Why ePassporte wont pay out [Detailed]
 

Each and every person in the US should file a criminal complaint against the US citizen operator of ePassporte, Chris Mallick.

I have already explained why I believe that ePassporte will not pay out in other threads but here it is again:

For ePassporte to be in a position to pay out every account, at the time of closing the doors ePassporte would have needed over 100% of wallet funds in cash or security. This is extremely unlikely.

Most financial services institutions like banks and p2p processors like Paypal only hold a percentage of liabilities in security. This is why they have things like FDIC insurance in the USA and one of the reasons they need an Australing Financial Services license in Australia.

Let's take Paypal as an example. If every single Paypal customer made a full withdrawal of every cent held in their Paypal account then Paypal would run out of money before everyone could be paid. This is because they run models of the transactional nature of the business and this model takes into account that at any particular point in time a certain percentage of account holder funds will remain in the system.

In banking terms this is called fractional reserve banking.

HOWEVER ePassporte was not governed by any regulatory regime which required it to be insured for all account holders funds and thus likely did not have the generally accepted levels of security for banking institutions or regulated and insured organizations like Paypal.

Not being governed by a regulatory regime means that ePassporte was free to carry as much account holder liability mismatch as it wanted to. This liability mismatch funded movies being made, private jets, expensive cars, the expensive lifestyles of executives and so forth.

While ePassporte was running along without any hitch, even with a low fractional reserve liability mismatch they could honour recurrent liability of the normal flow of money within it's system. As soon as Visa pulled it's relationship, the stack of cards fell in one instant and has caused a run on ePassporte funds, firstly those held in Virtual Visa Cards and Secondly those in wallets.

Unless ePassporte ran the system with no fractional reserve liability (which is not possible for such an operation) then there is less than 100% of account holders funds held by ePassporte. I would be surprised if they held anything over 20% - 30% as the lavish lifestyle of Chris Mallick had to be supported by something and as we all know his other buisiness ventures, especially film making, were flops or underperforming at best.

What is likely to be happening now is this.

Closing down an operation like ePassporte takes time. Firstly staff were let go and many would have been paid a severance or termination. Then lawyers and accountants would have been called in to try to make sense of the mess, also costing a considerable amount.

Following up this ePassporte had to make some sort of public statement so has done so and has been following this up over several weeks with additional statements of re-assurance but no real action. In the mean time secured creditors are likely being paid out quietly. Chris Mallick wants to come out of this without impediment to movement around the world so he wants to be sure that no funds are left owing to secured creditors.

This will leave a small percentage of representative wallet funds remaining. I imagine invested monies are now being called in. The most likely scenario is that when all secured creditors are paid out somewhere between 0% - 15% of wallet funds will remain.

The most likely tactic that will follow is that ePassporte will pay out the most vocal critics or if they aren't that clever they will make enough disbursements that confusion will be created. Some people will say they got paid, others wont. This will buy just enough time before the liquidation statutes of the jurisdiction in which ePassporte operates will allow final distributions of funds - this will go to shareholders and into Chris Mallicks pockets.

Very few people will see the money returned because it is just not there, it's gone.


People owed considerable monies by ePassporte should file class action lawsuits NOW before the process is allowed to complete. This should also be backed up by criminal complaints - insist that your complaint is taken.

If you keep buying the delaying tactics and waiting it out then you are playing into Chris Mallick's hand and as unsecured creditors of ePassporte you will be left swinging in the wind.

Obviously if they spent more than their profit they can't payout. However, there is no reason they would need to do this and it is in fact rather fucking retarded to do so.

That is all.

Of course they would have, no unregulated financial services business is going to sit on 100% of the money it holds for account holders when regulated and insured financial services business don't.

ePassporte would have had funding for recurrent liability plus a buffer for the fractional reserve margins dictated by their own modeling of the transactional nature of the business.

