Introduction
Governments the world over closely regulate the venture capital industry. That is because there is a dark side to capital raising. The venture capital industry, with its emphasis on financial deal making and the availability of persons often desperate to raise capital, is like a magnet for crooks, cheats, scammers and swindlers. In similar fashion, scammers are hard at work in the international dating & romance sites, extracting cash from trusting and unsuspecting victims.
To illustrate this point in stark terms, on the 15th May 2017, the Australian Competition & Consumer Commission reported through its Scamwatch report (https://www.scamwatch.gov.au) that in 2016, Australians had lost $299.8 million to scams of one sort or another. That is a very significant amount.
Problem
These crooks, cheats, scammers and swindlers are the reviled cockroaches and rats of the venture capital industry and like their namesakes, they must be eliminated. Team Diligiser has always placed high importance on protecting the general public from these crooks, cheats, scammers and swindlers. To that end, we have done our bit over the years to report a number of these crooks, cheats, scammers and swindlers to police and government regulatory authorities as we uncover them, but they are very difficult to apprehend.
One of the most significant reasons for the difficulty in uncovering and apprehending these crooks, cheats, scammers and swindlers is that there is no centralised, easy to use platform available for use as a comprehensive due diligence tool to check the veracity of persons or companies who purport, hand on heart, to be bone fide proponents of pillar white truthfulness and honesty.
Solution
The solution is to develop a platform designed to provide members of the public with a simple to use due diligence tool to check persons and companies with whom they come into contact with for a transaction that involves the transfer of money for securities or loans or other purposes.
This tool must also include a reporting process to notify relevant authorities of the details of the scam & scammer. Depending upon the nature of the scam, the relevant authority could be ASIC, the ACCC, a State Department of Fair Trading, the AFP or a State Police Service.
Team
Our team of Logan Senjov & Graham Segal have complementary skills & experience that have proved useful in identifying ways and means of resolving the issues involved in creating a simple to use platform for checking the veracity of persons or companies offering deals to good to be true or other deals that are suspect in one way or another.
Where we started
In approaching this matter, we started from the concept that Graham has practical experience in dealing with these crooks, cheats, scammers and swindlers. That experience was backed up through reference to various public reports from the Australian regulatory authorities that have a direct interest in financial transactions that in general, will involve the transfer of cash and/or securities:
- Australian Securities and Investments Commission (ASIC)
- Australian Prudential Regulation Authority (APRA)
- Foreign Investments Review Board (FIRB)
- Australian Transaction Reports and Analysis Centre (AUSTRAC)
- Australian Competition & Consumer Commission (ACCC)
- Australian Federal Police (AFP – ACORN)
- Queensland Police Service (QPS)
- State & Federal Departments of Fair Trading
As the crooks, cheats, scammers and swindlers operate almost with impunity across international borders, we have included references to the overseas securities industry regulatory authorities, which will be included in this platform in due course. The list of relevant financial regulatory authorities by country is set out at:
https://en.wikipedia.org/wiki/List_of_financial_regulatory_authorities_by_country
Importantly, there are many websites established by private individuals, non-profit organisations and companies where the details of the crooks, cheats, scammers and swindlers and their nefarious exploits can posted for public examination and education. A list of 40 such websites have been identified and will also be included in the due diligence platform in due course. An example of a private sector due diligence site is http://www.quatloos.com/Q-Forum/viewforum.php?f=33. A reference to this site is included in the due diligence check tool for illustrative purposes.
Logan is a professional coder/programmer who has taken the concepts involved to resolve the practical issues involved in creating a simple to use platform for checking the veracity of persons or companies as may be required from time to time. This is explained in more detail in the next section.
What we did
In approaching this matter, Team Diligiser started from the concept that Graham has practical experience in dealing with these scammers, experience backed up through reference to various public reports from the Australian regulatory authorities that have a direct interest in financial transactions that in general, involve the transfer of cash and/or securities:
Scammers don’t respect international borders, so we have laid a basis to later include access to overseas securities industry regulatory authorities.
Importantly, there are many private sector sites where the details of scammers are posted for public examination. A list of 40 such websites have been identified. A reference to one such site is included in the due diligence check tool for illustrative purposes.
Team Member Logan has created the due diligence check tool based upon an automated access to ASIC data, ‘whois’ information (https://www.whois.com/whois/) and citizen reporting sites. Where a suspected scammer is identified, the tool will direct users to various authorities such as ASIC, the ACCC and the nearest AFP or State police station.
What we have
As the outcome of this hack, we have the framework for an easy to access due diligence check tool that is available to citizens to check the veracity of persons or companies who purport to offer financial deals of one sort or another. At present the tool is primarily limited to Australian Government data, although components of State & Territory responsibilities are referred to, this being the result of a time limitation arising from the 46 hour constraint imposed by the terms of GovHack 2017. To conclude the framework for the due diligence check tool, a simple reporting process in incorporated for citizens to report suspect transactions to relevant authorities, whether the Australian Federal Police, the Australian Securities & Investments Commission or other agency. In devising the reporting process, Team Diligiser is cognisant of the sensitivity involved with some transactions, where the reporting citizen may be embarrassed or feel humiliated at the events that have prompted the report. Consequently, it will be important that a high degree of confidentiality be built into the system.
Next steps
The next steps in the evolution of this due diligence tool is to incorporate access to the securities industry regulators worldwide as well as the private sector sites committed to providing public access to known crooks, cheats, scammers and swindlers.
At this point, we envisage that the due diligence tool will be produced in two versions, one version being more sophisticated in its approach to the due diligence check. This version will be available for sale to persons who undertake regular and constant due diligence checks, such as professional investors, executives of venture capital firms, executives of private equity firms, executives of hedge funds, executives of lending organisations and consultants who work in the venture capital sector.
Close
We have developed this due diligence check tool as a public service to the Australian community. In time, it will be developed as a due diligence check tool available for use by persons globally. We understand the heartbreak, the hurt & the humiliation suffered by individuals when they are scammed and trust that this contribution to the elimination of the crooks, cheats, scammers and swindlers will be of great community benefit, both emotionally and financially.
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