In my last post I concluded that Universal Currency is broken. It’s management is ineffective and corrupt with nepotism, deception and illegal conduct, totally contrary to the By-Laws under which it operates. I continue my commentary here highlighting specific figures taken directly from data visible to IRTA Members, that prove without a shadow of doubt, that Universal Currency has been deliberately mis-managed for personal and political gain. Heads MUST surely roll . . .
1. System Imbalance – Fraud
As at yesterday, the raw Trade Account Balance figures are:
Members: 120 (with 22 inactive in the last 12 months)
Total Trade Deficit: -$1,309,828.87
Total Trade Credit: $1,509,539.97
System Imbalance [missing/hidden accounts]: -$199,711.10
This is an indicator of fraud (i.e. deliberate deception), right here. A Mutual Credit system must balance. This is the FIRST thing any investigator or forensic accountant will check. UC balanced in mid April 2014 so the fraud has occurred sometime between mid April (when I had access to the system) and yesterday when I got these figures.
The UC By-Law (4) states:
The UC shall operate as a zero (0) balance accounting system.
UC doesn’t. This is fraud.
It should be noted that a system deficit of $200k does not necessarily mean that there is a $200k fraud . . . it could be much higher, or it could be lower. The NET RESULT of hiding accounts [taking them off-balance] however, is what is visible to Members – a missing $199,711.10.
2. Administrator Deficit Spending
IRTA has three House accounts in deficit, totalling $207,001.57.
This is prohibted under law. The By-Laws state:
4. The UC shall maintain a General Operating Account and a Debt Reserve Account within the UC system. However, the UC General Operating Account shall not have a credit line and must operate from a positive position at all times
6b. If the Administrator participates as a member of the UC, it shall not be entitled to a credit line.
Deficit spending by the Administrator (IRTA) is against the By-Laws and is fraud, period.
3. IRTA Board Gaming of the System
The IRTA Board has obtained credit for their own (or associated companies) benefit.
There are eleven Board members that I can identify with UC accounts under companies or entities. Three of them are in credit but eight of them have deficits in UC, representing 26% of the entire UC trade debt liability.
This is an extraordinary situation that shows quite clearly how the IRTA Board have benefitted from their positions of power. One Board Member even has a $30k debt and has not even sold/repaid one cent in the last year!
All Members are required to reduce their account deficit to zero at least once a year.
10. Member with an approved credit line must achieve a positive balance in his or her account at least once during any twelve (12) month period, or their 12-month cumulative sales must exceed the credit line.
This has not happened – for 44 Members in the last year. This includes five Board Members’ accounts affecting a total of $200,242.00 trade debt.
Here are the statistics (visible to all IRTA Members) of entities related to Board Members. I’ve removed the names for obvious reasons A1 & A2 is the same Board Member. There is at least a third account for this Board Member but it’s missing from the figures:
|Board Member||Period Purchases||Net movement||Last Sale||Period Sales||Trade Credit Limit||Over Credit Limit||Trade Balance|
Of the eleven Board Members I can identify, eight are in debt [ I have identified another one since completing the above chart]. There may be others that I’ve missed and there may be multiple accounts off-balance. I’m only working with the raw data available to UC Members*.
Three Board Members are over their overdraft (by $1,696.97, $2,879.67 and $15,488.97) totalling $20,065.61 over their credit limits.
The total trade deficits of the Board is: $425,149.19.
One Board Member has a deficit of $30,488.97, is $15,488.97 over his credit limit and has not made any sales since three days before 9-11 happened!
Two Board members entities have produced a net contribution to the currency in the last year, totalling 12,579.85 ($3,945.00 and $8,634.85).
The others took advantage of it by $72,986.48 (-36,212.95, -9,260.60, -9,025.41, -5,173.40, -3,940.78, -3,511.00, -2,735.29, -1,716.97, -1,410.08)
Bartercard, the company that has signed the secret deal with IRTA for exclusive endorsement, has multiple accounts and has the largest debt in the system at some $200,000.00. There is a missing account that I know of (probably more if you’d ask me to guess) and in the context of their shonky deal, the nepotism that exists between the IRTA Executive that I revealed in my last posts and the irregularites I am posting here, this is TOTAL CORRUPTION. The missing account I think had the word “Programme” in it. I don’t know what it was but it certainly isn’t in the figures available to Members now. Auditors should analyse this closely looking at the reason it/they were hidden – when and why and by whom.
I know that others associated with the Executive (and the Executive themselves have UC accounts. Where are they and why are they hidden?
4. Issuing Credit Illegally
I have questions relating to the process, relating to the issuing of creditlines in the last few years. The rules are:
10. CREDIT LINES
Member grants to the UC Committee the right and power to issue trade dollar credit lines to any member on terms and conditions consistent with the then current UC credit policies and members. credit worthiness and ability to repay.