Additional funds would have been used for investments (some will pay, some will fail), risk loss adjustments if fraud levels spiked, recurrent funding of additional liabilities to lien holders and suppliers etc.

Even Paypal would not survive a run on funds and it's insured and regulated in many countries - ePassporte was not subject to any financial services regulation of any note, it could do what it wanted basically and probably did.

You keep talking this shit but it is just that, shit. I'm not saying they didn't blow a bunch of money but it is not necessary and would be retarded.

As far as investments, it makes no sense to invest in retarded shit. They could make a fortune on safe, lower interest investments. I seriously doubt a run on Paypal would close them down, I really don't think you understand just how much fucking money they make in profit above and beyond what they hold for others.

Again, epassporte could have very well been dirty and it appears they were. It's just a retarded way to operate when you already have profit built into your fees.

A run on ANY financial institution would cause a crisis in any country, Paypal included.

Do you think that the investment in the movie Chris Mallick made didn't come from ePassporte ? That's what I call a failed investment.

Simple economic theory dictates that any financial service such as a bank, Paypal or ePassporte runs on a fractional reserve system. It would not be possible to operate otherwise. A regulated system carries a balance of risk , liability and security. ePassporte was unregulated in this regard. Why would you hold ePassporte out to operate at a higher standard when it was not subject to insurance on deposits and regulation ? It doesn't make sense.

It's not even in USA only. The Epassporte accounts were given to many other countries such as Canada. How unfortunate.

Correct. Looking at Chokers list of victims almost every developed country has affected people and some under developed countries too.

However, the operator of ePassporte is a US citizen and may be subject to a higher criminal legal standard in the US than in any other country. However this remains to be seen.

Chris Mallick most likely has very effective legal structures in place to distance himself personally from the mess - however this should not stop people making criminal complaints where they can.

sadly enough, you hit the nail right on the head. however, a LOT of people have no clue how banks operate, and I only know this because I had a friend in the banking industry who explained it to me one night.

and with epass being incorporated in another country, I bought they have as strict guidelines and rules as the US does, which only means there is even less $$ to go around

I know how banks work, that is not the issue. Banks are setup specifically to operate on the fractional reserve system. They have, you know, things in place to make them a little safer with that and deposits from any non retards are 100% guaranteed.

I'm not going to act like I'm an expert on the banking laws, especially in whatever country Epassporte was setup in but I know that I have checked on stuff like this before and everything I read on it said that if you hold customers money YOU HAVE TO KEEP IT IN FULL, IN A SEPARATE ACCOUNT. You cannot borrow it, steal it, pay employees with it, etc.

So, like I said. Epassporte could be 100% dirty but it's fucking retarded and not how any middle man dealing with money should operate. The OP acts like the only way to pay employees is by stealing the cash and running a ponzi. This is 100% false.

AdultKing, you clearly have some understanding of banking and the fractional reserve system and I agree with you 100%. What I would say to anyone planning a class action lawsuits against Epassporte in the US is make sure you have a clean history of paying your taxes on your Epassporte income.

As sad as it is sticking your neck out in court and showing undeclared funds may just come back to bite you :2 cents:

Just go to Chris Mallick's home and ask for your money.



http://www.chris-mallick-fraud.com/nice_day.jpg

I was with you until I started to question the eWallet feature.

"Payments leaving the business are typically transferred internally to a pseudo bank account located in the company?s home bank(curacao?). The eWallet funding account is a pooled account of all payments made to all of the payees. Funds in the eWallet funding account are still under the of the company until they are moved by the eWallet accountholder. Global Payout eWallet August 2009"

http://www.slideshare.net/leonardgib...wallet-2728247

At what point did we give permission to send our money outside the stability of the Visa Intl. system? At the point that epass told us our cards were in danger and we needed to move it into the "wallet" for safety.

Our company has managed to get all funds from epassporte by manual withdrawls. A pain yes but end of day in our hands in the bank. I would be concerned with such a huge influx of wires - they cost $24.95+ each. I hope everyone is settled.

