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22 Responses to “Interview with Ginko’s ‘Nicholas Portercarrero’”

1. on 30 Jul 2007 at 10:46 pm1 Kimo Junot
   

   wow..after reading this interview I am REALLY glad I pulled my money from Ginko when I did and started doing business with JT Finacial

2. on 31 Jul 2007 at 12:02 am2 Tyffany Flintoff
   

   Benjamin

   Well done for cornering him, but you could have been more forceful.

   I simply can’t believe that any intelligent person would see Ginko for anything other than a pyramid (Ponzi) scheme. Seriously. As I write this the Ginko website says they have deposits of L 193m – Call it somewhere north of US $ 700,000. That’s money they owe to depositors – excluding any accrued interest. We’re not talking petty money here and when Ginko crashes and burns (as all pyramid schemes must) I can see blood on the walls which will splash from the grid all the way to Linden Lab.

3. on 31 Jul 2007 at 12:41 am3 Virtually Blind - Virtual Law | Legal Issues That Impact Virtual Worlds » Blog Archive » Commentary: Ginko Not “Buying” Avix

   [...] So if you’re into the SL financial markets, or have money in AVIX, or in Ginko, you’re going to want to pay close attention.  For pure readibility, however, you’re going to be more interested in my one on one interview with ‘Nicholas Portocarrero’ (Andre Sanchez in real life) from earlier tonight.  Why?  He told me he doesn’t have your money.  At all.  Well, not in any “liquid” form anyway. [...]

4. on 31 Jul 2007 at 1:11 am4 Benjamin Duranske
   

   Thanks Kimo and Tyffany.

   Tyffany – You are 100% right in your analysis. Read the transcript from the meeting that followed that I just posted with AVIX though. I didn’t know what he was up to, but he cut this interview off b/c, it turned out, he had to run to the press conference, so I didn’t get to the hard stuff here. But it worked out better, really, because he was in front of a lot of people when I got to the harder questions. Really, four or five of us there were pushing pretty hard, and we got serious responses to the questions you (and I) hoped I could get to here. Like who he really is, how much he’s personally taking, and where most of the money is (gone, basically). It was a good night for interviews — just view this one as the appetizer.

5. on 31 Jul 2007 at 1:41 am5 Tyffany Flintoff
   

   Thank you Benjamin

   And good work in getting through this. I’m actually annoyed with myself for not writing a post on Ginko earlier as it screamed Ponzi to me months ago. I’d honestly not paid it too much attention as I had assumed that people wouldn’t be so stupid so as to be taken in and not trealised just how big it had become.

6. on 31 Jul 2007 at 1:48 am6 Benjamin Duranske
   

   It screamed Ponzi to me months ago too, and to others before that. The first post on this in this run, below, links to a piece I wrote back in February on this. And others said the same thing before I did.

   The thing with schemes like this that makes them so hard to predict is that they actually work for a while, because there is new money to pay off old interest. They sometimes even fool the people running them.

   They could, I suppose, even survive this, but since there’s no bailout in sight, I’d now put the odds somewhat significantly against it, especially in light of the candid responses here and in the transcript of the press conference about how little they really have in assets.

   Also, really, who would be so dumb as to bail them out at this point? They owe people close to three-quarters of a million dollars and appear to have no significant tangible assets. Who wants to take *that* over?

7. on 31 Jul 2007 at 1:01 pm7 The Forge · Brazil is the new Nigeria

   [...] Interview with Ginko’s ‘Nicholas Portercarrero’ – Benjamin interviews Andre/Nicholas, who has serious brass balls. He claims that it was an “objective fact” that he could pay depositors 100% annual returns on their investment. How? Why….he’d just pay them out of his own pocket. Yeah, that’s going to scale well. Andre spends the whole interview avoiding giving any answers about anything substantive. [...]

8. on 31 Jul 2007 at 1:41 pm8 Tyrian Camilo
   

   This isn’t necessarily Ginko’s fall, like everyone is saying. Infact, every panicking client they have makes the situation even worse, and harder for Ginko to return to normal.

   What’s their mistake?
   – Not liquid enough investments
   – It seems like no “steady streams” of profit
   – Too high portion of funds in effective use

   and most of all:

   ALLOWING A FEW MINOR PORTION TO WITHDRAW MOST!

   I know for a fact that some has even been allowed millions of L$ for withdrawal during this time.

   What began this all?

   The new anti-gambling policy. All Casino owners wanting their money out ASAP. plus allowing over 300k L$ withdrawals for minority, minority favoured by Ginko.

   In order to give interest, funds need to be in use, and even how much we’d like to: They just usually isn’t that liquid. Sometimes it might even take months to liquidate something.

