The metaphysics of financial scams

It is a kind of metaphysical financial question: What happens if you scam people but no-one is scammed? Paul Tetu, a self-described “aspiring screenplay writer, novelist, and movie producer” tested the question recently. (Don’t you love the “aspiring” part?)

As the SEC complaint says, Mr. Tetu has been running ads in the Wall Street Journal and elsewhere for the past five years. In them he promises “High Yield Transactions”, secret trading programs which could generate annual returns of 70 to 100%. Just in case people were nervous about his bona fides, Mr. Teto assured investors that he had worked “with the State Department and the International Monetary Fund and that he had facilitated previous transactions in excess of $100 million”.

Sadly, as the SEC points out, there were issues:

  1. “Tetu’s purported secret trading programs did not exist, and Tetu did not have the ability to generate the returns he promised; ”
  2. “Tetu never understood the precise nature of these so-called secret trading programs, and never met any of the promoters who told him about the transactions;”
  3. “Tetu never made any attempt to verify the existence of these secret programs, to explore the credibility of the promoters or to substantiate the likelihood of the promised returns;”
  4. “Tetu never had any dealings with anyone at the State Department or the International Monetary Fund; and”
  5. “Tetu never consummated any of the types of transactions that he promoted, much less those in excess of $100 million.”

So, there were some problems with the offer. But you’d think someone would have still taken a flyer on this intrepid financial entrepeneur. But then here is the crusher in the SEC complaint:

“Despite his best efforts, Tetu failed to convince anyone to invest in his scheme.”

In other words, despite Mr. Teto’s half-decade trying to scam millions out of investors, he wasn’t able to obtain any money. None. Nada. What is the world coming to?