Ginko Financial’s End-Game
by Alphaville Herald on 06/08/07 at 12:46 am
L$200,000,000 in obligations, no liquid assets — queue up and wait
by Pixeleen Mistral, National Affairs desk
get in the Ginko queue
Sunday afternoon, GinkoTec and Ginko Financial honcho Hinoserm Rebus sent a notecard to customers who have deposited Linden space bucks in the role-play bank known as Ginko Financial. The notecard and announcement at the fictional bank’s web site inform customers that they have two options for withdrawing their funds – get in the queue, or if they prefer not to wait “the seemingly indefinate period of time it could take to refill the reserves”, accept space buck “perpetual bonds” which someone might possibly want to buy on the open market at some point. Maybe.
According to Mr. Rebus, there is now a L$1,000,000/day limit on withdrawls. But Ginko Financial president Nicholas Portocarrero informed the Herald this evening that Ginko has approximately L$200,000,000 in obligations (about $740,000 USD), so this suggests it could be be the better part of a year before some depositors see their money – if they ever do. As of this writing, the savings deposits claimed at Ginko Financial’s web site were L$118,429,950 – so perhaps paying 60% interest is catching up with the “bank”? According to Mr. Rebus, there is L$30,000,000 in pending withdrawls at this point – so the L$1,000,000/day limit seems ineffective at stopping capital flight from the “bank”.
Given suggestions of ponzi scheme-like scams in play, and enough money at risk to make some sort of class action lawsuit a possibility, the situation at Ginko looks bleak. With sources suggesting that Hinoserm Rebus and Nicholas Portocarrero may be alternate accounts run by the same RL typist – a suggestion which both avatars strenuously deny – the lack of transparency in Ginko’s governance presents problems to those who would like to believe in the bank. The clouded Ginko situation is not helped by Mr. Portocarrero complete refusal to explain where he has invested his customers money – but this is how Ginko Financial has always run its business.
Ginko will gladly pay you someday for a deposits you have made in the past
To address these issues, the Herald interviewed both Mr. Portocarrero and Rebus independently.
interview with Nicholas Portocarrero
Pixeleen Mistral: Nicholas, I was surprised to see a notecard from Hinoserm about the Ginko Financial situation today. I’m sure you can see how this coming from Hinoserm rather than you would lead to all sorts of speculation – now Hiroserm just contacted me, but I’m still very interested in your take on this
Nicholas Portocarrero: What speculation?
Pixeleen Mistral: speculation that you are going to disappear with whatever fund there are and never return – then there is speculation that you and Hiroserm are alts
Nicholas Portocarrero: I’m not his alt, and he is not my alt. I’m also not running, though restructuring might be necessary
Pixeleen Mistral: when will you publish an accounting of your “investments”?
Nicholas Portocarrero: Never
Pixeleen Mistral: i see
Pixeleen Mistral: because you can’t? or because it would tend to implicate you?
Nicholas Portocarrero: Because it was never part of the deal
Pixeleen Mistral: so the deal was people give you money and you might give some back, maybe?
Nicholas Portocarrero: The deal was, you loan me some money. I’ll pay you interest and do my best to pay you back. I cannot pay 25% of everything back all at once. So the loan might need to be restructured, so that it is no longer in the form of an account balance. Accountholders are not shareholders and no disclosure agreement was.. agreed to.
Pixeleen Mistral: why did you make promises that you were very unlikely to keep? this whole thing looks like a long running scam
Nicholas Portocarrero: I understand
Pixeleen Mistral: and I am surprised you are still trying to make it continue. at what point do you give up?
Nicholas Portocarrero: I am not running away my debt
Pixeleen Mistral: then you plan to sell some of your land in SL?
Nicholas Portocarrero: No.
Pixeleen Mistral: that can be turned into cash quickly
Nicholas Portocarrero: Cash that cannot pay off my debts. as such, selling it off would acomplish nothing.
L$200 million in debts
Pixeleen Mistral: what is the total size of your debts right now?
Nicholas Portocarrero: Around 200mil
Pixeleen Mistral: L$?
Nicholas Portocarrero: yes
Pixeleen Mistral: with the interest you have, what will it be next month? and at what point do you simply declare bankruptcy and bail?
Nicholas Portocarrero: I don’t know what kind of answer you want from me. Bankrupcy will not be declared and bailing will not take place
Pixeleen Mistral: so what should people who “invested” with you expect? a year wait? or more? maybe Hiroserm has an answer?
Nicholas Portocarrero: Most likely what will happen is this. All account balances will be converted to bonds, with a face value of L$1. Interest payments will be made and slowly they will be bought back and cancelled. Anyone unwilling to wait, may sell them to the market
Pixeleen Mistral: what is the expected timeline for this?
Nicholas Portocarrero: To buy back and cancel all the bonds?
Pixeleen Mistral: yes
Nicholas Portocarrero: I don’t know, but it will not be fast.
Pixeleen Mistral: make a guess
Nicholas Portocarrero: Why?
Pixeleen Mistral: so that your “investors” might set their expectations based on your insight into the situation – without some confidence in you, the chances of future financing seems dim and without some idea of what will happen, I find it hard to see how anyone would have confidence. your proposition has been “trust me”, but that trust is seriously eroded now. without an accounting of where the money has gone, and what the expected payback is, why would anyone go along with this?
Nicholas Portocarrero: Define go along with this.
Pixeleen Mistral: I wonder if this is all going to end up in RL court somewhere? some might think that this is massive on-going fraud
Nicholas Portocarrero: And how exactly is it a fraud?
Pixeleen Mistral: you know what a ponzi scheme is, right?
Nicholas Portocarrero: Yes, I do.
Pixeleen Mistral: cool
Pixeleen Mistral: anything you want to tell the Herald readers? have I missed anything important?
Nicholas Portocarrero: Yes, you have missed the fact that I have not ran away from this debt.
Pixeleen Mistral: I’ve been trying to see if you have a credible plan to repay the debit, and its not adding up for me
Nicholas Portocarrero: According to the standards used by some people, millions of people and major institutions would be engaged in ponzi schemes. Any person with a credit card debt would have to go to jail
Pixeleen Mistral: thanks for talking and good luck. I hope it all works out.
interview with Hinoserm Rebus
Hinoserm Rebus: Nicholas doesn’t have very many people skills. I don’t think he understand the importance of announcements. If it were left entirely to him, nobody would ever hear anything about anyone.
Pixeleen Mistral: I see
Pixeleen Mistral: one source who contacted me says he suspects that Nicholas may not really exist
Hinoserm Rebus: A very interesting theory
Pixeleen Mistral: is there anything you can do to lay that theory to rest?
Hinoserm Rebus: Surely you’re not implying that I’m playing the role of Nicholas. He’s not a native English speaker, that should be apparent to anyone who’s lived in the online world for more than a couple months. But, that aside. I lost my train of thought.
Pixeleen Mistral: well some people suggest a connection, and your avatars birth dates are close. another issue that I am hearing from several sources is that the connection between GinkoTec and Ginko Financial means that GinkoTec ought to liquidate assets to cover for the bank
Hinoserm Rebus: I’m really not sure how that connection was made, exactly. For all purposes, GinkoTec sold/sells the technology that maintains GF and the services (me) to maintain it.
Pixeleen Mistral: GinkoTec owns the land where one of the branches of the bank is, and I believe the phrase used was “implausible deniability” that they are not in fact overlapping ventures
Hinoserm Rebus: I guess since I pay for GinkoTec, and GF pays my salary, you could say they’re connected in that regard. But GinkoTec isn’t a company in any regard, nor is it about making money — it’s a group for me and my friends, and people like us who have the same ideas. Ask anyone in the group — they’re not paid, with the exception of a few that help with GF support.
Pixeleen Mistral: so no plans to sell land in SL to cover Ginko Financial’s withdrawls?
Hinoserm Rebus: If I sell my land, it will be to pay my bills because of the money I’ve lost inside GF, should that occur.
Pixeleen Mistral: Ginko Financial also has some land of its own though
Hinoserm Rebus: Maintaining Ginko Financial is both my full-time job, and main source of income. Ginko Financial and… Von Mises something, I think, yeah
Pixeleen Mistral: is Ginko Financial still paying you a salary?
Hinoserm Rebus: Would it matter? There’s no L$ to pay me it with.
