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Encouragement Award 2004Comment and Opinion

This site earned an Encouragement Award in the 2004 Millenium Awards. The citation read:

This Encouragement Award is being given jointly to the betting scam operators Foxtab and Premium Strategies in the hope that in their next incarnations (and they will return with new faces) they take more care with their brochures and avoid the lies which are so obvious that even a cursory glance brings them out as if they have been marked with yellow highlighter. While the creation of a fake accounting firm to provide a testimonial was a stroke of genius, I would hope that more care will be taken next time to cover up this sort of invention.


Astrafund Pty Ltd and Foxtab
(The web site for this scam no longer works. Why should it? The crooks would have moved on to a new scam by now)

An offer from some shonks (11/12/2004)
101 Collins Street, MelbourneI received a very nice glossy brochure in the post on December 10, 2004, from a company named Astrafund Pty Ltd, offering to make me wealthy through betting on horse races with the Foxtab system. Astrafund has a very impressive head office in a beautiful bronze-glassed building on the bank of the Brisbane River. I am not in Brisbane so I don't know if Astrafund actually has a cubicle on level 30; maybe they just use the virtual office facility (for $154 a month – first month half price) and work from one of the scamsters' homes. Their Melbourne office is also in a very impressive building in the heart of the financial district (see picture at right). Again, as I am not in Melbourne I can't drop in to see if they actually rent a desk or just have the phone answered.

[Update: On January 11, 2005, I was advised by the operators of the serviced office business which Foxtab had been using that Foxtab was no longer a client of theirs. The company modestly requested that their name not be associated with Foxtab in any way. I think this is false modesty, as "We do not deal with criminals" is a useful message to include in any company's set of public policies.]

You can see the brochure here (2mb Acrobat file).

The people who are running this scam are liars, thieves and charlatans. They should be in prison. If they think that I am defaming them then all I can say is "The people who are running this scam are liars, thieves and charlatans". Of course, to try to take any legal action against me for defamation would require the vermin to come out into the open and tell everyone their names, so I feel quite safe.

The brochure is a masterpiece of legal work. The first thing you don't see (because it is on the bottom of the inside of the front cover) is this disclaimer:

This disclaimer serves to disclose the following : Investment of any type can involve some risk. You can make a profit as well as losses. You should not commit funds to this, or any other investment, that you cannot afford to lose. You should reference all claims, projections and statements made in this brochure, to the disclaimer.

Well, you might accidentally see it, so it is printed in 7 point type, making it look like this:

This disclaimer serves to disclose the following : Investment of any type can involve some risk. You can make a profit as well as losses. You should not commit funds to this, or any other investment, that you cannot afford to lose. You should reference all claims, projections and statements made in this brochure, to the disclaimer.

The next page of the brochure gives the company's vision, including the fact that a company which claims as its head office a desk in a serviced office complex has "core values of honesty and integrity". Then we hear about the brilliant man who developed the system. He is a mathematician by the name of James Clark, who "was educated" at Washington State University. By some strange oversight, when you go to the American Mathematical Society's Mathematics Genealogy Project and search for this name and school you are told: "Your search has found 0 records in our database". I do know, however, that he is a brilliant mathematician, because he has worked out a way to gain an edge over totalisator betting systems. Why this is impressive is that tote systems work by taking their share and dividing the rest among the winning gamblers. Totes do not set or pay on odds. There is no edge to gain. Maybe Mathematician Clark is unknown to others in his field because he is keeping below the radar so that nobody can steal his work on angle trisection.

The next thing we hear is how poverty-stricken Australians are when they retire. The numbers are strangely familiar, and seem to be the same ones which are spouted by pyramid salesmen when showing the plan. Still, if something works on one bunch of suckers it would be a waste not to use it on others. The next five pages are figures and graphs showing how well you would have done using this betting scheme over the last year, assuming, of course, that you had the benefit of hindsight when creating the list of excellent results. I didn't bother to check whether the results shown reflect what actually happened in real racing history. It would be a bit silly for the crooks to make up the results from whole cloth, although it would be very difficult for anyone without a lot of time to spare to check them.

The next page is wonderful. It starts off with the heading "Australia's Largest Industry", and then says that the thoroughbred industry is one of Australia's largest (Note – not "the largest", but "one of the …"). Please note that the "thoroughbred industry" is not just betting on horse races. It includes all the stud farms, the training facilities, the staffing and upkeep of race tracks, the veterinarians, the people who transport horses around, the businesses which run the betting shop networks, and so on. The brochure says that annual turnover for the industry is "in excess of $12 billion", and this may very well be correct, but "Australia's Largest Industry"? Just to put things into perspective, I bank with Australia's fourth largest bank (the same bank as used by Astrafund). Westpac's turnover in its last financial year was $8 billion. The three banks above it had a combined turnover of $37 billion. Australia's largest retailer, Coles Myer, sells $32 billion worth of food and clothes each year. Do I think that the promoters of Foxtab are being deceitful when they call thoroughbred racing "Australia's Largest Industry"? Yes, I do. Did it take me long to reveal their deceit? No, it didn't. Do I think that the sort of person who would fall for their scam will bother to check" No, I don't. Do the principals of Astrafund care about the truth? Make up your own mind. (Note – I used the word "principals", meaning the owners. The word "principles" does not apply in this context.)