   Yes, Nicholas is VERY evasive and VERY secretive, but there’s hope that Ginko makes out of this rather nicely and safely.

   If Ginko falls under, it’s a very very dark day in the economy of SL.

   And, i have way over 1Mil L$ still at Ginko. I had there 1.8Mil L$ sometime before this started.

   Please, give it sometime, and let Nicholas do his job as a banker and get investments liquid :)

9. on 31 Jul 2007 at 5:15 pm9 Benjamin Duranske
   

   Tyrian – Even though I sympathize with you here, and I agree with a lot of your analysis, I’m afraid that the conclusion — suggesting that people not withdraw their money — would only benefit you and other very big depositors who are already prevented from getting at your funds, and would not benefit smaller depositors at all, so I have to disagree with you.

   One interesting argument here is that it really is unfair to bigger depositors that Ginko is distributing what they have left this way. It might be more fair to simply divide whatever is left amongst everyone who is involved based on how much they have in — like a bankruptcy, which is pretty much what we’re looking at here anyway.

   Also, I was prepared to dismiss your idea that they were giving preference to big depositors because it appeared to be coded into the ATMs to not allow bigger withdrawals, but I saw something happen today that makes me think you are right about them giving preference to certain big depositors.

   About 3m came out of the total today — in what appears to be a single transaction — at around 1:30 PM SLT.

   I, like you, now wonder who is getting special treatment.

10. on 31 Jul 2007 at 6:10 pm10 Wrath
    

    About 3m came out of the total today — in what appears to be a single transaction — at around 1:30 PM SLT.

    I, like you, now wonder who is getting special treatment.

    I hear Thurston Hallard likes to make withdrawals in the L$3 million dollar range…. Just sayin’.

    But seriously, Ben, thank you for attending the meeting and posing such good questions, much appreciated.

11. on 31 Jul 2007 at 8:46 pm11 Prokofy Neva
    

    Is Duranske a lawyer, or a prosecutor lol?

    Tyffany, intelligent people do stupid things all the time, and they should have the freedom to do so — or at least, that’s what a good number of people in SL believe, wishing there not to be the sort of government intervention and regulation experienced in RL.

    This exposure of Ginko is not news; there have been numerous stories over the years about Ginko, and anybody googling them would find them should they have done the slightest bit of homework before investing:

    http://www.secondlifeherald.com/slh/2005/11/anshe_declares_.html

    As I’ve noted elsewhere, however, precisely because Ginko weathered scandals, and weathered attempts by various groupings in SL to buy it out or expose it when deals failed, that people began to have more working day-to-day trust in the terminals. It’s an interesting phenomenon. And I’m not sure it is defeated yet, merely because Benjamin Duranske rolled up and role-played prosecutor, perhaps something he didn’t get enough satisfaction doing in RL?

    I wonder if Nicholas still plays the gold markets on the Internet, or what he plays. I originally I had the impression that indeed he did have plenty of RL investment to cover the toy of Second Life. But he may have gambled for too high stakes in the WSE and AVIX fandagos.

    The problem with all this is truly that Benjamin and others are just tuning in. And while he credits uncredited others for pointing this out much sooner (like the Herald, which has covered it for years — and there are others), he doesn’t seem to want to grapple with the obvious question: three years is an awfully long time for a Ponzi.

    He says, “The thing with schemes like this that makes them so hard to predict is that they actually work for a while, because there is new money to pay off old interest. They sometimes even fool the people running them”.

    Actually work for a while…but 9 months or 18 months perhaps…but 3 years? and surviving scandal after scandal, and surviving even very similar scandals involving very high-stakes bids to control it or buy it out? Shaun Altman had a large deposit in Ginko’s for awhile, for example.

    At what point do you have to say, but it works for such a long time that we can’t accept — quite — that it’s Ponzi. Usually things in SL accelerate far faster and collapse sooner in SL by contrast with RL. So really, my main question about this is why *three years*? And… the story isn’t over yet.

12. on 31 Jul 2007 at 11:49 pm12 Benjamin Duranske
    

    Thanks for your comments, Prokofy.

    I’m not sure I understand your initial question. Prosecutors actually are lawyers. Though I haven’t practiced on that side of the table, the skillset translates from civil to criminal litigation fairly easily, and probably matches up pretty well with investigative journalism too.

    I’ll ignore the rest of the personal swipes; you raise some interesting points.

    A ponzi scheme isn’t terribly difficult to define, and it doesn’t have anything to do with how old an institution is. Basically, a Ponzi scheme is always a Ponzi scheme; it doesn’t lose that status due to the passage of time.

    The term just refers to using new deposits to cover a high interest rate promised to early depositors, rather than paying interest from the proceeds of legitimate investments.

