It's time for SL residents to take a stand

I had a good reply to Elex written too, but *Lock*

Ill say the gist here quickly


There were no shareholders till he started selling Bonds to cover his "liquidity" problem.

and besides hes wrong about how its more Ethical to cover the shareholders -

It would be simple enough to list investment spending without going into detail that would help the competition.

Especially since much of the missing money is supposedly invested in "Off-world" investments.

Well, he was also incorrect about the priority of responsibility. Banks, unlike many other organizations, are legally obligated to the depositors first and shareholders second. When a bank folds, the depositors are paid off first, then the shareholders/owners get what is left over afterwards, if there is any left.

The other issue is that, technically, Ginko is in default to its depositors at this point. Normally, a bank in this state would be seized and liquidated after being given a very short time to try to liquefy its assets to cover the shortage. At that point, all the "investment strategy" would become public knowledge anyway, since that is bona fide bankruptcy.

Not to mention the point who would want to copy Ginko's investment scheme anyway? It led to a near complete default. Yeah, now there's an investment strategy I know *I* would want to copy. Uh huh. Right.

Which makes perfect logical sense -

Since its not the COMPANY'S money they are playing with.

Its the depositors.

Nick is playing with a lot other people's Real Life money - and doesnt feel at all morally obligated to tell people what he did with it.

Thats just plain slimey

Its worse than that its the muck under the slime grade slimey.

I guess for me even if it was not any type of pyramid or anything its just so much bad business right now I can't fathom it. If i was in this state I would be desperately trying to sell all the stuff i had ingame (first likely) and move the bank to a small lot on the mainland. Even if I had to sell it off quickly to a landbaron like anshe chung who would most certainly absorb a lot of the "tangible" ingame stuff like the sims. I would be giving it to people as quickly as i could get hold of the cash. If there is off world assets in all honesty I guess to me they probably would be faster to liquidate assuming its a normal asset. I can't imagine much that would be very hard to sell unless its a house or something but I would not consider that an investment for holding cash in SL for the "bank". MOving it in game on the lindex well he has alts etc by his own admission he could pay debts off. But the first thing I would do would sell every scarp I had in sl landwise it would show an effort something people could see. Its replaceable and yes i KNow right now it would be a loss but private sims there is always a market for. Mainland could be sold if it was slightly underpriced.

I can only assume by the lack of movement (the sims in sl that ginko holds I see no movement nothing for sale etc on the estate listing and I kow the name of two sims they own and they are not for sale. all this would indicate some effort to liquidate ingame its just not happening so i dont get it. ) he is doing nothing ingame.

Well, that is actually really easy to fathom..

There is no real consequence if he doesn't do that, so he has no reason to bother.

He feels quite safe under his "you accepted the risk that I could screw you hardcore by giving me your money" disclaimers, so why worry?

Yeah, so Ginko is basically done as an ongoing financial interest in SL. Next month there will be a new bank with a new name and a"new" owner offering great returns on "savings accounts".

He gets to play "banker" with all the positives of playing with hundreds of millions of L$ that doesn't belong to him, without any of the REAL negative consequences if he screws up. So? He's out of business again.. start up another one. This time, maybe a real estate venture.

I know, I couldn't live like that, either, but some people it doesn't really bother. SL provides the kind of fertile ground for that type of mentality to grow and prosper. It's "Your World, Your Imagination", after all, even if that imagination is a malignant cancer on the rest of the virtual society.

Sorry, Nick, I don't 100% believe that this really is the way you really are, but you certainly aren't giving folks enough incentive to see you differently, try as you might. Do the right things, and you will come out of this smelling like a rose. Continue to do the wrong things and, well, if the shoe fits...

*shrug* Just my opinion, though.

Here are four that you could have looked up if you knew how. They are where some of the money is and can't be easily retrieved.

https://www.wselive.com/research/major_shareholders/1
https://www.wselive.com/research/major_shareholders/40
https://www.wselive.com/research/major_shareholders/3
https://www.wselive.com/research/major_shareholders/8

You also could have looked here
https://ginkofinancial.com/phpbb/viewtopic.php?t=221
for his June Report where he claims L$70 million in assets located inside SL. When I first looked at this 2 days ago and ran the numbers with present value then I got L$44 million so he has lost L$26 million is asset value in the last 2 months. Again these holdings are very difficult to sell since the volume on the exchanges is low presently.

