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Old 01-12-2007, 02:04 AM
Doro Ajani Doro Ajani is offline
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DXSynergy and the law: jurisdiction and other issues

The following is presented to clear up a number of misconceptions people have had regarding the legal jurisdiction that GDT, Inc. operates in, and how this relates to DXUsers worldwide.

This comes from the Business Law section of the DXPT forum, written by the admin. I hope that this information will be helpful. Please feel free to discuss the information or ask me any questions that you may have.

================================================== =======

NOTE: IF THIS POST IS TO BE SHARED PUBLICALLY, IT MUST BE DISCLAIMED TO, IN ITS ENTIRETY, NOT REPRESENT ANY FINANCIAL OR LEGAL ADVISE OR EXPERTISE. ANY INDIVIDUAL'S DECISION TO EXAMINE THE FACTS OF THE MATTERS PRESENTED HERE IS ADVISED TO SEEK THE COUNSEL OF A COMPETENT FINANCE OR LEGAL PROFESSIONAL. THE INFORMATION PRESENTED HERE WAS CONSTRUED AS A RESULT OF REVIEWING THE 'HOWEY TEST' AS APPLIES TO SEC JURISDICTION OVER THE DETERMINATION OF 'INVESTMENT CONTRACT' ISSUES, WHICH UNDER LEGAL ADVISEMENT TO DXPOWERTEAM, WOULD BE GENERALLY APPLICABLE TO RESOLVING WHETHER THE DXSYSTEM COULD BE SO CONSTRUED.
__________

First, the SEC has no actual jurisdiction over Vanuatu.

Second, the SEC has no specific 'clout' in Vanuatu.

Third, if any legal party outside of Vanuatu tries to purchase shares of your IC or obtain shares of your IC without your permission, then you can request of the Vanuatu Supreme Court to register notification that those shares are not to be recognized, and that will usually pass, especially if your run your company according to your Constitution.

__________

However, none of those issues actually pertain to the point of law anyway. We don't have to go so far, because already neither the DXGC nor the DXSystem have an aspect that can be rationally termed a 'security' as which would be required before the SEC can have jurisdiction.

To facilitate an understanding of what does/does not fall under the jurisdiction of the SEC, you can do a google search for: the Howey Test as well as the notion of 'risk capital', which can be applied in relevant cases in tandem with the 'Howey Test.'

The Howey Test is the relevant test pertaining to our purposes of understanding whether the DXPortfolios (in particular) can be classified as a 'security', and therefore fall under the jurisdiction of the SEC (which is still just an intellectual exercise in this instance, as GDT is registered in Vanuatu, and the DXSystem is clearly labeled as operating therein, and hosted therefrom, meaning according to the ICA (1992) in conjunction with the E-Business Act (2000) that any agreement to take part in the system is an agreement made inside Vanuatu. Since there is no general embargo or blockage of business with Vanuatu at a government level by most if not currently all industrial nations, there is no precedent that can be applied retroactively to indicate that we should not have taken part in dealings with Vanuatu. Again, even a bank registered in Delaware (USA) has a subsidiary there.

_________________

Highly recommended reading, especially if you currently run or intend to later run a DXS-related program of your own:

http://www.abanet.org/buslaw/blt/200.../forcier.shtml

http://blj.ucdavis.edu/article/554/

http://www.shufirm.com/weblog_public...849&mode=print

http://www.sec.gov/divisions/corpfin...cord011802.htm

__________________

In short... the 'Howey Test' states the following:

an interest will be classified as a security only if the following three elements are present:
  • an investment of money has been made,
    in a common enterprise and
    the investor has the expectation of profits, which profits are expected to arise solely, or substantially, from the efforts of the promoter or third party.

Further, there are 3 separate 'common enterprise' tests; one of the 3 must be chosen and made applicable. For instance, if you granted that my interaction with the DXSystem fell under US jurisdiction, then by virtue of my incorporation and also legal residence in the State of Michigan, my dealings fall within the jurisdiction of the 'Sixth Circuit Court', where the 'horizontal approach' applies for purpose of determining whether a 'common enterprise' exists.

Again, this is an intellectual exercise, because my involvement is not held to exist in this jurisdiction.

Nonetheless, here's the short answer pertaining to the 'Howey Test' with reference to whether the DXPortfolio structure can be seen to be a 'security' (even though it still would not fall under SEC jurisdiction, but rather under the IC Act (1992), in conjunction with the E-Business Act (2000) of Vanuatu):

an investment of money has been made... This does not pass, because the requirements for this involve a giving up of money to a company in exchange for a fixed-rate or variable-rate return, as well as whatever accounting of principal. The reason this does not pass is because there is no investment deemed made with a company in particular. All transactions are 'exchanges' of value, and with third-parties not directly related to 'company investment' of any kind. We don't fund the DXPortfolios in order to raise capital for the creation of the services, for example. The factor determining gains is cited as 'demand/supply activity', and includes this:

If there is no activity, then even though we are paid a variable-rate of return on the Portfolio, that rate can legally be '0.00' for any extended period of time... even multiple consecutive years. Though this is unrealistic, it is the legal rate of return. Therefore, involving your funds in the Portfolio comes with no guaranteed or fixed return of profit. And it is not represented as doing so. 'It can earn from the demand/supply of activity throughout the various DXServices.'