That makes sense

This is what all of these services do, they pool the funds into one bank account that draws interest for them. In the USA I am almost 100% positive that they are required to keep the funds intact 100% to be legal. Considering how epassporte is setup I have no idea if it is true for them. My argument was with the statement that "omg, they have to steal your money to stay in business!" That is b/s and it would make the whole thing a ponzi scheme which is explicitly illegal.

I think you are missing some of my points. I am not claiming that ePassporte was set up as a Ponzi scheme, that is an entirely different thing all together.

My theory is based on the premise of regulated financial institutions such as banks or Paypal.

Let's take Paypal as an example. Paypal is covered by FDIC Pass Through insurance, which is different from that provided to banks. Specifically:

From FDIC public disclosures available from Paypal:

Paypal is a "middle man" as you put it, it stores fractional reserves of account holder US Dollar balances in various banks, at the moment these include:

(Source Paypal web site - disclosure statements)

Given a full run on Paypal there would be a crisis and Paypal would have to call in any investments have been made with depositors funds. However as Paypal only hold pass through insurance there is no implicit guarantee that funds could be paid to all account holders. This would depend entirely on Paypal maintaining more in cash and security than was held in accounts (given that there would be a financial cost of managing such an event and reclaiming invested funds).

ePassporte was NOT subject to insurance of account holders funds nor the structural regulation that would be required to hold such insurance. So there is no point in anyone claiming that ePassporte could be held to a higher standard than a regulated financial institution as history shows that where corporations are not bound by regulation then risk taking behavior is more likely.

Link to it. Also, Paypal could be run under banking laws. I am way too lazy to go look but if so they are doing something within the law by being setup correctly.

You use this idea that an 'unregulated' epassporte must be doing the same thing. Being unregulated (in USA) is what makes it to where you CAN'T use fractional reserve. You must keep your customers money at all times.

I'm working, so I'm not going to dig through legalese to figure out the exact rules. Here is an example however.

Unlike fractional-reserve banking, DGCs hold 100% of clients' funds in reserve as gold, silver, and/or platinum, which can be exchanged via digital certificates. Proponents of DGC systems say that deposits are protected against inflation, devaluation and other economic risks inherent in fiat currencies. These risks include the monetary policy of countries or territories, which are said by proponents to be harmful to the value of paper currency.

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

And why was this guy Larry Chavana pretending to help me before he just fucking disappeared?

http://oi52.tinypic.com/1077yxg.jpg

And what the fuck is that look on his face?

Would you knowingly trust him with tens of thousands of your dollars?

Anybody should watch "Money As Debt" on Youtube.

It's very well done and explains how the money works.
And guess what? 99% of the people have no idea.

Is this more fractional reserve b/s? There is nothing wrong with fractional reserve in the BANKING system. There are regulations and backups put in place to keep things operating and it puts more 'money' into the system. This is not OMG bad like a lot of nutjob sites suggest.

https://www.paypal.com/us/cgi-bin/we...l/FDIC-outside

Specifically:

As for the reference to DGC (Digital Gold Currencies) they are completely different and there is no relationship between p2p companies and DGC's.

Paypal is not a DGC and neither was ePassporte.

Sorry to burst your bubble, but the US doesn't have strict rules in anything, banks, cars, food or any other product. The quality standard accepted in the US is way lower than in most developed countries. There are even companies producing different(lower) quality product for the US market and higher quality product for other markets.

Dude, you have to opt into the Paypal money market. I do not and have never used the thing, they make it perfectly clear that you can lose your damn money and everyone should know this anyhow.

You are right that Paypal isn't a fucking gold trading program, that has nothing to do with whether or not they are allowed to use fractional reserve banking. I would bet $5 that they are not allowed to do this and if they are it's because they are REGISTERED as some kind of financial institution that is well regulated, has some extra security and is specifically allowed to do so.