    Early depositors in Ginko were promised a 100% yearly rate of return, later ones rates ranging from 45-70%. We now know that investments Ginko made (in world stocks, web sites owned by Sanchez, “loans to ourselves,” etc.) haven’t performed at that level.

    So the payment of interest for anyone who has withdrawn money from Ginko must have come from later depositors. It’s pretty straightforward. Ginko is a Ponzi scheme because the facts we now know fit that definition and only that definition. Nothing up my sleeves.

    That’s not to say it might not keep chugging along for a while — as I’ve said, Ponzi schemes do, it’s one of their hallmarks. But really, right now, it does look to me like this is the end. And it looks that way in a way that it never has before based on a comprehensive tour I’ve taken starting in February, and concluding in what must be dozens of hours of research over the last week into, I believe, very nearly everything that has been written on this way back to the very beginning.

    I didn’t say that the end was near back in February when I first covered this, you’ll remember, but I am saying it now.

    That’s because there’s significantly more hard evidence of recent financial wrongdoing now, some of it brought to light here, some of it on other sites, and some of it in the form of some extraordinary admissions from Ginko last night, including the fact that they’ve extracted, conservatively, $87,000 in cash from Ginko for themselves (Sanchez said 1-2k per month for him, and 1-2k per month for the staff — though people tend to lowball their own fraud, at an average of $1.5k per month for him, and $1.5k for the staff, they’ve taken $87,000 in just two years and five months).

    In addition, we now *know* where the bottom of the current assets bucket is (it was repeatedly scraped today) and it is a lot closer than even I thought.

    Finally (and this is least relevant, but I’m curious) though a Ponzi scheme could certainly last three years, or ten years for that matter, particularly if a sufficient number of earlier depositors abandoned their deposits, I don’t actually believe Ginko is 3 years old. There are a many reasons for that, chief among them that the domains where Ginko interacts with investors were not created until February, 2005. Also, the earliest evidence of Ginko on the web (that I’ve found) is an old ad that ran on the SLH a couple of months later: http://tinyurl.com/ytjyrp – resolves to SLH. Do you have any evidence, forum posts, old notecards, whatever, that makes you think it’s 3 years old? I haven’t found anything that makes me think it’s that old.

13. on 01 Aug 2007 at 6:20 am13 me2to
    

    What if the entire WSE shakedown recently was somehow connected with the out-lawing of gambling, followed by Ginko’s inabilities to uphold it’s end of the bargain??
    What I am saying is “What if the shake-down was simply a scapegoat, to cover-up some other much more serious troubles, in an attempt to ‘save face’???
    Kind of like ‘wag the dog’(movie)???
    I think that is what it was called.

    Or, what if ‘one person’, or a ‘group of persons’ planned, and then orchestrated an attempt to cause a ‘crash’ in the economics of sl??
    Perhaps we are not getting all the truth about what is really going on? Ever think of that?
    How do you know that Ginko hasn’t been making hundreds of thousands of dollars off of the currency markets in recent times, and not telling anyone about it???
    After all, apparently 1.5 million US per day is being transacted in sl. If Ginko is the biggest and most wide spread banking atm, and currency trader, then what share of the entire market does that mean that Ginko is getting, then???
    And, how convenient that LL out-laws gambling?
    Perhaps, this cues some people to ‘cry poor’, when in fact, they may have been making a hundred times, what they say they have been making?? ever think of that???
    Maybe some people are starting to worry about taxes and accountability???
    Hmmmmm??? Maybe, once getting all this huge amount of monies recently, some people start to think/act somewhat erratically, not really knowing how to legitemize the monies???
    Not wanting to pay taxes??
    What better way to cover up huge gains of monies, than to take advantage of this market crash, and ‘cry poor’???
    But, then again, maybe some people just blew all their cash, and they really are poor?
    I’m not accusing. I am just thinking about this.
    How can people really ever trust an avatar, anyways??

14. on 01 Aug 2007 at 6:42 am14 me2to
    

    Wasn’t there a bit of a melt-down in the US stock markets just prior to all of these troubles? What if some peoples monies suddenly went down in value significantly in real world??
    Rather than take huge losses, some people might chose to rather wait and see if the real world markets might recover???
    Hmmm?? What if some people then get confronted with the out-lawing of gambling in sl, right after the real world down-turn in stock values???
    Perhaps some people then decide to throw wrenches into the exchange of monies they have with people in sl, attempting to slow things down a bit??!!??
    Refusing to take the real world huge losses, and rather putting the burdens onto others, while trying to scapegoat other causes for the problems????
    Reasoning that this is there best way to try and cope??
    Wag the dog. Wag the dog.
    What’s really going on anyways?

    http://en.wikipedia.org/wiki/Wag_the_Dog

15. on 01 Aug 2007 at 6:45 am15 me2to
    

    Maybe the sl company ’300′, might make a movie about this?