Pixeleen Mistral: it must be hard if that was your job – what are you planning to do to support yourself?
Hinoserm Rebus: If GF ends up going away? I still have the software, I might consider selling it — or using it again. I designed the software as a universal platform. It could just as easily be converted to a billing system for a shopping site — which was something we had planned to do. Or something akin to PayPal, accepting payments for other sites
Pixeleen Mistral: right – probably some demand for that
L$30 million pending in attempted withdrawl queue
Pixeleen Mistral: then there is the speculation that the only reason for maintaining the bank at this point is to move the remainder of the assets out of Second Life
Hinoserm Rebus: Lemme see if I can explain how I understand what’s going on right now, and what lead to my notice. Nicholas basically came to me yesterday and said that it was nearly impossible to liquidate enough assets fast enough, and that he wanted to convert everyone’s account balance to GPB (Ginko Perpetual Bonds or something like that) on the WSE. I’m not too keen with that idea, for many reasons — I don’t like WSE, I don’t think it’s a good idea, it’s not going to solve the problem, and, well, it still leaves me out of a job I’m not the best at explaining, so forgive me if this stops making sense Basically, to bring L$ back into SL, it’s going to mean selling off alot of investments Nicholas has started up — from what I understand, these are small web businesses and SL businsesses that looked promising, but aren’t actually worth much yet. Sure, selling them would mean being able to pay off the withdrawal queue (about 30mil last I checked), but it would leave how much more unpaid, and no potiential to ever continue making money. Effectively, the emergency plan of converting to the bonds would be useless, too, since (I imagine) the same investments are funding those as well. It would just be bad all around
Pixeleen Mistral: I think it would calm everyone if those investments were made public so that people could clearly understand the likelihood of them paying off
Hinoserm Rebus: I agree, but that’s not my choice
Pixeleen Mistral: btw – do you have a way to contact Nicholas in RL?
Hinoserm Rebus: I had his contact information at some point — knowing me, I still do. I have files from decades ago. Yeah, I still do
Pixeleen Mistral: good to know
Notice Regarding Current Situation 08/05/07 02:57:38 PM EDT___________________________________________________
I would like to personally try to explain some of what’s been going on.
About a week and a half ago, we saw an increased number of withdrawals; the time to speculate as to why this happened has since come and gone, so I will leave it at that. No matter what started it, the result is the same: We have expended every possible short-term resource, and are still unable to meet the current demand for funds. We have attempted several different things to remedy the situation (which is in short why the interest rates and limits have fluctuated wildly), but none of them turned into a viable permenant solution.
For the time being, we have decided to continue doing business normally, but leaving the withdrawal queue in place with an expanded L$1,000,000/day limit, to give an indication as to where the end of this situation may be. However, a realistic estimate could possibly extend in to the realm of several months.
It may be hard to believe that we would expect people to stick with us, especially after how poorly this situation has been handled, but a large number of you continue to show your support, and I still have hope of a second chance at fixing the problem.
For those of you who wish to withdraw your funds, you may wait in the queue, or cash out to Ginko Perpetual Bonds, which is currently the only option if you don’t wish to wait the seemingly indefinate period of time it could take to refill the reserves.
I would also like to personally appologize for the lack of communication and the diminishing customer support during all of this, but through all of the changes that were being made it is impossible to keep my support staff fully informed, and usually I am the last person down the line to receive factual information — and too often the first person to relay that information to you.
I thank everyone for your continued support of Ginko Financial, and hopefully with time we will be able to continue through this situation and get things put back right.
-Hinoserm
Benjamin Duranske
Aug 8th, 2007
Re the play money thing, they way I’d deal with that, were I suing somebody over this, is I’d actually show a jury LL hitting my credit card for $30 and giving me Lindens. Then I’d buy a virtual hat, and convert the rest back to US dollars. I think your average jury would decide it’s money.
Thal
Aug 8th, 2007
I told people that were all keen on this scheme when I first heard of it that it would not end well.
And while Micholas has behaved immorally, the people who decided to dump money into that obvious dead-end of an investment scheme really have no one to blame but themselves.
Thal
Aug 8th, 2007
“I think your average jury would decide it’s money.”
Not to mention, when LL decided to do the Great Gambling Purge of ’07, they (inadvertently?)strengthened the argument of those who feel that L$ are more than just play money.
Hiro Pendragon
Aug 9th, 2007
“Ginko Financial is *no longer* a Ponzi scheme ”
Ben, let’s call a spade a spade. This Ponzi-scammer’s next announcement will be … nothing. We won’t hear from him. He’s in Brazil. Who’s going to prosecute?
Prokofy Neva
Aug 9th, 2007
Uri’s notion that the Lindens should intervene is preposterous. Once Lindens — and avenging litigators like Duranske — are allowed to muck about and meddle with the world, there is no Second Life. I guess Urizenus has become utterly cynical and doesn’t care. He should at least care enough until his book comes out, eh?
Swinging your dick around and saying “there is no debate; these are facts” just makes you look retarded. There is no evidence that Nicholas deliberately failed to invest money; indeed, he attempted investments that were shakey as they were in casinos.
>Gaius, big difference between wanting LL to babysit (e.g monitor) and be a responsive, responsible company that protects its customers from other customers’ scams.
Ugh, ugh, ugh. Get this fucking nuisance out of our lives with his television detective show jargon, pronto. I don’t want Linden Lab or any resident or resident-run entity governing any of us, passing judgements, making determinations of criminality, or anything of the kind.
Real-life authorities can and should act. Those with concerns should consult not some hick in his own private Idaho, but real lawyers and real prosecutors if they have concerns.
I hold Urizenus *personally responsible* for creating the monster which Benjamin Duranske has become for our world. For shame, for shame!
I guess he found a kindred soul in his morality crusades (which these vanity exercises are disguised as) — kinda like blowing the whistle on brothels and Evangeline, eh? And…whatever became of that?
>This is over. It is not a subject of debate. It is an ongoing illegal operation. It is a fraud just as much as an empty box scam or a fake land sale. It is just more complex. Stop pretending it is something it is not. There is no “liquidity problem,” it is a series of failed investments supporting a preposterous interest rate that was bound to collapse. It is illegal. End it.
Benjamin should be banned from every single parcel in Second Life where any investor is, for precipitating further runs on a bank. It’s a heinous, destructive, provocative act. It doesn’t matter if Ginko is a fraud; it doesn’t matter if it is “a preposterous interest rate”. These facts are known; they were placed in the literature; people can judge for themselves from cards they can read. No one requires any outside “legal expertise” and outside agitators to “determine something is illegal”.
Fuck this shit, seriously, Urizenu, you should be deeply, deeply ashamed for empowering this asshole, and helping destroy the world.
——-
Benjamin Duranske, you have not been retained; you are not authorized to practice law in Second Life; you have no standing, and you represent nothing. Your claims about this or that activity being “illegal” are just your overzealous posturing; they mean nothing except an exercise in vanity for yourself.
No one has pronounced Ginko’s unlawful, either a federal prosecutor doing a probe, or Linden Lab. You opinion isn’t worth much.
In building a fraud case, indeed what is stated on the literature is very important and closely looked at and does mean something.
From everything we can see, it does not appear to be fraud, and it appears to be unsound investments, not fraud.
There isn’t any “lunatic fringe” here “defending Ginko”. There’s people like me with common sense and ormal understanding who aren’t zealous extremists like Duranske, who merely point out that Nicholas did not defraud people in any literature. He kept his word.
There’s no evidence that this claim is the case, “4) Current depositors are promised 44% interest but their money is not invested.” In fact, Nicholas appears to have been attempting to invest the money.
I don’t claim to have special knowledge of Ginko’s; I have no need or motivation to exonerate them. What I want to make damn sure happens is that overzealous, illegitimate litigators unconnected to any real law or client or organization or institution can so callously harass people and incite panic. That’s wrong.
Benjamin Duranske fueled the panic. He bears responsibility for the collapse to some extent, though he did not precipitate it. He is a public enemy in that regard. There is no need to hasten the demise of a shakey bank and force more people to make runs at it merely to prove one’s theories about finance that one finds interesting to watch in between *cough* writing book chapters.
Read my blog for further commentary.
http://secondthoughts.typepad.com/second_thoughts/2007/08/ginkos-goinggoi.html
Reservebank Division
Aug 9th, 2007
Ginko just declared bankruptcy….