It also says on this page that "income is tax free". This may very well be so, but the relevant case law on this has all been to do with people trying to claim gambling losses as business expenses. It seems to be the clear from the court decisions that anyone who was really successful with the Foxtab system may well be declared to be running a business and therefore be assessable for income tax. One of the fine examples of the legal advice that the promoters of this scheme have received is the stipulation that the maximum bet using the system should be $200. Betting at this low level could probably be used in court as evidence that the gambler was not serious and therefore not liable to tax, and anyone who bet more than this would have no claim against Astrafund for invalid tax advice because he would have been acting outside the recommendations of the program. In any case, the income tax issues is moot, as nobody is going to be making any money out of this except the promoters.

I was interested to read that the millions of calculations necessary each week to produce the tips are "made through Astrafund Pty Ltd main frame computer". Just how a "main frame computer" with its associated raised-floor accommodation and extensive power and air-conditioning support systems would be located in a cubicle in a suite of serviced offices is something that I will have to talk to IBM about. I really like the page headed "Guarantee", where it goes on to say that if you had bought in a year ago you would have been guaranteed the results shown in the results graphs, but, sorry, you are coming in now so there is no guarantee of anything.

The final pieces of clever lawyering are in the application form to buy into this scam. The first thing I noticed was that the impressively titled "Foxtab Program Agreement" had already been signed by the CEO of Astrafund as part of the brochure printing process. What this means is that it is not any sort of agreement or contract at all unless he deigns to sign it again once it has been submitted. There also appears to be no corporate seal on the "agreement". If you think that I am being a bit pedantic here, it actually says in the "agreement" that once they receive your money they will supply an agreement signed by both parties. But – how will they get your signature on what they send to you, and if what you sign here isn't the final agreement, why does it call it that in the brochure? A mystery.

The other beautiful aspect of the agreement is that there is no amount of money mentioned on it. You have to fill that in yourself. But the cost of the program is mentioned nowhere in the brochure, so how do you know how much it is? You can't leave the amount blank (unless you are particularly stupid and regularly write blank cheques to strangers), as a contract with no consideration is no contract at all. You get the amount by ringing them up. This means that you have contacted them, so legally required cooling-off periods may not apply and you will have no chance to change your mind. The other nice thing for them is that they will have a record, three times and in your own writing, of how much you will allow them to extract from your credit card. If you subsequently complain about poor value for money, there will be no doubt about whether you were aware of the cost. Another advantage of having no price on the brochure is that it removes the possibility of the document being seen as a prospectus for investment, which would require the disclosure of some useful information like the names and addresses of the owners and directors of the outfit.

Just for interest, here are the last two years' activities for Astrafund as recorded by the Australian Securities & Investments Commission. Notice how often (and when) they move or change directors. They do not seem to have lodged an annual return since January 2003, but perhaps they are still waiting for Professor Clark to do the arithmetic.

05/11/2004484E Change to Company Details Appointment or Cessation of a Company Officeholder
12/10/2004484B Change to Company Details Change of Registered Address
27/07/2004484E Change to Company Details Appointment or Cessation of a Company Officeholder
27/07/2004484 Change to Company Details Change of Registered Address
484C Change of Principal Place of Business (Address)
11/02/2003203 Notification of Change of Address
203G Change of Address – Principal Place of Business
29/01/2003316 (AR 2002) Annual Return Change of Registered Office Address
316T Change to Principal Place of Business
316L Annual Return – Proprietary Company

Other interesting facts about this company are:

So, in summary, we have a brochure filled with lies and half-truths asking people to give money (and credit card details) to unnamed people who have no known addresses, telephone numbers or means of being located in exchange for the possibility the they will receive useful horse race selections. The system is based on tote betting, which means that the more people who subscribe to the scheme the lower the individual payouts will be on those rare occasions when one of the provided guesses actually runs a place. Of course, there is also the incredible idea that anyone who knew how to pick all those winners would tell anyone else at all, as they could make all the money they could ever spend by working for ten minutes a week.

Here's a challenge for the crooks running Astrafund and Foxtab: For the next ten Fridays, send me ten selections by 5:00PM AEST. The selections must be one horse each in ten races at at least four race tracks. At the end of the time, I will have 100 selections. If the scheme works, I should have at least 80 place-getters listed. Easy, isn't it? Can't do it? Won't do it? I didn't think so.


Betting Scam Update (18/12/2004)
Last week I mentioned that I had received an offer to participate in a betting scam. In the brochure it said that income from the scheme was not subject to income tax. The promoting company is not registered for Goods and Services Tax even though it is obviously over the turnover threshold for registration, but it collects the tax, which is illegal if the company is not registered (otherwise there is no way to pass the money on to the tax office). Just so I don't forget, the Australian Taxation Office case number for its investigation into Astrafund Pty Ltd (A.B.N. 73 082 152 707) is 178580. All it took was one phone call to the ATO. I had to fill in an online form at the Australian Securities and Investments Commission to register complaint number 71590765 with that organisation.