The fact that the gold companies don't use fractional reserve should make you consider that maybe they aren't fucking allowed to.

I'm not saying 100% that a business can't operate this way, it just seems highly unlikely that it would be legal (USA) and most of the developed world. I researched this long ago when I wanted to start something similar to epassporte for a completely different industry. Everything you've claimed so far has come right out of your ass.

Tell you what, prove to me that a private business in the USA can legally use fractional reserve banking and I will shut up.

Link provided in above post.

You are missing an important fact here. Paypal is NOT required by law to keep 100% of account holders funds in a seperate account, in fact it does not. It operates a risk model completely unique to any bank and maintains US dollar balances with several major banks and through this model also operates a monetary fund which is loosely based on a fractional reserve model however with various unique attributes given the nature of the Paypal business.

Non US Dollar balances are held almost entirely within Paypal operated monetary funds through various instruments of investment and they disclose quite clearly in their mandatory public disclosure statements that these funds are not guaranteed.

ePassporte was not subject to any of the regulation imposed on Paypal and thus is less likely to have managed funds on a pure 100% reserve model as even the regulated Paypal is not required to do so.

Every time you hold a non US dollar balance you opt into the Paypal Money Market by default. You also opt in to it when you undertake certain types of transactions with Paypal.

Read the disclosure statements, it's all disclosed. FDIC rules to Pass Through Insurance also apply.

Continue your crusade, it is obvious you don't have the capacity to understand what I'm saying.

I don't need to prove it, it's law, specifically the USA set of laws called Investment Company Act of 1940. This law applies to Paypal and as such would have applied to ePassporte if it was in the United States of America, however ePassporte chose another, less regulation centric jurisdiction to operate.

just got my epass payment today.

http://www.gfy.com/fucking-around-and-business-discussion/993371-epass-wallet-visa-credit-card-withdraw.html

:1orglaugh :1orglaugh

Paxum is interesting in it's terms and conditions.

I wonder if a Paxum rep can confirm one way or the other whether Paxum maintains 100% of account holders funds in accounts seperate from those for the operation of Paxum ?

Ok the problem is that now some people recived money...but after 7 Novermber ? What will happen they will continue processing payment till the end...or they stop and close the website and they will disappear ?

Probably they are paying someone to give us the hope that they will pay all of us but their plan is an other...

How many money they wired till now ? Are they wiring only small wallets ?

I think the people thus far receiving money are doing so out of their Virtual Visa accounts, which is a slightly different process than wire withdrawals of wallet amounts.

In any case i don't understand why disable visibility of balance inside wallet....

Till 18th they updated the website without removing the visibility of the balance...

I don't know how work their system but in my opinion there is a function like in worpdress templates:

<?php display_current_user_balance(); ?>


that display the balace of the logged IN user...so why not mantain this variable available online ?

Additionally how many days they need to make a FORM ? I don't know all of you ... but i think that is very easy operation to do....any programmer can complete this task in 1 hour

I don't belive Mallick or other of few people that now are trying to play with HTML and Perl to built the new UPLOAD DOCUMENT form...

The entire banking system is a government-sanctioned ponzischeme. The government makes the taxpayer pick up the tab when things go wrong (bailout anyone?).

The difference with epassporte is that epassporte didn't have any kind of government backing. The question here is: why did mallick decide to close down epassporte (and in such a disorderly manner)? Insufficient funds is the only reason I can think of.

For anyone who wants some background on Money Services Businesses in the USA and the regulations pertaining to them, this website has alot of information.

http://www.fincen.gov/financial_inst...msb/index.html

Unfortunately I cannot find whether or not ePassporte was a registered Money Services Business in the USA.

Yes there is. It's essentially fraud.

I didn't intend to start a debate on the pros or cons of fractional reserve banking, all I was doing was providing a thorough explanation of why ePassporte will not be in a position to pay out all accounts.