Chapter 1 in SL
(aka: Monetize everybody’s deposits into worthless GPB bonds and call it a day.
Announcement 08/08/07 10:20PM EDT
Dear accountholders,
Ginko Financial was established in December 2004 at a time when Second Life had less than 20,000 residents. As one of the strongest brands in Second Life we have seen the economy grow to many millions of residents and thousands choose Ginko Financial as their preferred financial services provider.
As you probably already know, Ginko Financial has experienced some challenges in these last couple of weeks. Following the ban on gambling in Second Life we began experiencing a wave of withdrawals from Ginko Financial. This led the funds we keep in reserve for day to day use to be exhausted, which evolved into a full blown panic depleting even our last line of cash reserves and resulting in the current situation, with about L$50,000,000 queued up for withdrawal. This situation is unsustainable, as we would be forced to sell off our assets at a significant discount in order to honor such withdrawals, thus severely harming Ginko Financial’s long term prospects and it’s ability to ultimately honor all of it’s obligations to accountholders.
We had some hope that calm would return to the public and we could resume normal operation, but that does not seem to be likely or even possible anymore. Drastic steps have to be taken in order to protect YOUR wealth while giving an escape valve to anyone who is in panic or simply in need. We are not going to vanish and the investments we made still exist and will not be sold off.
After considerable thought, we have concluded that the only way forward from this is to convert, compulsorily, all customer deposits into a tradeable debt security called Ginko Perpetual Bonds. These bonds, listed on the World Stock Exchange (www.wselive.com), will allow Ginko Financial to recover from recent events by removing all pressure from our cash reserves while providing accountholders with a way to cash out on an open market.
All accountholders will have an account automatically created on the World Stock Exchange (www.wselive.com). Customers will receive one bond with a face value of L$1 for every L$1 they have deposited in Ginko Financial. Each Ginko Perpetual Bond will yield L$0.03 or 3% of face value per quarter (every three months). Ginko Financial will be actively purchasing these bonds in order to help keep prices at as high a level as possible.
Ginko Financial will bounce back from this and if you stick with us, you wll not lose anything. If you must sell the bonds, then you must sell, but I advise against accepting low prices.
Regards,
Nicholas Portocarrero / Andre Sanchez
Rasta Bourgoin
Aug 9th, 2007
To bad.. Ginko is smart as hell… told the clients they would get a bond for 1L$ when the price of it on the Exchange told us it was worth prox. 16L$…. I think Ginko bought there own bonds (with clients money(?)) for 1L$, waited, now sold the shit for the 16L$ it was worth, don’t pay the clients, but give them 1 bond for 1L$, while it is worth 0.16L$ now, so stealing from us twice in one movement!
Now every client can wait until the air clears up over Ginko, or sell with GREAT loss…. man oh man… I hope Micheal is proud on his actions… by the way, mister Lawyerman: can’t we ALL bond and draw this fuckers ass to court for theft? Would be a GREAT thing to do! 2 Things can be solved in one court… 1: Is Ginko fraud and should they pay us, and 2: is the Linden $ ‘play money’ as stated by Linden, or is it more than that and is Linden’s TOS incomplete at that point?
Just wondering…. what would happen to SL / Linden if the Linden$ IS worth more then nothing as THEY want us to believe… JUDGE! JUUUUDGE!!!
Benjamin Duranske
Aug 9th, 2007
Ignoring the frothing, screeching wall of incredibly personal insults isn’t easy, but I am going to. Prokofy isn’t allowed to post on Virtually Blind because this is what happens. I’m fairly sure I was called an “asshole” here. I just shake my head. This passes for discourse?
Anyway, there’s an argument buried in there, sort of, and it is wrong.
Prokofy says that there is “no evidence” that “current depositors are promised 44% interest but their money is not invested.”
Wrong. Until yesterday afternoon (when they closed the ATMs and website and cashed people out for essentially valueless bonds) *CURRENT DEPOSITS WERE PAID DIRECTLY TO OLD DEPOSITORS*. As in, from my pocket to the pocket of the guy at the front of the queue. Not into investments. You could watch it happen. And Nicholas even said so on the main forums, claiming that since there were already investments, it was okay to do this.
I fairness, I’ve said that I think he didn’t understand that this is illegal. And obviously, neither does Prokofy. But it is.
Your call in terms of whether you accept my analysis. I’m a lawyer who once worked on an appeal of a guy convicted of mail and wire fraud by Ponzi scheme. I’ve read hundreds of pages of trial transcripts on this stuff. I know the law and how it is applied. I’m a pretty cautious guy, and I’d not say this if I wasn’t sure. It’s illegal.
It’s pretty academic at this point though, isn’t it? I mean, they just shut everything down and gave people essentially worthless bonds instead of their money back.
So screaming and stamping your feet about how it wasn’t a scam now looks pretty silly. And doing it while you’re calling a reasonable guy who most people recognize is just writing about what he knows about an “asshole” is really pathetic and sad. It sucks, I guess, but I’m too busy to get all that wound about about this.
It’s not prosecution, it’s community action. Prokofy just didn’t get to be part of it. That’s something I see happening with increasing frequency as more and more people who are thoughtful and who do their research — rather than just getting by on “loud and mean” — join the conversation.
Mytwo Cents
Aug 9th, 2007
Benjamin – our comment have crossed indeed. I am aware that Ginko has closed the ATMs and effectively restructured the debt. Maybe this has become academic indeed but is still quite interesting. Hey, I could get my alt to call your alt to arrange an inworld lunch – there are still some other residents around that role play being a banker
Benjamin Duranske wrote: “This answers your question. “The problem with this argument, parroted from Nicholas by the remaining members of the die-hard lunatic fringe still wholly defending Ginko is that they appear to think it’s fine to screw people if you put it in a contract. That’s not true. What matters, when you’re talking about fraud, is how the scheme operates. The fine print could say “This is a Ponzi Scheme,” and that wouldn’t make it legal to run it as a Ponzi scheme.”
> Yes and No. I agree to your statement in general, but it is irrelevant as an answer to my point. In what I so diligently called “case two”, I tried to explain that anecdotal evidence suggests Ginko might not have been a ponzi scheme in the first place. Why not? Based on how I read the information publicly available, Nicholas did actually invest a substantial amount of the money given to him in assets with the aim to generate economic returns. In my opinion, such a business model can not be called a ponzi scheme. Your constitutional right to be upset about your stupidity of having invested in it remains uncompromised, of course.
Benjamin Duranske wrote: “Until yesterday afternoon (when they closed the ATMs and website and cashed people out for essentially valueless bonds) *CURRENT DEPOSITS WERE PAID DIRECTLY TO OLD DEPOSITORS*. As in, from my pocket to the pocket of the guy at the front of the queue. [ ] “I fairness, I’ve said that I think he didn’t understand that this is illegal. And obviously, neither does Prokofy. But it is.”
> I seriously doubt that it is. Consider my comment above in combination with this:
(1) Benjamin Duranske and I are visiting Bank of America
(2) Benjamin gives the clerk at the counter a US$20 note to be deposited into his account
(3) Right after Benjamin is done I go to the counter a withdraw US$20 from my account, the clerk gives my the note that Benjamin has just given him,
(4) Benjamin sues BoA for being an illegal ponzi scheme
Bejamin Duranske wrote “Re the play money thing, they way I’d deal with that, were I suing somebody over this, is I’d actually show a jury LL hitting my credit card for $30 and giving me Lindens. Then I’d buy a virtual hat, and convert the rest back to US dollars. I think your average jury would decide it’s money.”
>
. Fair point, and this really is something that is highly debatable. But if L$ are real money please buy me a can of beer at the next supermarket with a bunch of L$. Also, wouldn’t LL need to expense the L$ stipends they create out of thin air as real costs? Wouldn’t the US government be interested to know that a company is creating a parallel real currency on their territory? Wouldn’t suddenly accounting standards and licensing requirements apply to in-world businesses? I’m not further commenting on this because it actually is a very different discussion.
Benjamin Duranske wrote: “I know the law and how it is applied. I’m a pretty cautious guy, and I’d not say this if I wasn’t sure. It’s illegal.”