In short, we do not 'make investments.' If you wanted to indicate that perhaps DXSynergy is trading us 'notes or shares' representing liability to the company, then you are back to the IC Act. GDT could never remove profits without satisfying the 'Solvency Test', and that would include showing that they can satisfy both payment of liabilities as well as assets being greater than total liabilities (including our holdings, if that were the case).

in a common enterprise... Here, under the 'horizontal' approach or 'narrow vertical' or 'broad vertical' approach, this is again not the case. Under 'horizontal', it would have to be shown that the investments are 'pooled' for common application. Again, if you wanted to show that there was reason to suspect the system of foul play, that would be an issue different than whether the DXPortfolio or the rest of the DXSystem can be deemed a security as it is generally operated. If GDT wished to remove holdings, then it must pass the solvency test. That's a different issue. Coming back to the presumption that the system is run according to the claims throughout the site, we see no evidence whatsoever of a 'pooling' of 'investment monies' (neither of those qualifiers applies).

Under the narrow vertical or broad vertical approach, we would have to define the 'investment' by defining the specific terms of the interest payouts and times for payouts, including limitations. What we find is that since the Portfolio is not required to ever make payouts of any interest gains, and that those payouts, as we are aware from the Terms and Conditions of operation, are based on 'funds being made available to balance the outside accounts', we are aware of the nature of an exchange system, and understand implicitly from such terminology that payouts are only possible based on provisions of required amounts, and currency/e-currency form being requested. That is to say: there IS NO EXPIRATION DATE SET for a payout to be processed.

Under the IC Act, GDT would have the right to delay any payout on DIRECT INVESTMENT (not DXSystem involvement) up to a solid year from the time notice of the demanded/requested payout was received. That goes along with the nature of maintaining general solvency.

Also, there is no expected drive to gain on the part of the promoter. GDT does not indicate that it is trying to make deals on your personal behalf, to enhance your personal gains (as in the case of a personal investment broker who purports to work on your behalf, and get his/her own cut of commissions in the process) which would be necessary to satisfy the 'broad vertical' approach for the test of 'common enterprise.'

In short, there is no 'common enterprise.'

the investor has the expectation of profits... This is met, but only in proportion to the 'supply/demand' activity of the DXServices. That means that the expectation is limited entirely to not include any expected expiration date for gains of any sort, meaning that this does not perform as a security would dictate generally to be considered under SEC jurisdiction (if our involvement put the DXSystem into SEC jurisdiction). There is no steadfast fixed-rate of return. There is no lower-limit to the variable-rate. If a variable-rate can be 0.00% for [years straight], then we are not seeing what constitutes a security.

================================================== =======

Continued in next post
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Last edited by Doro Ajani : 01-12-2007 at 02:17 AM.
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  #2  
Old 01-12-2007, 02:06 AM
Doro Ajani Doro Ajani is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Continued from last post:

Note: recall that all DXG which originates as 'profit' from the Portfolios is not 'profit' at all, but a 'credit' applied as a pending bonus. That simply means a right to a share of additional capital, if/when the capital is available. Each individual has the right to withdraw some of this or all of their share at any time, but the act of doing so represents a 'credit' which has a negative impact on the Portfolio holdings that must be accounted for, as we came to better understand during the implementation of the G2. Others who have not been able to withdraw simply must wait for provisible funds from DXMerchants (not new shareholders). DXMerchants can fund their Consoles personally if/when desired, as well as receive, and pay out, batches of monies that come through the Merchant's possession by virtue of the Merchant having transferable/sufficient balance (Float money to cover the exchange of value).

The 'credit' given to a Portfolio can be added, subtracted, etc. As long as the value is applied proportionately and does not benefit any party unfairly (that is, if DXSynergy were to issue DXG on-demand when users InX, and keep that money for their own benefit outside of the definition of the activities and benefits pertaining directly to us). DXSynergy does not create 'DXG on-demand' to send out from their own accounts. DXG is only created (sourced into production) directly through the Members themselves. That's a crucial difference.

Ultimately, there is an expectation of profits, but those profits are not deemed to befall individuals at any particular point in time or on a recurring schedule. They come only according to the 'supply/demand activities throughout the system.' Without an expected cashout (in your own native currency or according to the currency or e-currency choice provided through - but not originated by - the system for such payouts), there is no 'expectation of profits' that falls within the understanding of a 'security.'