Interestingly enough the AIC stock is owned by Investor Allen who just merged the AVIX with JT Financial and owns Merlin's Investment Bank. http://www.your2ndplace.com/node/331
Also BNT is owned by Intlibber Brautigan who was very much against the merger. http://www.allenvestfinancial.com/home/story/BNT/427

What does this have to do with anything? Well as of June 2007 Mr. Portocarrero claimed to own 10,818,978 shares of BNT and 55,395 shares of AIC in case you didn't go look at the June Ginko report. If you look very closely you will note that Mr Portocarrero is on the bord of directors of BNT.

So there you have a story of where some of the money invested by Ginko Financial is inworld and just how complicted this whole investment community really is. Who gains from forcing Ginko to sell these shares at $.10 on the dollar to fund demands for immediate withdrawl of at least some of the funds left in a seemingly failing SL bank? Do the depositors gain by getting at least some of their money back? What about the people who buy 30 million shares of stock at $.10 on the dollar and just who will they be anyway? I'll tell you who they wont be. They wont be the depositors because their money is all tied up in Ginko. Maybe it will be all those other bankers who now have their deposits growing from people fleeing from Ginko. Makes you think about what is really going on doesn't it?

Don't ask me, I don't have a clue but it sure is fun researching all this instead of ranting and raving with little or no real knowlege about situation.

what ever makes you sleep at night

bottom line: you and your fellow SLBBC'ers witch hunted a person into the ground to the point where he is not able to continue doing what he was doing successfully, and without your armchair banking knowledge, practically out of business. i see him trying to at least do right by those who, for lack of a better term, banked with him.

and the fact that he still hasn't "made a run for the border", as so many have predicted still speaks more for his character than some business owners out there.

And while you were researching did you add these up?

The bank run, the failed merge, etc occured first .. the threads followed.

Again .. for there to be a witch hunt there has to be no witch.

And I dont belong to the SLBBC - I dont even think the SLBBC is a good idea.

I think Ponzi schemes and Unaccontable Fund Managers are even worse Ideas.

I said they added up to $44,000,000 two days ago but I have no way of knowing how many shares of BNT and AIC he presently has only what he reported in June.

I got curious and went to peak at the sims he has under bnt holdings 27 sims most were for sale but the prices were very high . I guess I truly don't understand. why is he charging on average 15.7 per sq meter for a private estate when the going price is around 10 per sq meter? and all this in the middle of a crisis. The lots were all 4286 meters squared as well.

In any event such is life. That land wont be selling anytime soon so does he really want to sell it? I would hope so. If he wants to sell it at a decent rate to pay of debts he has to bring it to the market price the land is over priced.

also what is slbbc? If and I assume I am being called an slbbc'er i guess I should know what it means?

Thus leaving the unaccounted portion in the 150 Million area roughly?

Which is what people in this and the other thread have been saying.

I think shes refering to Second Life Better Business council - with was the topic of a thread a couple months ago.


I could be mistaken.

lol only by coincidence I guess I am in the new slbb but only for a couple of months and I only took notice of this mess about 2 days ago really i thought ginko was strange but I didn't know what was going on hehe ah well. I am the "evil" one here i guess. /shrug

One of those is his own company, so no, it isn't a place where he invested depositor funds; he's trying to sell shares of his currency exchange company to everyone else.



Nope. That link doesn't go anywhere; probably since I don't have a forum login there.



Well, if he is really being victimized here by other financial organizations using strongarm tactics, he would get a HELL of a lot more sympathy from his customers, let alone the rest of the general public if he went ahead and posted this information in detail. I mean, what has he got to lose at this point? The haggis is in the fire already, the barbarians are at the gates, and the feces has cleared the fan grill. Out with the info and buy some real lovin'.

Even still, with all those numbers, there's nowhere near enough to cover the L$147M which is still outstanding, which means that Ginko is in default. Of course, that means diddly poop in SL since it is a toy bank, but there is still an element of goodwill he could be playing to, if he'd just make an effort.

Dunno about Colette, but I sleep VERY well at night after I shut off SL. MUCH better than I could if I owed US$500,000 to a lot of angry folks.



Uhh.. he's still doing it, last I checked. Into the ground? Yeah, I can see the dirt on his nose from here. Problem is, it's all self-inflicted. Successfully? Wow. Who writes your material? Fox News?