> Merely highlighting a degree does not constitute an argument and merely holding a degree does not automatically imply being correct. See, I realize that we fundamentally differ on the interpretation of Ginko’s business. However, I have tried to show my line of thoughts as to why I think there might not be a strong case to call it illegal – maybe not even a case at all given the context they were operating in. In contrast, a lot of your statements rely on “This is fact because I write so” without giving a lot a rationale. This is not meant in a condescending way; I would really like to know on which basis you think Ginko could be called illegal.
Bejamin Duranske wrote “[ ] calling a reasonable guy who most people recognize is just writing about what he knows about an “asshole” is really pathetic and sad. It sucks”
> It does. I would also cast a considerable amount of doubt on your ability to “destroy the world” for that matter.
Mmmh, that comment seems to have developed into Prokofyan dimensions
Benjamin Duranske
Aug 9th, 2007
This is a really excellent question, actually.
So the reason that this…
(1) Benjamin Duranske and I are visiting Bank of America
(2) Benjamin gives the clerk at the counter a US$20 note to be deposited into his account
(3) Right after Benjamin is done I go to the counter a withdraw US$20 from my account, the clerk gives my the note that Benjamin has just given him.
…isn’t illegal and what Ginko was doing was illegal is at the BoA, there’s a big pile of money from which investments are constantly being made — and at the end at least, at Ginko, there was not.
The way it comes out at trial is you hire a forensic accountant who traces the money. If he can show that all the money coming in was going out, and there was no big pile from which investments were being made, it’s very strong evidence that it’s an illegal scheme.
The reason I didn’t say it was until right at the end was exactly that — there was no transparency, so there no way to do what a forensic accountant would do. But at the end there, when it was going from depositor’s pocket directly to withdrawer, and no investments were being made, it was facially illegal. That’s when I, fairly cautious by nature, did call it illegal.
Benjamin Duranske
Aug 9th, 2007
> I would also cast a considerable amount of doubt on your ability to “destroy the world” for that matter.
Very sadly, I have to agree. That did crack me up though.
Yngwie Krogstad
Aug 9th, 2007
My big problem with what happened at Ginko is this:
Last Tuesday, I made a deposit. The point was to hold it until Saturday, and then take it out and make a payment to somebody. Why? So it wouldn’t be sitting around in my L$ balance, to get spent. I didn’t care one whit about getting 44% APR on it. I thought I was being responsible.
Now statements they have made publicly on their website since then, which were not available to me as an already existing account holder at the time I deposited that money, make it very clear that the panic over the new gambling policy, and consequent run on the bank, were already underway before I deposited those funds, and Ginko KNEW THAT. Yet they were still happy to take my deposit.
SHAME ON YOU, GINKO FINANCIAL. If the panic was causing that much trouble, you should have stopped accepting deposits sooner. Stopping them yesterday was the right thing to do, but you waited too long.
Thal
Aug 9th, 2007
“Benjamin Duranske, you have not been retained; you are not authorized to practice law in Second Life; you have no standing, and you represent nothing. Your claims about this or that activity being “illegal” are just your overzealous posturing; they mean nothing except an exercise in vanity for yourself.”
LOL. When people have spoken to legal matters in the past, Prok has shamed them for not being lawyers and talking law, (even though this is something he himself does regularly – pronouncing people as criminals, making all sorts of claims about legalities – all sorts of legal huffin and puffin.), yet when we hear finally start hearing from actual lawyers on some of these issues, suddenly they are rogue attorneys who are evil usurpers and have no clue about these issues, in a legal sense.
The most vainglorious labeling others as vain. It’s not even ironic anymore; it’s just sad.
Same shit different day.
Prokofy Neva
Aug 9th, 2007
[****Note: so that other people's comments are not pushed off the front page prematurely, the typesetters have taken the liberty of splicing together three consecutive rants into a single mega-whinescraper. Rants are separated by "---" for those looking for the seams in the prose - the Editrix***]
Um, there’s no “frothing and screeching”. There’s a simple statement of fact here. Benjamin Duranske is a public enemy for fueling a run on a bank and losing people money.
Duranske isn’t allowed to post on Second Thoughts, my blog, because I have a rule about people who incite or cause RL or SL harm, and his concept claim of “libel” regarding my remarks is actually such harm. Ermm…”fairly sure” or…no sure? Link?
I shake my head that someone can pretend to play lawyer on Second Life, prosecute people virtually on behalf of some unknown force, and not meet with a single rebuff.
>Wrong. Until yesterday afternoon (when they closed the ATMs and website and cashed people out for essentially valueless bonds) *CURRENT DEPOSITS WERE PAID DIRECTLY TO OLD DEPOSITORS*.
Wrong. Current deposits were locked into investments, duh. Only *part* of the new deposits were used to pay back demands for withdrawal *in part*. This is so obvious that I can’t for the life of me fathom why Duranske is pushing this and trying to be so unyielding in his pronouncement. He isn’t privy to Ginko’s books and is SPECULATING.
Ginko liquidated and delisted from the WSE as a firm, but itself had — has? — holdings in the WSE.
>As in, from my pocket to the pocket of the guy at the front of the queue. Not into investments. You could watch it happen. And Nicholas even said so on the main forums, claiming that since there were already investments, it was okay to do this.
*Part* was going to withdrawal demands. Nicholas has never commented on what his investments were, or how they were arragned. Duranske is fishing here.
>I fairness, I’ve said that I think he didn’t understand that this is illegal. And obviously, neither does Prokofy. But it is.
Oh, stop it. The problem with lawyers today, and why these fat egos are running wild and trying to jocket for power, is that anybody can Google up law and read it now. They don’t need some asshole law-school graduate to swagger around and inform them what they memorized by rote. We all read the identifying traits of Ponzi schemes years ago with Ginko. None of this is new, and none of it is the sensation that Duranske, in search of an Internet career, imaginges it to be.
Something is illegal if you can PROVE that it is so. Duranske has no books open from Ginko; he can’t show that all deposits when to all withdrawals because we can’t know the percentage and the total demand. If he were to come up with a) the figure of total deposits, which was reflected ($42 million or so when it collapsed) AND the figure of the total amount of demands (which weren’t shown anywhere I can see), we *might* have the ability to judge this better. Duranske finds it impossible to admit that he is SPECULATING here. Lawyers should not do that.
>Your call in terms of whether you accept my analysis. I’m a lawyer who once worked on an appeal of a guy convicted of mail and wire fraud by Ponzi scheme. I’ve read hundreds of pages of trial transcripts on this stuff. I know the law and how it is applied. I’m a pretty cautious guy, and I’d not say this if I wasn’t sure. It’s illegal.
It doesn’t matter if “it” is illegal and what some case involving a RL guy involved. This is another case. And…not a fraction of the information involved in the RL case is available. A lawyer who struts around commenting about what is legal or not legal, and prosecutes people like a district attorney in court in the media is guilty of malpractice.
>It’s pretty academic at this point though, isn’t it? I mean, they just shut everything down and gave people essentially worthless bonds instead of their money back.
Remains to be seen, again. Quite likely the bonds will be worthless, but stranger things have happened in Second Life.
>So screaming and stamping your feet about how it wasn’t a scam now looks pretty silly. And doing it while you’re calling a reasonable guy who most people recognize is just writing about what he knows about an “asshole” is really pathetic and sad. It sucks, I guess, but I’m too busy to get all that wound about about this.
Yes, a person who *fuels a run on a bank* with ill-advised prosecutorial pronouncements *is an asshole*. I can’t think of a better word to describe that person. I’ve heard others call him worse, in fact.
Um, we’re all special and important and have real lives. I’m not too busy, however, to tell off this *prick* who keeps imagining he has been appointed prosecutor of Second Life. He hasn’t. He represents nothing. Again, I’m appalled at the false shelf life Urizenus has helped to provide him. Lawyers so easily impress people.
>It’s not prosecution, it’s community action. Prokofy just didn’t get to be part of it. That’s something I see happening with increasing frequency as more and more people who are thoughtful and who do their research — rather than just getting by on “loud and mean” — join the conversation.
Ah, the old FIC argument — and the neo-FIC argument! — which says “You must be jealous and envious, and that’s why you criticize.”
People with rich and busy real lives and second lives aren’t “jealous” that some strutting little pompous ass in his own private Idaho got in the media and got attention for him. It’s not as if I’ve lacked for media attention in SL ROFL. It can’t seem to dawn on an ego like this that criticism comes from a position of integrity and concern for the world. They can only see it in terms of some territorial pissing match because that’s how THEY do things.