The exercise of the power shall be at the sole discretion of the UC Committee with regard to interest, terms, conditions and other particulars. Member requesting a credit line shall submit an application for credit and shall be required to sign and guarantee both corporately and personally for the credit line, unless the UC Committee approves collateral in an amount of cash (or its equivalent) equal to a minimum of 50% of the trade dollar amount of the credit line.
Member hereby authorizes the UC or its authorized agents to make whatever credit investigation is deemed appropriate to assess Member.s credit worthiness.
The UC Committee shall determine the actual amount of a member.s credit line according to the credit policies established by the UC Committee in addition to those enumerated in this paragraph. In no case shall the credit line be more than the amount requested by the member.
Member with an approved credit line must achieve a positive balance in his or her account at least once during any twelve (12) month period, or their 12-month cumulative sales must exceed the credit line.
The UC Committee reserves the right, in its sole discretion, to reduce the amount of any member.s credit line at any time. The UC Committee shall determine the total available amount of credit in the UC.
5e. The UC Committee shall make all policy and credit decisions of the UC. Actions require a 2/3 vote of the UC Committee.
Delinquent Accounts are dealt with under these rules:
UC Credit Maintenance and Delinquent Account Parameters
Members In Good Standing (Current on IRTA Dues/Current on UC Fees):
Must have a credit card on file for every member or no line of credit will be granted.
In addition to using the existing UC Credit Matrix to determine credit worthiness:
There shall be a 90-day waiting period before granting any line of credit request greater than 2000 trade dollars. During the 90 days, the member must show reasonable sales performance (to represent quality of goods, delivery, etc.) to be considered for requested line.
A nominal line of credit (2000 Trade Dollars) may be given at application at the sole discretion of the UC BOG or its assignee if needed to pay IRTA dues and UC fees. An active credit card must be given in order to receive this initial line of credit.
Non-Renewing IRTA Members/UC Members who are not in good standing (Not current on UC Fees, Members who are over their line of credit)
Positive UC Balances:
Members not in good standing (examples include, but are not limited to, not paying IRTA dues and or not paying UC fees, etc.) are placed on Admin Hold/Frozen and member may receive a cancellation warning. UC fees immediately increase to
$ 150 cash/ 150 UC per month and transaction fees increase to 1% (cash on purchases/trade on sales). Member must pay all fees in advance to spend down their account. IRTA/UC will consider the entire balance forfeited if payment is not made within 90 days.
Negative UC Balances:
Members not in good standing (examples include, but are not limited to, not paying IRTA dues and or not paying UC fees, etc.) are placed on Administrative Ho ld/Frozen and member may receive a cancellation warning. Fees on the account immediately increase to $ 150 cash/ 150 UC per month and transaction fees increase to 1% (cash on purchases/trade on sales). If UC balance and outstanding dues and/or fees are not settled, the UC Committee may proceed immediately to
cash collection of the account. An account with a negative balance must cooperate with offerings and have an active credit card on file to be in good standing.
Accounts Exceeding Credit Allowance:
Members who exceed their line of credit by way of trade reversal, line of credit decrease or otherwise are placed on Administrative Hold. Member shall have 90 days from the date their account becomes overdrawn without penalty to obtain a balance within their credit parameters. Accounts that remain overdrawn after 90 days shall pay a penalty of .5% interest in cash on the overage amount (example: Line of Credit is $5000, after 90 days of overdrawn credit notice Balance is $5500. Penalty is .5% cash on $500) until sufficient sales are made and members’ account is back within their credit line.
I do not believe that these rules have been followed, probably not even consulted!
5. High Levels of Toxic & Aged Debt
Debt recovery is clearly not occuring. I don’t have access to the system so can’t check them all but according to the system itself there are 37 delinquent accounts totalling $150,627.90 and in one member’s case their [substantial] debt has remained uncollected and incurring interest for many years. I would predict that there are many more in the figures that are bad debts too, but not recorded as such.
The Debt Recovery situation is chronic. UC’s aged debt is extraordinary. Thirty Members have a total of $185,298.00 in debt with NO SALES EVER! You can see the figures in the screenshot here, with over a million dollars in Aged Debt.
If this Aged Debt is bad debt then UC is actually bankrupt!
This graphic shows only the last year (2013) with a debt to Universal Currency of almost $200,000 in December 2013 when they had an Ethics complaint before IRTA being kicked into touch and the secret deal with IRTA being prepared.
Click the images for a higher resolution (easily readable) image.
There are a lot more troubles in there too.
On the system health check report the following figures show a scary story:
There are 46 Members in debt with no sales for 3 months totalling -$378,096.00
There are 40 Members in debt with no sales for 6 months totalling -$330,081.00
There are 33 Members in debt with no sales for 12 months totalling -$306,172.00
There are 30 Members in debt with no sales ever totalling -$185,298.00
That is NOT the sign of a healthy economy.