I'm not sure, but aren't people on the forums the "vocal minority" or what-have-you that have no real impact on the rest of the world, as compared to the masses who don't visit the forums? Seems I keep hearing that; if it is true, then we had absolutely nothing to do with what happened to Ginko or the congenial, if doddering, Mr. Portocarerro.

If he was trying to "do right", there would be transparency; there would be a LOT less condescension towards customers and the general public for asking the hard questions that he really needs to be right up front answering. Fully, unambiguously, and truthfully. He doesn't even have to answer to anyone but his customers, as far as I am concerned, but they are still being treated as mushrooms like everyone else, so, meh.



He doesn't have to make "a run for the border". There's no consequence worse than what he is already experiencing: bad publicity. Well, he is running away from that, sorta, I guess, but it isn't going away for a while, I imagine.

I'm sorry you do need to log into Ginko forums to view the June report. Here it is in its entirety. In it you will see why I included GCS only because he uses those assets to claim a L$70,000,000 in-world stock portfolio.

Report on In-World Investments

Dear customers,

Very often I have been asked to disclose more details regarding Ginko Financial's investment activities. As I have explained in the past, with the exception of the failed Paris sims, we have focused our investments off-world for most of our existance. This has changed with the establishment of capital markets in SL, starting with the WSE (www.wselive.com). I am still uncomfortable disclosing anything regarding the off-world side of things, but as the in-world investments have grown in importance, and as they are already relatively public, I think it's reasonable that I better inform you on them.

First, the overview. Our current stock portfolio, excluding halted ompanies (MPR) and subsidiaries (GCS and VME), consists of the following:

- 10,818,978 shares in BNT (Brautigan & Tuck Holdings) which has a 30-day average value of L$10,494,408.66.

- 6,773,393 shares in HCL (Hope Capital Ltd) which has a 30-day average value of L$19,846,041.49.

- 1,329,132 shares in LOT (Lotto Networks Unlimited) which has a 30-day average value of L$1,143,053.52.

- 624,570 shares in KCG (Kavai Conglomerate Group) which has a 30-day average value of L$6,913,989.9.

- 473,350 shares in EFM (Empire Fund Mutual) which has a 30-day average value of L$421,281.5.

- 55,395 shares in AIC (Allenvest Investment Capital). I am unsure what the average is, but it has a market value between L$55,395 and L$110,790.

This puts the total value of the in-world stock portfolio at around L$38,901,867.57, or around 23% of depositor liabilities. If GCS is included, the value jumps to the L$70,000,000 range, or around 42% of depositor liabilities, with the addition of VME boosting the number by L$1,000,001 and somewhat more than 0.5% of depositor liabilities.

Of particular importance to report here is the mistake I made with MPR, which has cost us about L$2,000,000. The founder of MPR seems to have disappeared from SL, with bills unpaid. Ginko Financial invested heavily into MPRs IPO, at one time owning over 3,000,000 shares. This has strenghtened our resolve to shift our investment strategy, which we'll comment more on later.

You may have noticed that we have an investment in AIC, which owns a competing stock exchange to HCL, our main holding. As I looked into AVIX I was somewhat impressed by their system and decided to make a small trial investment. Our investment is and will remain small as we learn more about them and their CEO. As far as I can tell however, he seems like an honest, well intentioned and competent person. It's important to remember however that this is only my superficial impression, it should not be taken as charachter refference. Further investments into AIC are not high on the list of priorities, but the option has not been discarded.

I have no doubt that SL is capable of supporting more than one exchange and that the existance of several does nothing but good to the industry as a whole. It is important to consider that the penetration rate for financial services in SL is relatively low. Multiple exchanges increase both the number of people that are actively aware of their existance and, due to competition between them, their quality and attractiveness to the public.

With BNT we seek a close, long-term relationship. They will be building and managing all of Ginko Financial's estate investments, starting with the Von Mises estate. In the near future, they will also be building the Ginko Financial Center.

Speaking of the Von Mises estate, I would like to expand on our strategy with regards to estate investments. The idea is fairly simple, we pay for the purchase and development of a simulator, then sell half our stake in it on an IPO in order to recoup the investment made. It's a variation of the standard sim owner practice of reselling land to buy new simulators, while keeping an income from tier management. There were delays in ordering the Von Mises estate, which I imagine have played a part in VMEs slow IPO progress. We are also still refining our strategy, and as it is a first people are understandably cautious about investing in it. As the building is completed and the simulator opens for business, investor interest should pick up as shares in it may return considerably more than our savings accounts or bonds, or even GCS.