It’s not community action, because it’s not *in defense of the investors*. Real community action would be to take up real people and their stories, to try to find out whether in fact any of them had a real RL case, and pursue it. Not facile prosecution. My part of it or not part of it is immaterial. I don’t claim to need or want to spearhead every
movement in Second Life. I pass up many, even when asked. I certain passed up Cristiano’s ill-advised open letter, for example. I focus on what’s important and take positions and hold meetings on those issues. Protection of investors hasn’t been a huge priority because I see that most of those putting small deposits in Ginko’s did so out of awareness of risks and cautiousness; most of the big players are people with Lindens to burn who take enormous risks in SL in general. I can’t weep for the casino owner that flushed thousands of US dollars out of new people who were giving their parcels traffic by camping, getting a few bucks, and spending those and more on slot machines.
Taken as a whole over time, the Ginko scheme was one involving real investments that paid out, not merely theft of new deposits into one person’s pocket and then a failure even to pay interest to old deposits.
I would have to endorse this point, and it gets to the heart of a lot of what is wrong with Duranske’s swaggering:
> Merely highlighting a degree does not constitute an argument and merely holding a degree does not automatically imply being correct. See, I realize that we fundamentally differ on the interpretation of Ginko’s business. However, I have tried to show my line of thoughts as to why I think there might not be a strong case to call it illegal – maybe not even a case at all given the context they were operating in. In contrast, a lot of your statements rely on “This is fact because I write so” without giving a lot a rationale. This is not meant in a condescending way; I would really like to know on which basis you think Ginko could be called illegal.
I’ll be happy to put it more strongly: Duranske uses a method, common in TV shows with police and detectives, that he imagines a DA behaves in. He imagines that if he tallks tough and gives “just the facts m’am” that he *is* tough. Instead, he only reveals more and more what a weak position he is in.
>Mmmh, that comment seems to have developed into Prokofyan dimensions
Oh, I’m all for Prokofian dimensions when it comes to threats to the republic of this magnitude. He’s a person pontificating as if they have standing; practicing law without a license, essentially, in a virtual world context; invoking a somewhat misleading series of “credentials” (“on leave” from a firm that is in fact holding a job for Duranske when he returns? That’s not really explicitly confirmed). He’s also siccing RL media on SL, trying institutions by sound-byte in the media, and seriously undermining people’s efforts to in fact cope with the Ginko meltdown.
I find this extraordinarily destructive, and I fail to see why anyone should be applauding it.
—-
>The way it comes out at trial is you hire a forensic accountant who traces the money. If he can show that all the money coming in was going out, and there was no big pile from which investments were being made, it’s very strong evidence that it’s an illegal scheme.
Oh? Erm…”at trial”? And…where was this trial in Second Life? In the RL media? Up your ass?
All of a sudden we need to hire a forensic accountant? Oh? Only then we have “very strong evidence that it’s illegal”? Merely evidence? That still has to be *tried in a court of law*? Hello?
But…I thought DA Duranske had already pronounced that it was “illegal” and had all this evidence, the way he was talking!
—
One update: in his farewell message on his website, Nicholas of Ginko’s writes “about L$50,000,000 queued up for withdrawal.”
That means $50 million was demanded back, while only $42 million was available in deposits. That isn’t a very big spread. But precisely because *it was tied up in investments* it couldn’t be paid back without a loss. Ginko’s would have had to take a huge loss on all its stocks at WSE or whatever else they had investments. If there hadn’t been the harassment by wannabee DA Duranske, the RL media amplifying his panic-mongering, one could theorize that eventually CD deposits and bonds could have been gathered to keep the queue of withdrawals moving fast enough, and restore confidence. Some people said they were only withdrawing to convert in part to CDs. This might be a fanciful notion, I’d be the first to admit it. We’ll never know.
Ginko’s problem, from what I gather, isn’t that it’s “Ponzi scheme” as I’m not at all certain that it meets that test, given that it indeed was not merely taking deposits and stealing them and using them to pay back withdrawals. The problem is that it over-invested in casinos, and these failed due to the casino ban. Nicholas is very detail-oriented and absorbs a lot, and of course didn’t miss the hand-writing on the wall, but I have found him sometimes to obsess about inconsequentials and perhaps he became overwhelmed with such details, I don’t know. Back in 2004, he had less tied up in casinos simply because these businesses weren’t as booming back then.
Eventually, I hope he will tell his story in full as I think it’s a very important chapter in Second Life — about the possibilities created by Second Life for some people, that other people like Duranske had to destroy in the name of some vengeful Puritanical spirit from which America evidently isn’t free to this day. At what point does a credit union become a Ponzi? Merely at the point someone labels it as such…
DaveOner
Aug 9th, 2007
Prok bans people that disagree with her from her little blog then chases them here because she misses the attention and the drama!]
Don’t you have some kitty litter to change, Prok?
Benjamin Duranske
Aug 9th, 2007
That’s a lot of text. I don’t think I’ll read it.
I see something about how Nicholas is a hero of the common man at the bottom above where I’m typing. That’s got to sit well with the thousands of people who have lost hundreds of thousands of dollars. Remember this guy took around $100,000 USD out of this operation himself.
Stay classy, Prokofy.
Mytwo Cents
Aug 10th, 2007
OK, it feels that Benjamin got his beating and it is time to roll up the discussion before anybody gets hurt
, but I just want to pick up on two points:
(1) Benjamin Duranske wrote on SHL “…isn’t illegal and what Ginko was doing was illegal is at the BoA, there’s a big pile of money from which investments are constantly being made — and at the end at least, at Ginko, there was not.”
Really? How do you know this? If you don’t have information to support your statement, this is just an accusation without substance. In fact, circumstantial evidence points to a scenario similar to the one I tried to describe earlier on. According to statements made by GinkoTech employees that were informing residents on behalf of Ginko Financial Ginko had L$200 million in total capital with 94% invested in various assets at the beginning of the bank run. Even today Ginko claims to still hold assets worth L$150 million that can not be divested in the short term without significant losses/discounts.
They could be lying, of course. But if we assume the above reflects the real situation you could consider this as the “big pile of money” you are looking for. Hence, your accusation of Ginko being a ponzi scheme looks overhasty in hindsight. Also, given the current asset base of L$150 million the decision to keep the ATMs open can probably not be considered as “illegal”.
I do however believe that Nicholas brought it upon himself of being accused running a ponzi scheme by shrugging off people with legitimate questions and concerns and refusing to disclose anything on his operations. Even now nobody gets any details which I think is simply unacceptable and disqualifies him as somebody I would want to deal with business wise. In my view, it was not the unsustainably high interest rates and not Benjamin’s coverage that brought the demise of Ginko but his own behavior.
(2) There is actually a much broader question hidden in the whole discussion around Ginko and what is “legal” or “illegal” in SL: For which actions in SL can the person behind the avatar actually be made legally accountable for?
This tread is clearly not the right place to discuss this any further but if you assume for a moment that everybody in SL might be playing a role at any given time, and that all people know this, is it actually possible for Ginko be illegal to do anything illegal even if they wanted to?
If you don’t have a law explicitly applicable for a particular issue, couldn’t anybody’s ultimate line of defence just be: “I was just role playing a girl / escort / neko / bdsm master / banker / ponzi schemer / lawyer, and everybody knows that SL is just a kind of game. Hence, nobody could have seriously assumed that I really meant it. Yes, you can call it immoral but based on what basis can you call it illegal?”
Just a thought.
SqueezeOne Pow
Aug 10th, 2007
I bet the SexGen lawsuit will shed some light on what recourse Ginko customers and other “victims” of similar schemes will have…except for the international thing.
Benjamin Duranske
Aug 10th, 2007
MyTwo Cents – I’m actually happy to keep talking here, I’m just not reading Prokofy’s stuff. It’s just insults, not discourse, and I don’t credit it. If it beats me up, which I’m sure it does, so be it. I trust readers to sort the wheat from the chaff.
I actually like that you’re pushing this all the way to a final answer. It lets the argument be crystal clear.
You quoted me saying that depositing a ten dollar bill to a Bank of America branch, and that ten dollar bill being given to the next guy in line “isn’t illegal, and what Ginko was doing was illegal [because] at the BoA, there’s a big pile of money from which investments are constantly being made — and at the end at least, at Ginko, there was not.”