This is entirely different than, for instance, "a HYIP promising you 14.5% to your E-Gold every 15th of the month."

which profits are expected to arise solely, or substantially, from the efforts of the promoter or third party. This relates to two major concepts:

1) The investor does not have much or any control over his/her money. Again, we are speaking about an INVESTMENT. In an exchange system, the moment you InXchange, you have agreed to 'spend' your money and receive a receipt noting that. Your money is not deemed to remain yours. The DXG you receive is an accounting value that notes that you chose to 'spend' your money, and not to a 'common enterprise' but to serve a function which entitles you to hold value and make use of the various services to the degree of your 'receipt or claim to comparable value' in and throughout the system.

It can be argued that you have little control of your money, but the countering arguments are that 'your money was not invested, but spent', as well as 'you have a lot of control over your money, as there are multiple options for you to make use of DXG in any manner you see fit.'

You can, after all, choose to spend it, expense it, stick it into the G2, stick it onto your Console, fund campaigns for others or yourself, etc. There are system limits, but you have various options currently and more coming soon.

2) The point is that you did not put your money into the system with the expectation being made clear to you that the system was [solely or materially] in charge of creating profits for you. The point here is that the onus of creating profits is on the 'supply/demand' of the system, which is a matter of how the users make use of the system; since we have a material control over the profits that come of the system, we are not relying on the DXSystem as the sole or even material provider of our gains.

We can want to rely on them entirely, and DXSynergy has the right to exercise their own contracts with others to improve or increase the various services for usage, or contracts that provide more fluidity, etc... but nonetheless, DXSymergy is not to be considered the 'sole or expected creator of profits on our behalf', which stands in contrast to the function of the typical HYIP program explanation (specialized traders who do all the work for us, owing to their expertise, which we are assumed incapable).

Actually: it becomes a legal question of whether an investment is a 'security' for any particular individual investors in a program as well when it can be shown that the holder, him/herself, has the same or similar level of expertise and capacity as the program purports to provide, under the 'broad vertical' approach to determining whether 'common enterprise' exists.

Getting back to the point, the DXSystem does not claim to be 'creating the money for us', as in the case of HYIP's... which take your money and do not give you a way to help their so-called specialized traders make earnings with you, on your behalf, in the stock markets or NASDAQ or wherever they claim to be earning profits FOR you, without your control.

Affiliate programs (HYIPs) do not count in this measure, as that is not related to the specific investment instrument. We are speaking of how the investment itself is made profitable, and the degree to which the investors themselves are able to partake of the responsibilities of looking after maximizing their own profits on their own time, effort, etc.



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  #3  
Old 01-12-2007, 10:59 AM
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Xavier Xavier is offline
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Re: DXSynergy and the law: jurisdiction and other issues

You can dance around the legal definition of a security all you want, but I'm pretty sure wire fraud is still illegal pretty much everywhere, even in Vanautu
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Old 01-12-2007, 07:31 PM
Doro Ajani Doro Ajani is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Xavier,

Lawyers and government agencies dance around legal definitions all the time. It's one of the things that they get paid for.

That said, rather than trade insults and uninformed opinions, let's try making the debate a little more civilized.

The material I posted came as a result of DXPT seeking, and getting legal advice regarding the DXSystem.

Barron's Law Dictionary:

http://search.barnesandnoble.com/boo...64119974&itm=6

Quote:
From the Publisher
A quick-reference source for lawyers, law students, legal professionals, and the interested layperson, this book defines more than 3,000 legal terms in non-technical language, but without sacrificing legal accuracy. Terms apply to civil procedure, commercial law and contracts, constitutional law, criminal law, property law, and torts. This title is also available in a somewhat larger format "trade paperback" edition.
For in depth legal study, I'd recommend Black's Law Dictionary:

http://en.wikipedia.org/wiki/Black's_Law_Dictionary
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Old 01-12-2007, 10:28 PM
cigs645 cigs645 is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Dxsynergy, formely known as dxgold, before that known as another dx something or another in between the first 2 DX's . sounds like a lot of dancing and BS to me.

then again people like yourself are never too particular how you make money, if you were you would not have to Ponzi for a living .

Quote:
Originally Posted by Doro Ajani
Xavier,

Lawyers and government agencies dance around legal definitions all the time. It's one of the things that they get paid for.

That said, rather than trade insults and uninformed opinions, let's try making the debate a little more civilized.

The material I posted came as a result of DXPT seeking, and getting legal advice regarding the DXSystem.