I’ve just scratched the surface with only a few hours analysis. What will the auditors find?
6. Abuse of Systems
The system overview figures also state a concerning statistic, in that there are nine frozen accounts over their credit limit.
How can someone go over their credit limit without someone breaking the rules somewhere? Who? Why? When?
This is extraordinary conduct for an Association that should be representing its members best interests!
The whole purpose of the Universal Currency is stated at the outset of the rules:
1. PURPOSE OF THE UC
The Universal Currency shall exist to serve the members of the barter industry, as a medium of exchange and accounting between reciprocal trading partners. The UC shall strive to promote trading and good will among members.
Goodwill has existed only under the cover of deception, and ignorance (for the data has been there for all to see for many years). I’ve just looked at it and analysed it; then called a spade a spade.
7. Cash Fees
Cash fees total $38, 122.46 outstanding. These fees include Board Members and the top dozen or so are all around $1,000.00 owing. This indicates aged debt . . . again! I’ve also got other questions in regards to these cash fees – things I can’t understand at present. Fees owing on accounts in debit and over their overdrafts, and more. It’s not a clean exchange by any stretch of the imagination
8. Unbalanced benefit
Analysing who is funding the currency at the moment makes for interesting reading. Two or three large exchanges are effectively funding a dozen or so clear bleeders of the system.
Tracking the net ins and outs per customer over the last year is revealing. All IRTA Members should be digging into these figures themselves and doing due diligence before asking serious questions.
Those members (some relatively new) who have gained substantial balances in the last year or two will be kicking themselves that they didn’t do due diligence. Those who have large credit balances will stand to lose if the currency is not managed back into a stable state.
9. Tax Implications
I’ve seen enough to know that things are not right within UC and I have serious concerns of correct management. There are too many things wrong to assume that tax avoidance, perhaps even tax evasion has not occurred.
Retaining bad debts for example for many years and charging membership fees and/or interest will inflate sales. Presenting inaccurate information to the members by hiding major accounts is a concern that tax compliance has not occurred. Will an organisation that hides information from their own members not try to do that from the taxman too?
What about the significance of tax on the myriad of House accounts? Are these all ‘third party record-keepers’ that do not have to declare tax? I very much doubt it! I can tell you now that hidden in those invisible accounts are very definitely individuals who will have received taxable income and I’d bet my bottom dollar that any income has not been declared!
Fixing the currency problems
I’m not agin Universal Currency per se. It’s currenty bankrupt and being grossly mismanaged and abused but there are three things that need to be addressed in order to fix it:
- The facts are being suppressed. Until the hidden accounts, the secret deals and the fraudulent activities are revealed, you’d just be rearranging deck chairs. The current IRTA Board will have no motivation or interest to do anything meaningful as most of them would need to call on the 5th Ammendment. (I address their options in the next post in this series).
- The management is clearly corrupt and demonstrating high levels of nepotism. Unless this is addressed, then there is little hope for any substantive change. Status quo is likely, with possible abandonment from the members.
- The Universal Currency itself is highly inflated. As more information gets out there it will only be the smaller and less informed who will trust it. Rebuilding (or preventing a run/crash) would need serious surgery, the sort of thing that a corporate troubleshooter would do in a crisis situation.
In my next post I break the power structures within IRTA down into visual form showing who the people are who are making the decisions and how they are related to the end beneficiaries. I answer the questions, “Who is liable and for what?” It’s a rabbit’s warren of deception and politics but the answer is essentially VERY simple . . . Stay tuned.
* I will note here that I have blogged these figures within 24 hours of having received them and I have not shared my analysis in this post with anyone prior to publication thus preventing the possibility of any ‘insider trading’. I will again repeat that all this information is visible to all UC Members in their system and (except for my retention of the missing Bartercard account with the word “Programme” in its name) is still freely available online now, as I’ve published. If I have any errors or have anything wrong, I am open to correction and will update this post accordingly.
** I have been working with multiple data sets supplied to me via my Tipline all with slightly different dates. The UC system has no confidentiality clause for its use – it is simply a member login and passworded system and (except for the hidden accounts) all data is open and transparent to all Members with many health-check analysis tools. UC operational rules no not address confidentiality of data issues. UC Members have supplied me with the raw data and their own analysis. As I have said before, I have not and will not access the system myself.
*** I have published data without names in most cases for confidentiality reasons – my thinking that if people are made aware of problems that they can then be given opportunity to rectify them. For example I have not listed individual Board Members’ names against the balances. In a couple of cases I’ve named names because I believe it is in the Members’ interests to know their identity. Bartercard obviously falls into this category with their shonky deal with IRTA.
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