Our position in GCS we intend to sell down to 50% +1, no more. The lock on founder selling of stocks will be lifted on June 9th, after which we intend to let go of shares at between L$3 and L$4. This block does not apply to the 100k shares we re-acquired from GIF, which we are already selling off.

Our position with regards to LOT, KCG and EFM is neutral. The companies seem well managed (though investor relations could improve), with good potential prospects, but the risks involved do not warrant bulishness at current price levels. We have no reason to liquidate them on a firesale, but have no particular interest in holding as they do not currently form part of our overall strategic plan and the capital could be used for companies that do. As such, we are willing to sell them at L$1 for LOT, L$13 for KCG and L$1 for EFM. You can see the sell orders on the market. I have been told to use smaller orders, but I do not believe managing the sale of tiny chuncks of stock is a productive use of my time. If nobody wishes to buy at these prices, we'll do just fine keeping them.

I believe in the investment maxim that it is better to make one good investment than ten bad ones. I also believe that there is no direct link between risk and reward, only between risk and knowledge. Making an investment is not the same as going to a casino, there are no fixed odds. As such, given SL economic conditions, our interest is investing large sums in a handful of large companies rather than in many small ones.

We intend to expand our offering of bonds in june, through the GPBs (Ginko Perpetual Bonds), but the price and amount has not yet been determined. The thing I like about the GPBs, a big part of the reason I created them, is that they show the pure market interest rate. I say "pure", because they are the purest that can be, but it is clear that things such as market friction (the fees for trading the bonds) have a large impact on their ability to behave as accurate indicators of market interest rates in Second Life and particularly the market interest rate for Ginko Financial borrowing.

I believe this covers everything I wanted to say for now.

Regards,
Nicholas Portocarrero

thanks i was trying to figure out for the last day or so where those posts were

This is such a puzzle it makes my head hurt.

So basically if he could get a good price for things (which he can't because of a slump which could last for months and even get worse..) he would be able to get back half of the principle ?

So we are to assume the other half is outside of SL?

and he's trying to make the bank float on these bonds and deposits by robing Peter to pay Paul?

Looks like a really huge boner to me I couldn't even do it if i tried or its intentional. Either way it simply doesn't ad up and no amount of anything wil make it ad up saving possibly selling his sole to the devil for the missing debt.

I think it is fair and accurate to say that Ginko is a bank by some definitions but not by others, and certainly not as legally defined in most RL jurisdictions.

Consider the American Heritage Dictionary: "A business establishment in which money is kept for saving or commercial purposes or is invested, supplied for loans, or exchanged." If we grant "money" status to L$, and "business establishment" status to SL residents and groups that claim that status, then by this definition Ginko is a bank. I might add that most people, even in America, think of banks in this more generic sense rather than in the legal sense of their jurisdiction (remember that in America the legal definition of "bank" could vary from state to state).

Heh. For all we know, Ginko could also be considered a bank under an alternate definition from the American Heritage Dictionary: "The funds of a gambling establishment."

now i can say something before i go pass out due to trying to figure out a puzzle with things that simply dont ad up.

I dont often sit at a message board trying to solve a problem in my head but for this I have because its so bizzarre. YOu can try to blame "slbbc'ers" I assummed you meant some message board group but it could be a business group as colette says but again you have to realize that the numbers simply DO NOT ad up. This is not anyone's fault but those who were spending the money. The fact of the matter is they simply spent money they should not have spent and they did it by the looks of it way to fast.

They are relying on depositers (new people unsuspecting people) to deposit money that will be used to pay off any pending withdrawals and the sale of what I will now call "vapour bonds" (if you ever heard of vapour ware you can figure out what i mean). YOu can yell at people all you like but the fact of the matter is if you want to open your eyes and look at fact written by the person who is in fact the "head banker" he only has HALF of what he needs to float the bank and that ENTIRE half is in fact totally tied up in investments.

Logic (even yours would say) there is no cash to pay people who want to withdraw and there will NEVER be any until he sells some of the things he has tied up BUT HE CAN'T. NO financial institution in its right mind would tie up ever damned cent in investments. This is only pure logic here. If you get paid your pay cheque you want to save some money to buy food and pay the bills for the mortgage etc (your debt) you dont run and lock it all into a long term GIC or put it into your RRSP'S and leave youself nothing to spend. This you should be able to understand anyone can understand this. He has tied up ever cent he has in investments. He may have had a reserver but it was very small and depleted very quickly.

