people's money.
lol, these scams are perfect for the religious idiots. "Say, you think me calling myself God is impossible? But in 1956, it was said running a sub 4min mile was impossible, but it IS possible now. Even HS students are running sub 4min mile." See? The undeniable logic in that? Therefore, you must believe that I am GOD.
If i can borrow from a bank at 5% and get returns if 15-20% i would never ever need any other investors. The banks would be happy to give you alot of capital.
So what was their business model? Having computers making 2-digit anual income and bank reserves larger than the sum of all inversments combined – why would they need any investors at all? Also – at this level of profitability of their business – wouldn't it be cheaper for them to take a low-interest loan at an investment bank (single-digit interest rate) – if they needed money for expansion – instead of borrowing it from the public at 20 or 30%?
That video on the data center should have been such a red flag. I can’t believe people fall for this stuff still
they use a mind trick by saying about things "circled in red", when its not a circle but a square!
conmen will often say something blatantly untrue, to destabilise your sense of truth.
if they repeatedly do this, they eventually train you to accept untruths.
one of the ways to avoid being scammed is the moment you notice a contradiction to start opposing.
really they should say "outlined in red" or something like that.
The narrator of their adverts also was talking very drably, and was struggling for words at one point, this amateurish unprofessionalism is a sign its a scam.
if something is for real, and the person is genuine and has integrity, even if the person doesnt have much money,
the presentation will be flawless, a person of integrity will scrutinise and rescrutinise their presentation, and do retakes,
a bit like a phd student preparing their thesis for submission, where they will rake over their work again and again till all obvious flaws are removed.
when something appears amateurish, its a warning sign, and if you do decide to participate only risk a tiny amount of money,
and before that try contacting the people to see how they behave, and ask various questions and clarifications,
if they are a sham, they will make various slip ups. In particular look for subtle problems such as major spelling errors,
and contradictions.
I watched some money making scheme presentation, where the guy says its based on soccer betting,
and that he and the creator of the system have made 6 digit amounts for themselves using the system.
much later on in the lengthy presentation he said he never bets, except maybe a flutter on the horses,
but he had contradicted himself, where earlier he said he used his system, and its based on soccer betting.
and later he says the only betting he has done is on horses.
A lot of scamsters get a buzz from lying to you in your face, because they get away with it so often.
I knew it was a scam, because the guy had successfully scammed me with an earlier scam,
and I watched the presentation entirely as a student of pathology to look for warning signs
and that earlier scam had an outer presentation which was very slick and professional, but he then hands you over to the guy
who runs the scheme, and the way he talked was completely drab and amateurish, at one point you could hear a mobile phone go off in the background,
and at another point you could hear a car go by outside! I think at another bit, you could hear a washing machine start spinning!
someone with integrity, would rerecord the presentation or edit out those bits.
With another presentation, the guy showed some graphs on his computer, and there were some kind of social networking messages appearing below it,
and some of these were calling him a scamster! The guy was so careless, that he didnt even notice or edit out or do a retake!
scamsters usually have no understanding of truth, for them things are whatever they say they are, and contradiction is not an idea they understand,.
eg they will say they always vote republican, and also that they voted for Obama and Clinton, and be quite unperturbed about the blatant contradiction.
They might say they were born in the US, but have never left Canada, etc!
I watched another presentation, where the guy says he is giving away a book for free, but when you click the various links to opt in,
he eventually says that the woman who despatches the books needs to pay for her chocolate muffins, and so you need to pay $10 or something
to pay for that!
a free book for $10!
He had a free course on ecommerce, and when you opt in, he then tells you to agree by clicking:
"yes, I would like to sign up for your free course on ?????, and am paying $10 for the test at the end of the course"
a free course for $10.
I thought it was a bit fishy for an investment to be based in Las Vegas, usually investments are in New York, and the underlying companies
are in Los Angeles! Or it might be an industry in some arbitrary place, but they wouldnt emphasise the place, eg for say a gold mine.
Las Vegas is for gambling! Not for investing!
Maybe there are investments in Las Vegas, I just find it implausible! Its as implausible as a casino in New York, or a forex firm in LA, or a ski slope in Texas.