16. on 01 Aug 2007 at 3:29 pm16 drtomaso
    

    I highly doubt equity was extracted from Ginko depositors for the purpose of investing in FL US equity markets. The reason I believe this is that equities are much more liquid. It would be very easy for Ginko to call up their broker, and close out a chunk of their positions to free up capital to cover the bank run.

    The worst thing this “bank” has done is not be able to meet the demands for equity withdrawl. Its basically allowed the covers to be pulled off, and the actions that we see- small deposits quickly withdrawn by eager-to-cash-out defrauded depositors- are a text-book definition of a ponzi scheme. Whether it has always been one or not is never going to be known. It is one now.

    To recap: what ever the “investments” are that Ginko made, they are not liquid, as stock investments on the NYSE or Nasdaq would be. It would be too easy to cash out something to cover the withdrawls, and keep the game going. As its currently being played out now, no one will ever trust Ginko with their L$ again. Ginko is officially dead as a “company”.

17. on 02 Aug 2007 at 12:38 am17 me2to
    

    I know what nic needs to do. if he hasn’t already done so?RECEIVE JESUS AS YOUR LORD AND SAVIOR.
    G FOR GOD, NIC.
    G FOR GLORY.
    G FOR GRACE.

18. on 02 Aug 2007 at 2:09 am18 weeeeee
    

    I wonder if i caused this 30m after the ban, I cashed out 3m via paypal through ginko….

    Paid in minutes….

19. on 04 Aug 2007 at 7:59 pm19 micheal steadham
    

    Well obviously he hasn’t been hurt by the dealings of his own institution. If you look at the profile for GF Ambassator (the avatar that pays out dividends, accepts deposits, etc) in game, it states under Interests that he wants to rule the world.

    Obviously he’s trying by getting everyone’s money. He has absolutely no concern about solving the problem as he doesn’t see it as a problem, just an inconvienance to his gathering even more wealth ingame and when he converts our Lindens to RL USD.

    IF I ever get what’s owed to me, I’ll never use an in game bank, I’ll start an avatar to store my own money.

    Take note people, there is no recourse in game if and when these institutions take your money and run.

20. on 04 Aug 2007 at 8:00 pm20 Amunet Zander
    

    That interview was very telling I would say. Not one question directly answered, which from everything I have read on the Ginko forums is par for the course.
    Yes it was a risk to invest. We all know that. What most have been asking for is a direct answer to very simple questions and are getting the run around. Or flamed in the ginko forums…Not a way for anyone to run a sucessfull buisness of any kind.
    If Ginko holds on through this I suggest they HIRE a Public Relations person. One who can speak with out flamming and answer a direct question.

21. on 06 Aug 2007 at 12:32 am21 Some Dude
    

    Thats crap that the market was crashed. A shareholder sold his shares and Nicolas bought them for what he believed to be fair value. No one twisted and arms. It was a legitimate trade. This price has gone down since then , so i would call that a good trade, not crashing the market. nicholas just thinks its crashing cause he took a beating and has a hole the size of china in his ledger

    Seems like this could be the straw that broke the camels back

    if all the funds are withdrawn from ginko he will have no choice but to sell his shares at whatever the market can bear

    lets hope some money gets back into the market otherwise there may not be any cashed up buyers to take the other side

    if this happens you can be guaranteed to see black friday in HCL stocks

    based on the rate of growth of withdrawals in Ginko that shouldnt be long until everyone realises this, or have they already maybe????!?!?

22. on 09 Aug 2007 at 12:14 am22 Play Money, Real Fraud | Broken Toys

    [...] Linden Lab’s traditional response to all of this is that they don’t regulate anything, and no one should treat these “banks” and “stock exchanges” as anything other than mini-games, on the order of your office’s fantasy baseball pool. Well, assuming the guy who took your money lived in Sao Paulo, Brazil. Philip Rosedale, Linden’s CEO, was actually asked about this in a recent online chat: [14:19] Jay S.: lol, is there any new policy concerning the Ginko scandle, Ie it looks more like a ponzi scam [14:19] Philip Linden: jay we haven’t created any policy thusfar on bank, etc. [14:19] Philip Linden: we try very hard not to make rules we do not need to. [14:20] Philip Linden: We haven’t made any about banks [14:20] Jay S.: ok [14:20] Philip Linden: I would note that there is a lot of transparency around projects like Ginko [14:20] Philip Linden: moreso that in the real world [...]

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