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September 26, 2005

Canadian Royalty Trusts?, Mon., Sept. 26, 2005, 2:25 PM

I was asked by a new reader if I could point him to information regarding Canadian Royalty Check Programs". Well, given he didn't spell check" as cheque", I know he is probably American. Another tip is just the word check" -- as in money" as in somebody's idea of a marketing scheme.

The term is "CANADIAN ROYALTY TRUST" PROGRAM. These are simply securities that flow through income to the recipient, rather than put the corporation into a taxable position. They were intended to attract foreign investors, and they certainly did after foreigners realized these securities had been structured like a typical high yield roll program" " only legal.

The problem is two-fold: (1) the Canadian government has now realized how many hundreds of millions in annual taxes are not being collected, and so last week the government decided to cut off formation of new ones, and (2) a number of these trusts" have become broken trusts" " now trading at well below their issue price because traders now see that the payouts are little more than a return of capital " just like a phoney roll" program.

Not all Canadian Royalty Trusts have gone lame, thankfully, but many have, and the perpetrators should be put down, as in shot. I suspect there will be quite a number of lawsuits for fraud. More on this later.

I suppose what I truly dislike about these programs is that they were tax structures, and those inevitably turn out to be disastrous.

Then, speaking as a proud Canadian who thinks we overall have a superlative capital market, I just cringe when I see U.S.-based Internet marketing of these so-called Trust Programs.

Let me say that, with respect to the latter, I believe there is a direct correlation between the frequency of stock promotion by unlicensed promoters and the probability of fraud.

Many of these securities are businesses that will fail (or materially disappoint) as soon as interest rates in Canada move a level or two higher, or commodity prices fall a level or two lower, or the fast-paced Canadian economy starts to slow. In other words, there is a level of risk here that traders are failing to recognize.

I think the authorities in the United States would do the world a favor if they were to clamp down on so-called investment newsletters that are stock touts for these Canadian Royalty Trusts".

Every cycle is the same at the top. Usually it's the Canadian penny mining stocks. At the top they have moved from 25 cents a share to $2.50, or maybe $7.50 or $17.50, and then after the broad market bear sets in they fall quickly to less than 25 cents.

What bothers me is that it is not part of the Canadian culture that creates these financial disasters; it is typically (and I mean no disrespect to the country) American stock promoters who are working out of places like Orlando FL and Phoenix AZ and Las Vegas NV, but mostly via shell companies incorporated in places like Antigua, Bahamas, Belize, Cayman Islands, Costa Rica, and Panama (-- Note the list is alphabetical). I speak from years of experience with these people.

ROBTV analyst and successful investor, Kevin O'Leary, often talks about his lengthy list of Broken Trusts". He appears on camera most every weekday, and the video is archived and available. Canadians, I think, know what is going on with these Trusts. They get good advice from registered advisors. For others, I think it would pay to access O'Leary on ROBTV or some of the other Royalty Trust professionals that ROBTV interviews.

Some day, I'll get into this subject in detail. Like I say, many of these Trusts have been successful, and continue to be. The problem is that, after the best ones were taken public (IPO) by the better quality underwriters, many of the latest to come out are not very good. And the good ones are now mature, so the early gains are most likely history.

Caveat emptor.

Posted by Posted by Bill Cara on September 26, 2005 02:25:45 PM | Category: Canada

Discourse

Any comments on FDG ... Fording Canadian Coal Trust;

All the "analysts" are down grading it to neutral, but I don't follow their logic.

If you have heard anything ... positive or negative ... please post.

Thanks

Posted by: BonoPadre [TypeKey Profile Page] at November 5, 2005 4:36 PM [link]

I received the same spam email this guy is talking about. I think in order to hide the name "Royalty Trusts Program" the senders have referred to it as the "Royalty Checks Program". I believe the letter is just a scam getting investors to sign up for a $100 a year newsletter called "The 12% letter". Being a low income Canadian I'm extremely interested in finding out if our government has been giving away thousands, possibly millions of dollars to americans!? I like the USA but I'm not willing to fund a California fisherman's retirement when I'm here freezing my petuty off and working hard, risking my health, sometimes even my life to earn less than poverty! The company sending me the email is ADVFN, a UK investor advice spammer. I have entered the URL of the "12% Letter" website above for the readers' perusal. and The beginning of the extensive sales email reads like this:

>>
California Tuna Fisherman Nets
$63,778 Check
After Discovering a Little-Known 1985 Government Ruling

Enroll now in the program spawned by this little-known federal
ruling and you could collect $50,000 in checks by December 2006


By Craig Walters

On October 31, 2005, a California tuna fisherman named Darwin Clarke reeled in the catch of a lifetime.

It was a check for more than $63,000.

Clarke's big catch was the result of uncovering a little-known December 1985 federal tax ruling -- which serves as the basis for an exclusive government-authorized 'retirement program.'

The 55-year-old fisherman -- who got started in this program just 3 months ago -- now collects a $63,778 check every single month. By December 2006, Clarke expects to bring in over $250,000 in checks.

How did Clarke realize such good fortune?

He did it by looking north of the border, to Canada.

Darwin Clarke knew that Canada is a country famous for its generous social programs.

They have free health care, for example... something called Income Allowance... and get this: It's even written in the Canadian Constitution that the richer provinces have to share their wealth with the poorer ones -- a program called 'Equalization.' Some Canadian citizens actually collect checks from wealthy provincial governments.

So Darwin Clarke went looking into the archives of the Canadian Parliament, and what he found changed his life. In all likelihood, it could do the same for you.

You see, Canada's generosity has finally extended beyond its borders. And thanks to the 1985 government ruling you can now collect a very generous check once a month for the rest of your life.

Here's the best part... you don't have to live, or work in Canada to start collecting your payments. In fact, you never have to leave home.

This Canadian windfall may be the perfect way to fund an early retirement or supplement your day-to-day income. Some experts call it the Canadian Royalty Checks program...and many in-the-know Americans are already cashing in...<<

And theres lots more of testimonials and such. What are these Royalty Trusts? You say its a "Roll" scam? Is that like a pyramid scam? But somehow its legal?!

Posted by: ResearchMan [TypeKey Profile Page] at January 12, 2006 3:49 PM [link]

oops the URL linked to my name in my comment above is not my URL it belongs to the imho: "scammers" you have to take off the "http://" added on by this site at the start too if you want to check it out.

Posted by: ResearchMan [TypeKey Profile Page] at January 12, 2006 3:53 PM [link]

Thank you. I also received the 12% scam. But being a wily Scot (Canadian in NYC) I did my due diligence without biting.

Thanks again.
Bruce Campbell

Posted by: S B Campbell at January 27, 2006 10:40 AM [link]

Craig Walters 12% pie in the sky letter arrived
in Ft Lauderdale sans the tuna fisherman $63,000
a month hallucination,...by my 2 buck calculator
this guy would have to have sunk $6,377,800 into
a trust @12% to receive that $63,778 monthly check! Hmm, where can I buy a tuna boat?

soflaman

Posted by: soflaman [TypeKey Profile Page] at February 19, 2006 2:22 PM [link]

If it sounds too good to be true, it usually is.
I too took out my calculator and soflaman is right. If I had 6million plus to invest, I wouldn't need the likes of Craig Walters.

Fact is that you need money to make money and those who can do and those who can't teach.

didn't just fall of the turnip truck

Posted by: didn't just fall of the turnip truck [TypeKey Profile Page] at February 19, 2006 8:22 PM [link]