Barron's Law Dictionary:

http://search.barnesandnoble.com/boo...64119974&itm=6



For in depth legal study, I'd recommend Black's Law Dictionary:

http://en.wikipedia.org/wiki/Black's_Law_Dictionary

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  #6  
Old 01-14-2007, 01:09 AM
Doro Ajani Doro Ajani is offline
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Re: DXSynergy and the law: jurisdiction and other issues

cigs645,

GDT, Inc. has consistently redirected people to their new domain name as they phase out an old one, the exact opposite of what online ponzis do when they shut down one website and domain name, and take up a new website and domain name.

They went from dxgold.com to dxinone.vu to dxsynergy.vu - no attempts whatsoever to pass themselves off as anyone else.

Here's some documentation of a company name change for GDT, Inc.:
http://moorishtreasury.com/GDTsearch.pdf

Surely you can argue better than this? That was pitiful. And the attempt to attack me personally? Weak.
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Old 01-14-2007, 10:48 AM
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Xavier Xavier is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Oh, have no doubts, I do know the legal definition of wire fraud, and I'm sure no competent prosecutor would have little problem proving DXscam is just that, fraud.
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Old 01-15-2007, 07:23 AM
Doro Ajani Doro Ajani is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Quote:
Originally Posted by Xavier
Oh, have no doubts, I do know the legal definition of wire fraud, and I'm sure no competent prosecutor would have little problem proving DXscam is just that, fraud.
And this has yet to happen. Why is that?
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Old 01-15-2007, 09:30 AM
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Xavier Xavier is offline
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Re: DXSynergy and the law: jurisdiction and other issues

It's just possible that the prosecutors are either not aware of it, or for a myriad of reasons, it's not one of their priorities. Just because you're getting away with it doesn't mean it's legal. I think eventually they'll get caught, but believe it or not they're not the only crooks out there, and there aren't enough prosecutors to put them all away just yet.
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Old 01-15-2007, 10:08 PM
Doro Ajani Doro Ajani is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Xavier,

You'll have to do better than that. You sound like you're making excuses for why various regulatory agencies haven't gotten around to prosecuting what, in your opinion, is glaringly obvious fraud on the part of GDT, Inc. Your argument is weak.

If you're going to argue your point, then have some facts to present that can be independently verifiable. And, stop personalizing.

Please spend the time re-reading the material that I'd started these threads with. There are links to case law studies and legal references that you can independently follow up on.
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Old 02-15-2007, 04:18 AM
nomass nomass is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Quote:
Originally Posted by Doro Ajani
Xavier,

You'll have to do better than that. You sound like you're making excuses for why various regulatory agencies haven't gotten around to prosecuting what, in your opinion, is glaringly obvious fraud on the part of GDT, Inc. Your argument is weak.

If you're going to argue your point, then have some facts to present that can be independently verifiable. And, stop personalizing.

Please spend the time re-reading the material that I'd started these threads with. There are links to case law studies and legal references that you can independently follow up on.
And yours is even weaker. Here is one good reason that the authorities haven't gotten around to this scheme yet. The authorities have 18,000 pending investigations into white collar crimes in the US alone. I'll try to gives yours a priority # though it may not be SOON.

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Old 02-15-2007, 12:15 PM
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Xavier Xavier is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Add to that the fact that the amount of money involved is relatively minor, the owners are not going to be easy to trace behind IBCs and offshore registrations and I'm not entirely certain that Vanatu will extradite them. In time I'm guessing a few US based affiliates will either go to jail or (more likely) sign consent decrees, but I doubt any attorney in the US would advise a client to get involved in this scam.
Not to mention there is not any way I can see to make money from it anyhow.
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Old 02-15-2007, 12:21 PM
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Xavier Xavier is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Quote:
therefore fall under the jurisdiction of the SEC (which is still just an intellectual exercise in this instance, as GDT is registered in Vanuatu, and the DXSystem is clearly labeled as operating therein, and hosted therefrom, meaning according to the ICA (1992) in conjunction with the E-Business Act (2000) that any agreement to take part in the system is an agreement made inside Vanuatu.
This as an example is just patently wrong. The SEC has affirmed jurisdiction over any investment that is avilible to and/or targeted to US Citizens and US Residents. I actually think you could make a logical argument on the Howey Test (because the so called investor has some control over moevment of funds, not all the other crap in there to confuse you) but there are 15 other tripwires that you'll fall over before you get home. Very little in life needs to be c so complicated that you need an Accountant, Tax Attorney, DX Mentor, Tutor and a Jedi Knight to understand how it works. Or at least very little you can enter into for under $5000 USD. Take some advice and just get into a good mutual fund, in the end I can almost promise you'll do better.
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Old 02-16-2007, 07:16 PM
CheetaCopperwaite CheetaCopperwaite is offline
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Re: DXSynergy and the law: jurisdiction and other issues

Yes, the 48 hour rule has turned into the 48 day rule for Outxchanges. It is another broken promise by the scammers hiding behind the law in Vanuatu.


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