Then you wrote: “Really? How do you know this? If you don’t have information to support your statement, this is just an accusation without substance.”
If that were true, you’d be right, but I asked Nicholas about this in the official forums when they had .25% daily interest term deposits offered to new depositors, and were using the money immediately to pay off old claims as people hit the ATMs:
http://forums.secondlife.com/showthread.php?p=1612973
I wrote to Nicholas: “You are transparently giving the money you get today to the people who deposited yesterday. You are promising these people 148% interest on their deposits, but you aren’t investing their money, so there’s no way you can pay them. You’re giving it to other people you owe money to. It’s actually just that simple.”
He said: “The investments have already been made. There is no need to remake them.”
So this isn’t speculation on my part, it’s what Nicholas said: they weren’t investing the money, they were giving it to previous depositors and hoping against hope that the old investments would pay off. I don’t dispute that they at some point invested some money, but that doesn’t fix it.
I appreciate you pushing for every fact here, and appreciate you doing it civilly. It’s been a long couple of weeks for me and a dispassionate factual discussion is appreciated. Please do post again, or shoot me a note, if you’ve got other questions.
Prokofy Neva
Aug 10th, 2007
Duranske is so tiresome, and unable to accept that he simply doesn’t know the state of Ginko’s books.
Nicholas’ comments are as reliable as any other avatar’s, including Duranske’s.
If he said the investments were made, then why doubt it? Because the bank collapsed? Yet it ran for 3 years, and investments *were* made.
RL banks would collapse too if everyone took out their money at the same time as the banks loan it out for interest and investments.
It’s not far off to say about Ginko’s “It’s in Bob’s house and Fred’s house” like on It’s a Wonderful Life. Why? because the $100 tips for opening accounts, the interest that in fact did pay out daily for 3 years as advertised *is* in Bob’s house and Fred’s house, and fueled the SL economy.
I fail to see how, if Duranske himself fuels a panicked run on the bank so that withdrawals can’t be honoured, he gets to suddenly declare that money isn’t invested.
It was invested, in casinos, which were then closed at a loss. Ginko’s collapse is about a collapse in casino investments and the bounce in the economy, not because he took Peter’s deposits to pay Paul. I don’t understand why that is so hard to admit.
If all Ginko’s did was take Peter’s deposits to pay Paul, he’d have gone out of business 2.5 years ago. BTW, Ginko’s may be registered 2.5 years, but I’d be interested to see what form the name is in. There’s always been this distinction between Ginko Financial and GinkoTech. GinkoTech is something I indeed do recall stretching back 3 years. They make this elaborate fandago about proving that these two entities are separate. Duranske himself appears to have fallen for this “Ginko volunteers line”.
It may well be that the two furries I covered in my blog posts, and that others see and the Herald covered, are unpaid volunteers, who just happen to enjoy the hobby of scripting and making the entire programmed edifice of Ginko’s terminals. But are they paid in kind? Shares? Something? It’s an odd arrangement, one has to admit. To have a business with the exact same name, with peopel in it who claim not be on the payroll, yet who control the scripts. I will continue to ask questions about this.
Nicholas had a mix of new and old investments, that’s clear. Casino investments are what collapsed toward the end. Don’t forget they were invested in WSE as well and I believe still have a portfolio there of their own holdings. THe loss of trust in WSE has been another factor.
Duranske needs so badly to prove this is a classic Ponzi like some RL scheme he once litigated around that he is deaf to the facts. it’s as if he can’t see that even within his own theoretical hothouse, he could find *other* stuff that could still be objectionable and even illegal by his lights. He clings so hard to this point that he doesn’t want to be “confused by the facts”.
He doesn’t have a copy of Ginko’s books any more than anyone else.
—-
>Stay classy, Prokofy.
I rarely post to people who themselves are insulting ranters who ban me from their blog without cause (because they don’t like what I write on *my* blog LOL) — it’s the hope that somewhere, those sincerely looking at all sides of the issue might be persuaded!
If people lost their money, oh Hero of the People, it’s because you stampeded them to run on the banks. Something you’re proud of?
Please take a look at these “thousands who lost hunderds of thousands”. The graph of depositors is a tiny handful of very big players in the tens of thousands of US dollars, and a long tail of $400 deposits. *You* stay, classy, Duranske, playing Friend to Oligarchs and portraying them as victims of evil scams.
—-
So, Azno, you went into the casino business intead of that risking banking business. And..how did that work out for you?
—-
For those who don’t want to bother going to the official LL site to see Duranske’s rant:
So this is what you might call Monday morning quarter-backing in reverse or something. Duranske hated like hell even having to try to work at doing an appeal for a client that he clearly thought was guilty as hell, and he wants to recreate this RL drama over and over again, only this time, nail the sucker with angel choirs singing and The People hoisting him up on their hands to victory.
No one has convicted Nicholas of mail fraud; they haven't even *charged* him with that. I guess "innocent until proven guilty" has no meaning for lawyers living their first lives over again in Second Life -- and this time getting it right!
>I spent two months researching these laws. You are wrong.
I’d advise everyone to get a second opinion on this lol. People who dispense legal advice without a specific client-attorney relationship in a context of practicing law where they are licensed are really overstepping the bounds of ethics. There is no court case yet. We don’t have all the facts. For Duranske to be spouting “you’re wrong” “you’re guilty” is completely inappropriate, even alarming malpractice.
>I’ve known it for a while. I was just — finally — able to prove it this week. I’m a cautious guy by nature.
*Bursts out laughing*. Duranske has been gunning for Ginko’s from square one, and even admits his motivations.
> I’d not say this unless I was certain: what you are doing is transparently illegal. Usually I could not say that, but the immediate nature of transactions in SL makes it possible to *watch* you pay earlier depositors claims with later depositors money.
So…the Lindens have opened up Nicholas’ Excel transaction records?! And he is now also privy to Nicholas’ books in real life??? I find this absolutely astounding. Where does he watch?1 At the Ginko’s terminal???
>So me — a cautious attorney who has no personal interest in this — is saying this as clearly as I can: you are committing a fraud.
Anything for glory, for reliving first life lived unsatisfactorily in second life, for vanity, for being a prosecutor of evil scammers, eh?
>I have no expectation you will “be addressing me further” whether or not I “remedy my ignorance.” And I don’t care if you do or not. You’re obviously not going to admit what you’ve done. I’m not posting for you, I’m posting for the people you are cheating.
*Rolls eyes*. Someone should take Duranske’s police and detective TV away from him for awhile until he leeches some of this DA rhetoric out of his posts.
>url]http://forge.ironrealms.com/2007/07/31/brazil-is-the-new-nigeria/[/url]
>For anyone who hasn’t read this stuff yet, this above site summarizes the posts I’ve been running all week very well:
Sure it does! Matt Mihaly, who runs a MMORPG, loathes SL and will do anything to dump on it and write cynical, hateful stuff about it. So…put it all in context.
Mark
Aug 10th, 2007
“So, Azno, you went into the casino business intead of that risking banking business. And..how did that work out for you?”
Better question, how did it work out for GINKO?
Obviously, if they say they were heavily invested in casinos, and casinos are gone… ummm… DUH! Yeah but it’s ALL Benjamin’s fault for simply doing what YOU do every fucking day. Raising red flags. Big fucking deal.
Your attempts to pawn the blame off onto Benjamin are simply STUPID. This was a long time coming. The writing was on the wall about casinos YEARS AGO. It was PURE FOLLY for Ginko to invest in them. Any financier worth his salt would have steered well clear of SL casinos.
And get prepared for RL regulations for SL financial services at some point too.
It’s coming, it should come, and there is nothing you can do about it.
This isn’t the Wild West anymore. You don’t get to just hand pick what aspects of RL should apply to SL, as much as that sort of inconsistency serves many of your idiotic arguments. Lawyers, laws and regulations are coming. Why are you so threatened by that?
You want grid crashers held to RL standards, but not banks. You are so see-through.
Loser.
Benjamin Duranske
Aug 11th, 2007
Skimming that: “Confused…” “life lived unsatisfactorily…” “alarming malpractice…” (hey, another count of libel, smart guy) … “blah blah blah.”