For him to continue he has to do a couple of things which are also pretty logical and doesnt require rocket science here
tell the people using the "bank" this information
start liquidating assets immediately and at a loss and dividing it up

he is in default he owes a ton of money to people he has no choice in the matter he has done nothing for 1 week save possibly funnel a small amount

He may be "legit" but honestly if he doesn't liquidate everything soon as in on monday morning he's out of business as an avatar and as a "bank"

this is his mess and no one elses sorry

I've seen this question come up several times. I can imagine a number of answers:

1. Because there are no investments, it's just a Ponzi scheme, but I'm not saying that.
2. Because the investments are immoral or illegal: Drugs, smuggling, child pornography, gambling, etc.
3. Because the investments are silly or foolhardy: Swampland in Florida, London Bridge, Enron.
4. Because the respondant is unorganized and has no firm grasp of his financial situation--if he doesn't know himself, how can he tell you?

Given such possible responses, it is clear that the question is a good one. It's the kind of question responsible investors ask BEFORE they make an investment.

However, it is possible some other response is more appropriate:

5. I've discovered an incredible investment opportunity, and if I let people know what it is everyone will skip investing in me and deposit their investments directly there, depriving me of income. I want to profit from my superior knowledge.
6. I've discovered a good investment opportunity, but if it gets too much attention, its investment potential will decline. Maybe the tax authorities will close a loophole; maybe RL big-time investors will muscle me out of the picture; maybe millions of Chinese will create SL accounts to do the same things and take away my margins.
7. I've found a way to make good money, but it's repugnant to my typical investor. I've established a ranch for raising dogs for human consumption in a third-world country.
8. I'm a well-known personality where I live. It would be embarrassing to me if people knew I spent much time playing a video game. It would be doubly embarrassing if they found out how I've bungled things.

I'm sure there are others. Too bad I don't actually know which of these, if any, is the truth.

Well, of L$200M in assets from deposits:

~L$50M was liquid reserve (25% is decent for a fractional reserve, I guess)
~L$38M was in in-world stocks
~L$32M in GCS (not sure how that is an investment, though; investments in wholly-owned subsidiaries are weird to include like this, but whatever)

There's the ones he mentioned in passing in this forum, but I don't know if they are part of something above or not.
L$7M in bonds redeemed at ~L$6M
L$1M to build up Von Mises sim

OK, so we have a total of L$128M in in-world investments and liquid reserve. That leaves around L$72M in RL investments, which he is "uncomfortable talking about".

I also have no idea where the money for salaries came from. Paying out around L$5M or so. Normally, they would come out of profits. One can only hope that is the case here.

Well, that wasn't the problem. The problem is that people were trying to pin him down on exactly WHAT Ginko was, and he kept doubletalking. First, he said it wasn't a bank, and he never called it that. Then he admitted that he did call it a bank, but it wasn't a bank in the context that the average person considered a bank to be. Next, he said that it wasn't a checked deposit bank, but he was using fractional-reserve banking, but FRB is precisely the methodology employed by a checked deposit bank which plays the interest spread game on deposits<->investments.

The dictionary quip was meant to bring the whole silliness to light. The ultimate point was that he WAS running precisely the kind of "bank" everyone believed he was from his own words, despite his protestations to the contrary.



Actually, banks are regulated by Federal Law in the US, so the legal definition of "bank" cannot vary significantly from state to state. States may impose conditions and small details on how banks operate in their specific jurisdiction, but the overall operation of a bank is pretty much the same in every state.



Of that, I have little doubt at this point.

Well, when I think of transparency, the qualitative specifics of the particular investment don't matter outside of maybe a risk rating of some kind. The quantitative aspects DO matter, though, which is how much principal, what rate of interest, what term, and what terms (ie, early withdrawal penalties, etc). Those numbers don't compromise anything about his investment portfolio. Of course, he can magick unverifiable numbers out of thin air, but that has a risk of being scrutinized and potentially uncovered as well. That's why I keep suggesting an independent audit where he can still keep the qualitative info relatively secure, but have the numbers verified that they are not fabrications.

With that, he would have the requisite transparency to take care of a vast majority of the criticism he's getting from the public and most especially, his customers.

The only reasons left which would preclude transparency even under these circumstances would be the "shady deals" kind, which would do irreparable harm to Ginko's public image and cost him customers.