If there are further implausibilities, eg something circled in red with a square,
and then amateurish presentation screaming for a retake, then its too many warning signs, and time to close the browser window and run out the door.
where money is involved, everything needs to be good. An honest person feels guilt over the slightest imperfection,
a dishonest person doesnt have the faculty for guilt, and derives pleasure in jostling their victim-to-be.
For them their victim is really stupid and will believe anything at all.
anyway contradictions are a very fundamental warning sign of a scam.
when people are desperate, eg for money, they will notice and then dismiss warning signs. They are so focussed on what they want,
that they stop thinking about what can go wrong, and warning signs are entirely about what can go wrong, and are very reliable.
I think virtually every time I have been scammed, when I have raked over the experience, there have always been warning signs,
and in fact to say an investment has no risk is itself a warning sign, because ALL investment carries risk.
eg the covid shutdown has caused jeopardy to virtually all investment, eg the UK economy was losing 521 million quid per day due to the shutdown.
supermarkets did continue through the shutdown, but each supermarket is at risk from the other supermarkets.
there is always risk somewhere, a war could break out, there could be a huge class action lawsuit against a firm, etc.
in the UK, by law investment things have to give a summary of risks, eg with share flotations, they have to document all the things which could go wrong
with the company floated. eg say you were floating electric cars, you have to say eg that hydrogen cars could supercede electric,
and that after covid, much more people will be working from home via the internet, leading to a drop in demand for cars generally.
A bit like cigarettes saying smoking can cause lung cancer. Spread betting companies in the UK, have to declare something like
70% of our customers lose all their money.
This looks like a high school PowerPoint for a proposed business. How on earth did these people think none of this would follow them or go unnoticed? Also, how did anyone come to the conclusion that they were legitimate???
Ponzi is everywhere; one just needs to be cautious when investing, especially if one has limited funds. People come in different shapes, colors, sizes, and so many of the world enterprises model this format. My observation of how I see the world…
It's weird how they say they have a quantum computer that can predict the market and their website looks like it was built by the CEO nephew who learned to code on youtube.
The only difference between this and the big investment houses is the big guys keep the extra profit from their algorithms secret. They cream off the bonuses and we stay poor.
If that video fragment about the supercomputer was actually from their promo material… those are just networking switches that they showed lol.
I wouldnt be surprised if this woman is the front for a shadier actor in the shadows which reaped most or all of the profits
Interactive data is prof the apps use this for high frequency trading. Arbitrage . When u confirm and press the tabs to structure a buy or sell etc the arbitrage happens and that’s pfof 2021 market maker then buys and sells you the order ahead of u profiting duopoly everyone else . since the spying and cheating is interactive data look up the apps they say u given them permission to use interactive data . They know what u do by the tabs you press whether it is a certain stocks and your purchase order then is pfof to the market maker
Interactive data is prof the apps use this for high frequency trading. Arbitrage . When u confirm and press the tabs to structure a buy or sell etc the arbitrage happens and that’s pfof 2021 market maker then buys and sells you the order ahead of u profiting duopoly everyone else . since the spying and cheating is interactive data look up the apps they say u given them permission to use interactive data . They know what u do by the tabs you press whether it is a certain stocks and your purchase order then is pfof to the market maker
One question is that you always win others always loose Wrong wrong The broker always win and all losers
Just FYI if a company had this tech and could predict future trends,which is currently impossible, then why does the company need individual investors? Why doesn’t the company just put in their own funds and ride em to the moon? People seem to have lose the ability to think critically and it hurts me to see such stupidity.
So, how did this small business get all this tech that billion dollar companies not get?
Also, how does running have anything to do with stocks? Investments?
They said nothing, just a bunch of buzzwords, and random facts.
here's our datacenter, here's an example of a tube, and here's a stereo, which there are like more of, and stuff
1/2 a mill towards a luxury house, damn that’s cheap. I live 20km west of Sydney and my 3 bedroom home cost over 900k!
How are these disruptive technologies, they will be picked up and used before the masses know they exist. They are disrupting nothing, especially since everyone is banking on them.