Looking through archived ePassporte terms and conditions and disclosures I can find no references or any statement that indicates they maintain or guarantee 100% of funds. Given they were not subject to any significant financial regulation and in the absence of evidence to the contrary it is probable that they employed such a risk model.

I don't know what you heard or think but the US has their hands in just about everything. We're so fucking policed its not even funny. Maybe some stuff in other countries is higher quality but overall I doubt any country has more regs then we do.

http://www.regulations.gov

they spent all our monies in motion actions :D :p

Unfortunately ePassporte being a foreign company escapes alot of regulation of financial services companies in the USA. Even then my limited reading of the Money Services Business regulations over the past few days leads me to believe that even if ePassporte was required to be registered, there is little enforcement power available to regulators.

I really do want a Paxum rep to state definitively how much of account holders funds will be actually held in accounts by Paxum and what measures are in place to protect account holders funds if Paxum loses relationships with card companies. How is Paxum in a different position to ePassporte when it comes to account holders funds ?

That's quite bold, though popular assumption that epass funds was used for making of that movie, without any proof it's still only wild speculation, and even if true, it doesn't sound very legal move either.

Also epass is not a bank and doesn't NEED to operate under similar model, IF they get enough profits from other ways than interests. There are many much smaller ewallet systems and I'm sure they don't ALL run on fractional reserve system. Paypal might do so but they also actually operate as a Luxembourg-based bank in europe because of some laws involved.

Here's what Moneybookers, another big ewallet system says, should apply to other FSA regulated ewallets too:

You are right, but what I don't see mentioned here is that it appears that wallet funds were kept in a bank setup specifically for ePassporte and controlled by Chris Mallick. The bank holding ePassporte's account(s) and money could make loans based on those deposits.

report Mallick to the FBI

As ePassporte is a privately held company we will never know precisely who it made loans to however if you look across the board at Mallick's business portfolio, what is publicly known is that ePassporte is the only possible source of those funds outside of external investment. Yes, it is possible Mallick had a spare 20 million bucks in his back pocket independent of ePassporte but very unlikely.

Public disclosures by Paypal demonstrate that it does not retain 100% of account holders funds in guaranteed deposits and that some such holdings "may lose value".

Actually Moneybookers is a different system all together and subject to different regulations because of it falling under the regulatory regimes of the United Kingdom and it's structure forbids it to 'speculate on monies received by it on behalf of individuals or corporations' which is designated to be transferred. However the legislation covering speculative investment of Moneybookers funds only applies to money which originates and has a destination within the greater European economic zones. They can do what they like with money received outside of that.

Interesting that item (e) states they are registered in Belize and is directly contradicted by one of their reps in a post on the boards.

So they want you to feel comfortable by claiming they are in a highly regulated country while they actually run under Belize laws. VERY interesting. :Oh crap

I don't know if it's a contradiction or not, however the off shore notion is so similar to ePassporte isn't it ? Anyone with half a brain knows Belize is synonymous with almost zero regulation of financial services and offshore schemes harboring funds from tax schemes and so forth.

Yes Moneybookers runs under different regulations, but it's an ewallet too, and that proves that it is possible to run epass kind of service without using fractional reserve system or gambling with customer's money. (Although ironically they are used mostly in gambling/poker sites, but that is user's own decicion, not ewallet's.)

I don't really know from where did Mallick got money for movie producing, but he's been around for long time, epassporte alone for 7 years. And still he has already several other movies in production. But I agree that the silence and stalling doesn't look good and it's time to take some action very soon.

Moneybookers actually can do what it likes with money not originating or destined for the UK or the greater European economic zone. It is unknown whether it runs a fractional risk system for the remainder of funds. Moneybookers transacts a huge amount of Asian funds, it's highly represented as a payment method for Asian online casinos etc.

The FSA only protects funds originating or destined for UK / Europe.

Doesn't Payoneer use the same bank in Belize for their International debit cards?

Payoneer says on their website:

Choice Bank Limited says on their website

So yes you are correct.