Dan Frishberg and David Wallace – Another investor stung! An internal look at a scam run wild…

Who got scammed by whom?  The plethora of players and their individual motivations may never completely be revealed, but one thing is for sure…there is a long list of people who trusted a number of folks who are now finding there trust was misspent.  THERE MONEY IS GONE – gone down the black hole called BizRadio.  Once a dream of Daniel Frishberg is now nothing more than a sinking ship barely floating above water – just waiting for the last plug to be pulled and desperately clinging to life.

Who will pull the plug?  The SEC?  The FBI?  The US Attorney’s office? or perhaps Salem Communications (once they wake up and find that being in bed with BizRadio or any remnant thereof is bad news)?  I don’t know, but most everyone I talk to has the clear feeling that this can’t last much longer.

A SCAMMED INVESTORS STORY:

The phone rang.  On the other end was yet another investor willing to share their story.  There was anguish and shame in his voice.  Over two-thirds of he and his wife’s savings – VANISHED.  But as I listened to his story an all to familiar pattern emerged.  He and his wife fell into the PIT.

Now if there is any value to these blog entries, it should be the lessons learned from those willing to share their story.  It truly is less about Frishberg and his clan and more about how people can avoid these messes in the future.  So first lets look at the PIT.

PROMISE – The first step to falling into a scam (especially a financial scam) is the “promise”!  The investor caller stated (an I paraphrase) – our investments had begun to take a turn for the worse as the recession (then yet not defined as a ‘recession’) took hold.  Not wanting to see it slide any further, we decided to take matters into our own hands and signed up for an extensive learning session with the On-Line Trading Academy.  “That was a real learning experience,” he stated – and his words rang true with a sincere feeling that this experience was worthwhile.  But…

We asked people we could trust – “who could we talk to about professional money management?”  His email to me stated, “In June 2009, Frishberg-Jordan-Kaleta was recommended to us by someone who we thought we could trust and an individual who was involved in a business deal with Frishberg to sell his stock trading franchise to them which we later found out was to be a part of Frishberg’s grand plan to build an empire they could sell to CNBC, FOX or some other group.”

STOP – IMPORTANT POINT:  Before we continue with the “P” of PROMISE, it is important to note what was said above.  It is my personal belief that Frishberg did not intend to defraud.  However, like so many fraudsters (this will be discussed in detail in another blog), Frishberg got so caught up in his own illusion (by the way, I think he’s still there) that he crossed the boundary of reality and his efforts to build an empire (which seem to be crashing down around him) blinded him to the reality that he was scamming people out of their savings and investments in order to fund his dream.  Unfortunately, likely a dream that will never be realized.  He is now tarnished as is BizRadio and most would say (and have said to me privately) – BizRadio and Daniel Frishberg’s advice is now worthless.  His credibility has washed away just like the losses others have suffered at his hand.

Our contract was with Frishber-Jordan-Kaleta for management of two accounts (one qualified and non qualified) and were initially  contacted through there “business director” to speak with Kaleta. Kaleta told us they would put us into bonds and that some of the none qualified account cash would be used for loans that would provide us with 10% income (12% total with 2% for them) until the bonds began to produce cash flow as well. There was absolutely no mention of Biz Radio and we had NEVER heard of it until the SEC filing.

NOW GET THIS… The PROMISE was to pay a consistent return that was far better than what most folks were getting on their investment in the market at the time.  When people are scammed they fall for a false PROMISE. Folks – if it sounds to good to be true…RUN LIKE A SCALDED DOG! (Sorry I know the animal rights people will make comments about that statement – but I am from the south…)

The PROMISE is the first component of a scam!  The second – ILLUSION!

Monies were transferred into, at first what seemed to be, a safe high yielding investment.  Then they were called and the money swapping and trading began.  What I heard him describe to me was (what seemed to be) a shell game.  Money put here, should be moved there and instead of bonds perhaps it should be some sort of note…I mean I’ve heard it all from many investors – not just this anguished gentleman.

He stated to me, “It is very clear to us that Frishberg and his wife were driving this whole process. Frishberg-Jordan-Kaleta managed our investments and “invested” us in two other funds ( Wallace-Bajjali Development Partners and the Laffer, Frishberg, Wallace Economic Opportunity Fund LP) that we later found that funneled funds to Biz Radio. At the moment that we found out that the SEC had shut down Kaleta (Kaleta Captial Management) we removed everyone from our managed accounts at Fidelity. SUPRISE – we found that there were seven people on each of the accounts to include Frishberg and his wife.”

Now I suspect that anyone reading these blogs know what a Ponzi scheme is – I invest $10,000 with a guaranteed 10% return.  When you put your $10,000 in – I am paid my $1,000 interest from your funds and so on.  The key behind the collapse of a Ponzi scheme is NO MORE MONEY!  I feel like Gomer Pyle when I say this, but Surprise…Surprise…Surprise – when the SEC shut Kaleta down – the card that pulled caused the house of cards to collapse.  Up till that point, Frishberg, Wallace, Kaleta and the clan kept the ILLUSION going that something great was about to happen.  Sorry, but that was BS (you know what I mean).

The defrauded investor continues:

THERE is no doubt in our minds with all of the facts and evidence that we have that:

  • this was a PONZI scheme that imploded when the SEC investigated and filed against Kaleta
  • that Frishberg AND his wife were just as complicit in defrauding us as Kaleta
  • that Kaleta was just the front man (buffoon that he is)
  • that we were never consulted or informed that our money would be “invested” with Wallace-Bajjali Development Partners or Laffer, Frishberg, Wallace Economic Opportunity Fund LP
  • that in speaking with David Wallace that he is of the impression that we were aware that a large portion of our money was to be invested in the Wallace-Bajjali Development Partners which is NOT TRUE
  • that we contracted Frishberg-Jordan-Kaleta and not with Kaleta Capital Management to manage our money
  • that KCM was a just another way to fund Biz Radio

In the PIT the last component is TRUST.  Sadly, this defrauded investor TRUSTED someone who, too, was sucked into the aura of Daniel Frishberg and his associates.  TRUST by itself can be dangerous.  As I write this I must admit it saddens me to think that some may learn to never trust folks, but when it comes to your money…NEVER TRUST THE OPINION OF JUST ONE PERSON.  Due you due diligence.  Now, fairly, at the time, if you had Googled Daniel Frishberg you would have felt that he was someone that was worthy of trust.  After all, Dan was a master of illusion.  His radio show and guest spots made him the perfect person.  But ILLUSION is tricky, it has a way of eventually becoming the truth.  Now, google Daniel and the story is a bit different.  At least today people should have better sense than to blindly TRUST Dan or any of his cronies.

AS WE ENDED THE CONVERSATION…the defrauded investor said, “Chuck, thanks for listening to me.  It helps to talk about it and get it off my chest.”  I felt for him…and I knew that he was one of many who needed an outlet.  He was kicking himself, grieving his loss, and concerned about the future financially.

He fell into the PIT.  Learn from him and avoid that for yourself.

YOUR COMMENTS ARE WELCOME!

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