I sent the following email to Foxtab on December 20, 2004. As it is unlikely that anyone there checks the email (it would be hard to do without an office to put the computer in), I sent the same message by fax the following day:

Dear Foxtab,

The Australian Taxation Office case number is 178580. The Australian Securities and Investments Commission complaint number is 71590765. Copies of your brochure will be in their hands shortly

Just thought I'd let you know. More at https://ratbags.com/rsoles/comment/foxtab.htm

I notice that the email link on the Foxtab site uses a domain name related to Australian Thoroughbred and Betting. Is that the name of last year's version of the scam or is it something for the future?


Betting scam – Round 3 (29/12/2004)
On Tuesday, December 21, 2004, I received a telephone call on my business number from someone purporting to be a representative of Foxtab. The caller started off by telling me my address so that I could be sure he knew where I lived, and wanted to know why I didn't like what his organisation was doing. I told him that I don't like people who committed. fraud. He said that it was not fraud (another black-letter law reason for not having the price on the contract), Look out for your piggy bank!so I asked for some indication of performance. He refused to tell me how many "clients" his company had, but did tell me that the turnover of the company was greater than $50,000 per annum. When I asked him why the company was not registered for Goods and Services Tax he told me that it was. He told me to check again. I checked again and found out that, as I expected, he was lying. That was just one lie.

He then offered to come to my home to discuss the matter over a cup of tea. I repeatedly told him not to come to my home, but he continued to say that he was coming. I informed him that if he appeared at my home I would call the police. (I spoke to the local police station afterwards and they promised very prompt response if I had to have trespassers removed.)

After I became sick of repeating myself about how he was not to come near me, I hung up. He then rang me back three times (once on my mobile phone). I finally told him that I did not want to talk to him, I did not want him to come near me, and if Foxtab wants me to remove any material from this site they should get a court order. He asked me what I was going to do about the material about Foxtab on this site, and I told him I was going to double it.

After the first mention of Foxtab on this site, a couple of potential victims contacted me and all said that they had been told that the price of the scheme was $5,800. It was interesting to note that the representative of Foxtab who contacted me told me that they were not asking for any money in the brochure. I can add sliding around the black-letter law on fraud to the reasons given above for not having an amount of money specified on the "agreement" in the brochure.

The following message was sent to finance and business writers at 190 media outlets by both fax and email during the evening of December 21. I started with specialist writers, but the database of email addresses and fax numbers in Margaret Gee's Media Guide contains thousands more people yet to be contacted if necessary.

A Sure Bet – The First Cockroaches of Summer

It seems that every summer we get tinderboxes, cockroaches and new betting scams. One such scam named "Foxtab" landed on my desk a few days ago from a company named Astrafund Pty Ltd.

The classy brochure contains all the usual enticements to "invest", including the standard sets of results showing how well you would have done had you joined the scheme last year before it existed. What the brochure didn't contain included the names of the directors of the company and a real address for the company (serviced offices do not count).

The people at Foxtab did not like what I wrote at https://ratbags.com/rsoles/comment/foxtab.htm and wanted to meet me at my home. The first indication I had that that sort of threat was coming was when the person who rang me asked me to confirm my address. There are many ways of saying "We know where you live".

I had already notified the Australian Taxation Office of the fact that a company was apparently collecting GST while not registered and that Foxtab were claiming that income as a professional gambler was free of income tax. I had also notified the Australian Securities and Investments Commission that a company which had changed directors and address several times lately but had not submitted an annual return for almost two years was acting in a suspicious, scam-like manner. As Foxtab have invaded my privacy and continued to say that someone was coming to my house "for a cup of tea" after being told several times that they would not be welcome, I am fulfilling my promise to tell the media about them.

I Want My Foxtab

I thought that people other than the media and government authorities might be interested in what is going on. On the inside cover of the brochure you can find the slogan "I want my Foxtab". When I asked the lady at Foxtel corporate affairs if she would be interested in hearing about a betting scam using the slogan "I want my Foxtab" her response was to think for a picosecond and then ask me to email her a copy of the brochure. Rupert Murdoch's lawyers! I bet the scamster will want them to drop around for a cup of tea.


Tha last resting place of the betting scamFoxtab and Premium Strategies (15/1/2005)
I had a conversation during the week with someone from the company which had been supplying serviced office space and telephone answering services to the two betting scam operators which have been receiving some attention around here lately. The lady told me that her company did not want to be associated in any way with such criminal activities (she asked me to remove all clues to her company's identity from this site, and I did so immediately) and she also told me that Foxtab was no longer a client of theirs and Premium Strategies was about to obtain the same status. All those fancy brochures now mean nothing until the crooks can get the phones redirected and some new desks for the telemarketers to sit at.


 

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