You know, when your argument is down to, “But it lasted a really, really long time…,” I see a towel sailing in from ringside. Think about what you know about alts, stipends, and abandoned accounts and ask if you’re really so terribly surprised.
It’s a factually lousy argument anyway, other frauds like this have lasted much longer than three years. Check this one out:
http://en.wikipedia.org/wiki/James_Paul_Lewis%2C_Jr.
It lasted 20 years. Nicky’s just a baby scammer by comparison.
Benjamin Duranske
Aug 11th, 2007
The link above appears to be broken:
http://forge.ironrealms.com/2007/07/31/brazil-is-the-new-nigeria/
Prokofy Neva
Aug 11th, 2007
>Better question, how did it work out for GINKO?
I guess we’ll find out? His bonds are trading pretty briskly right now.
>Obviously, if they say they were heavily invested in casinos, and casinos are gone… ummm… DUH! Yeah but it’s ALL Benjamin’s fault for simply doing what YOU do every fucking day. Raising red flags. Big fucking deal.
Yes, it’s his fault for panicking people needlessly by appearing to have some sort of definitive legal opinion with some validity. There’s nothing of the sort and it’s important to keep remembering that. Benjamin Duranske is not practicing law here; he’s role-playing a DA in Second Life.
>Your attempts to pawn the blame off onto Benjamin are simply STUPID. This was a long time coming. The writing was on the wall about casinos YEARS AGO. It was PURE FOLLY for Ginko to invest in them. Any financier worth his salt would have steered well clear of SL casinos.
Well, I don’t know that he put all his eggs in that basket. And none of us have this information now, do we? What’s in the black box of Nicholas’ portfolio. I don’t think he’s as stupid as everyone imagines, but apparenty, as I said, somebody has to die for the Lindens’ sins, and he’s it.
>And get prepared for RL regulations for SL financial services at some point too.
It’s coming, it should come, and there is nothing you can do about it.
Oh? Says who? There’s nothing written in stone that says virtual worlds have to go the way of the old world — and of America, for that matter. Nothing written in stone whatsoever. And all your angry haranguing about this means nothing.
A wish is the strongest thing in the universe. And if people wish for something different and make it, you won’t be able to regulate it. Anymore than media makers can prevent people from downloading and uploading.
>This isn’t the Wild West anymore. You don’t get to just hand pick what aspects of RL should apply to SL, as much as that sort of inconsistency serves many of your idiotic arguments. Lawyers, laws and regulations are coming. Why are you so threatened by that?
Sounds to me you are hand-picking what applies — from one country, from one perspective, from one private Idaho. That’s exactly what we do NOT need.
I personally am not “threatened” as I don’t have any illegal activity in any manner; there’s nothing that’s going to be “regulated” in what I do in Second Life. I’m concerned for the overall featurs of the world, however.
>You want grid crashers held to RL standards, but not banks. You are so see-through.
Loser.
Grid-crashers lose me and others business and money. Yes, they should be held accountable. yes, if the Lindens can’t stop them, yes, RL authorities should. The servers are in their jurisdiction.
Everyone can agree what a business loss is. It’s pretty well defined, even without appraisals if you define it merely in the day’s take, and a loss of a day, and the revenue lost when a tenant moves out or a building is destroyed.
But…which banking system are we supposed to take? America’s? Singapore’s? Russia’s?
Seriously, you’re the loser, for imaging that if you bully and shout enough and ridicule me, you can prevail in a place like SL
—-
>Skimming that: “Confused…” “life lived unsatisfactorily…” “alarming malpractice…” (hey, another count of libel, smart guy) … “blah blah blah.”
Once again, an example of alarming malpractice. Seriously. Making such definitive legal judgements about a person’s business in SL, without knowledge of the facts, without being retained, without being clearly practicing law in some meaningful client-lawyer relationship. I find this truly alarming. And also this constant resort to screaming “libel”. That’s just youthful arrogance, I suppose. Um, I think Duranske needs to do some more “noodling around” in the First Amendment lol.
>You know, when your argument is down to, “But it lasted a really, really long time…,” I see a towel sailing in from ringside. Think about what you know about alts, stipends, and abandoned accounts and ask if you’re really so terribly surprised.
I have no towels sailing anywhere. I’ve made that argument not today, but since day one, go and read my posts. It remains a valid argument, and one that Duranske cannot successfully explain. Alts, stipends, and abandoned accounts can’t explain it all, truely.
>It’s a factually lousy argument anyway, other frauds like this have lasted much longer than three years. Check this one out:
http://en.wikipedia.org/wiki/James_Paul_Lewis%2C_Jr.
It lasted 20 years. Nicky’s just a baby scammer by comparison.
Since the claim about Ginko’s is that it is Ponzi as classic as the original Ponzi, it’s helpful to recall that the original Ponzi lasted 6 months or so, and that if something that is so “classic” and “wrong” lasts this long, one has to account for it with logic, reason, and facts, not emotion and vanity.
I simply don’t think this story is over at all. I see the bonds migrated successfully to the WSE, and I see people buying them up. I’ll have more on my blog soon on this.
What’s important to remember here is that a) Duranske does not have all the facts; no one does; b) he is not in authority and has no standing to pronounce on legality in SL; c) his stampeding a bank run and holding out the prospect of future livlihood for himself “advising” people on their reality/virtuality fears, options and ambitions all make him a completely vested and biased party in this debate.
CrushYiffDestroy
Aug 11th, 2007
SL: The Pyramid Collapses
In news now hitting real media, Second Life’s non-banking organization Ginko Financial has collapsed. GF currently owes about $700,000 in real money to some 18,000 accounts, none of which it can pay; its controllers are trying to give worthless stock …
Benjamin Duranske
Aug 11th, 2007
Nothing concrete there, just more generalized criticism. Moving on.
Mark
Aug 11th, 2007
Prok, quit attributing thoughts to me which I did not have nor voice.
I did not specify certain laws or even a certain country.
You must have worked for military intelligence in your past.
Law is coming, for better or for worse. Only a fool would believe otherwise.
Just look at the events of the past three months.
Come on. Quit pretending you don’t understand for the sake of your untenable argument.
We are already supposed to be paying taxes on SL income.
Gambling has been chased out, to mesh with current law.
Age play is being chased out.
These don’t have to be laws or regulations from RL countries either – they can come from LL, and they will. if you don’t care to face these truths, then have fun living in your little bubble of self righteous self-deceit!
Reality
Aug 11th, 2007
First Amendment Dearie?
1. Under any one government there is no such thing as truly free speech, nor truly free press.
2. Your ‘right’ to free speech ends where it begins for any other person – just as with all Amendments.
3. Your ‘right’ to free speech ends well before any statement that could harm an individual – be it by reputation, financial issues, anything for that matter.
4a. You are not a member of the judiciary branch of the government Dearie: You are not a lawyer, you are not a judge.
4b. You are not a member of the legislative branch of the government either Dearie: You are not a senator, nor a member of the house of Representatives. You are not a Mayor or even a Governor!
4c. You are most certainly not a part of the executive branch Dearie: I really do not need to explain this one to you.
4d. With all of the above in mind Dearie: You are in no position to state anything at all regarding any legal matter whatsoever.
Stick to rentals and meaningless conspiracy theories Dearie.
Anonymous
Aug 11th, 2007
Hey! Stop that Reality!
Scamming newbies of their tier is NOBLE you Bolshevik!
Prokofy Neva
Aug 11th, 2007
No, I’ve never worked for any government’s military or any other kind of intelligence (*rolls eyes*).
Just for the sake of publication, regarding these incorrect statements:
“2. Your ‘right’ to free speech ends where it begins for any other person – just as with all Amendments.
3. Your ‘right’ to free speech ends well before any statement that could harm an individual – be it by reputation, financial issues, anything for that matter.”
There’s no concept in law of “where the other person’s right to the same right begins” — that’s a moral precept, not a legal one. That is, if there’s a First Amendment saying Congress cannot abridge free speech, people have the right to free speech, and then from there, the restraints placed on it must be constitutional and by law — not by vague notions like “where another person begins”.
Local government can restrict free assembly and free space by “time, place, and manner”. They don’t say “your speech can’t happen because it trumps somebody else’s speech”.
Public television often debates endlessly how to have “fair debates” and makes efforts to do this during, political campaigns, for example, for credibility’s sake, but that isn’t a legal restraint on them. If WBAI wants to spout endlessly for left-wing candidates, and if Clear Channel radios want to spout endlessly for right-wing candidates, and no “dearies” can come along and impose “balance” on either of them. That’s democracy.
Libel is a very difficult thing to get started in real life, as you need to meet a very strict set of tests, having to do with public figure status, with livlihood being affected, etc. Nothing I’ve engaged in constitutes libel; or in fact anything on the Herald likely constitutes libel.
If Dearie here is so all-fired about statements that injure others financially, he should go see Benjamin Duranske, who fueled a run on the bank in SL.
There’s no law that vaguely states that “harm” in “anything of that manner” gets to be a reason to shut someone’s speech down in the United States.
Dearie needs to go back to Soviet Russia from whence he came.
Benjamin Duranske
Aug 11th, 2007
“fueled a bank run” or “reported on a fraud.”
You say potato, I say po-ta-to.
anofel
Aug 11th, 2007
i can see a false tricky point being ressurected here , with comments like : ” ….but on what legal basis ? …” .
The answer is : on the very same legal basis – whatever that might be – wich forced LL to admitt $L are real money in the case of illegal online gambling. Thus, $L are real money in all and every and any illegal financial activity . There are no such things like ” computer crimes “, but plain simple crimes conducted and mediated via a PC. Or via a Virtual World. LL is subject to the USA laws . LL is advertising, marketing, selling, operating , making profit on : an environment for illegal financial activities. Being the owner of a piece of land in California , or the owner of an Internet site , or a Virtual World , it does NOT make you free to rent your space to illegal financial activities , like illegal gambling and Ponzi schemes.
Reality
Aug 12th, 2007
Prokofy, I’m afraid Dearie that you’re being a bit dense here.
I do hate to break it to you but there really is no such thing as free speech – you’ll have to prove that speech truly is ‘free’ before your assertions will hold any water whatsoever.
Which of course – you cannot Dearie. A single restriction placed on ‘free’ speech means – are you following so far Dearie? – that speech is no longer ‘free’.
Oh – and by the by? My statements are 100% correct. Racial slurs are no longer allowed on television, racist propaganda and actions are deemed illegal in quite a few places, verbal sexual harassment is illegal … the list goes on Dearie.
Now then – are you done being a twit Dearie?
Are you done being so absolutely ridiculous?
Oh yes – I’m American, Dearie. You on the other hand … are questionable.
JohnLight Raymaker
Aug 13th, 2007
Hi,
I personally lost 84% of my fortune in the Ginko collapse. The question now is how to go on with my personnal challenge (check http://second-life-millionaire.blogspot.com) for which a savings bank is crucial.
My other question, and I’d like answers on this from financial gurus, is to know it is worth buying some Ginko Perpetual Bonds now, as anybody will try to get rid of them, making their price artificially low
Timothy Zapotocky
Aug 13th, 2007
Ginko is, I am 99.9% sure, mixed up with another SL brouhaha… Stroker Serpentine’s lawsuit against someone/something named “Volkov Catteneo.” Catteneo was evidently connected with the Ginko people somehow: although he was a no-Payment Info member with minimal profile info, he was a member of Ginko-connected groups, and owned land on a Ginko sim. Volkov needed to have some means of turning Linden dollars into Real Life dollars/euros — and unless he was selling linden bucks on eBay (which is time-consuming and which exposed him to the risk of his identity being revealed), he needed someone like Ginko to launder money for him.
I suppose they weren’t able to steal enough money from Stroker to keep their little ponzi scheme going. Well, I just hope they got caught and get thrown in jail!
RV
Aug 15th, 2007
Hhhhmmm… I saw a couple mentions that the L$ shouldn’t be allowed to be converted to actual currency because it isn’t backed by anything. I wonder what these same people think the USD is backed by?
Other then LL claims that the L$ has no value, there’s really no difference between it and the USD. Both only have value because we believe that it does, at least LL is honest that L$ is worthless…. good luck getting the US government to admit the dollar is only worth as much as the paper it’s printed on.
Prokofy Neva
Aug 15th, 2007
Duranske, if you think a crime has been committed in Second Life, and you’re convinced that all these big-spending casino owners you’re protecting who “invested” in Ginko have been terribly defrauded, then it’s your duty as a licensed attorney to report this to the proper authorities. Have you done that?
I’m afraid that your own say-so on this “po-ta-to” is simply not good enough. You like to swagger around trying to impress upon us that you’re oh-so-smart and can call a situation as a “crime”.
You’ve made an astounding judgement: that the law not only applies, but it isn’t being enforced. That suggests that Linden Lab is somehow culpable, and you’re blowing the whistle on Linden Lab. Indeed, your constant calls on LL to shut down these banks and freeze the accounts is tantamount to calling them guilty.
I find all of this rather distasteful, not because I wish to exonerate any of these characters, but because I think it is way overstepping your bounds as a lawyer, and also very misguided.
LL has made it clear especially in yesterday’s statement that they are not intending to subvert law. If somebody *besides you* — who is merely trying to sell a book, sell a blog, sell your virtual lawyering services in the Metaverse — could take a look at it, that would be good. For that to happen, not *you* but a class of people actually believing themselves to be defrauded would have to form and approach a real attorney, i.e. not you, because you’ve already tried the case in the media and acted like a fool, but a grown-up lawyer.
Has such a class formed? i haven’t seen it; it may well appear. I hope they have the good sense to seek real, competent, authoritative legal advice.
Until Philip Rosedale is served with an FBI warrant, he should not be closing any accounts. If he thinks he can’t wait for it to mature to that point, as it will discredit his service, any pre=emptive action now that would be very clumsy will not only look terribly guilty, it will harm innocent people and cause more runs on the bank like YOU precipitated, for which you should be deeply ashamed, having harmed your fellow human beings, and not achieved justice — eevn frontier-style — in any event with these alleged scammers.
LL should do nothing. Those with bonds should cash them out or hold them to see if they increase in value. Nicholas has already been informed by WSE that he cannot buy back the shares for under $1.
It might be a really good idea to leave the WSE, Ginko’s, and their depositors alone to sort out their own problems. They’re like a virtual credit union. Your interference neither brings justice or clarity to this troubled situation.
If the guy in Stroker’s suit had money in Ginko’s, that no more implicates Ginko’s in money laundering that it implicates Nobody Fugazy, who tells us he had $183,000 Lindens or whatever in Ginko’s (I’m still having trouble understanding why he put money in it). Thousands of people deposited. People rented on their sims, too, That’s not necessarily implicating anyone in further criminal activity. This is like the American or Russian police suddenly pinning like 20 unsolved crimes on the one happless screw-up they managed to arrest just so they can close the cases.
Reality
Aug 15th, 2007
Ahem – Prokofy Dearie?
You are not in any position to tell anyone what their job or duty is, nor are you in any position to decide jack shit regarding legal matters or choice of attorney for anyone.
All you can do is speak for yourself.
Anything else is an opinion – not fact.
Dinger Babcock
Oct 20th, 2007
Is anyone doing anything about these thieves? Anyway to recover the funds with their original value instead of getting 1/8 of the value into this BS WSE bond?
Inyur Orbit
Dec 2nd, 2009
I always wonder for the past 2 1/2 years. If Nic would be so kind an pay me my 400,000$L that i desperately needed then as I need today. I felt it was safe then to stash my earnings in the Ginko slot machine. And yet to this date of writing. I have not recieved a kind word.
Hey Nick you had time to find a way to settle this up with me? I would be glad to mark this debt off my list of people who owe me money.
Inyur Orbit
Diana
Nov 14th, 2010
Let me tell you something. Second Life is a ripoff. These jokesters stole Lindens worth about $3,500.00 USD. They pulled a fast one. One of the lindens said they did not believe I was old enough to play the game. The asked for proper ID license and Soc Sec card. Both were sent via fax to the linden office. They then asked for military ID that was sent too. Then they replied we still dont beieve it is you. We will not release the account or the money. We are keeping your 3,500$ Have a nice day. Theives they should be shut down by the Consumer Protection Agency.
Moral maze | Serendipidy Haven's Blog
Jan 4th, 2012
[...] and residents financially ruined with no recompense, hordes of residents leaving and, ultimately, a bank run that wiped out one sl financial institution, devalued the entire sl economy by 50% and caused LL to [...]