Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 17, 1993 TAG: 9305160014
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Not only that, but the account supposedly is insured up to $100,000, according to the brochure.
That's not the only unusual feature of the material for Kestrel Trust Limited, a Canadian company.
What the company calls "membership" also carries a multi-level marketing aspect so that "affiliates" profit when they convince friends to open accounts. An offer to pay money for signing up acquaintances usually guarantees rapid circulation through a community.
Only "elite" people have made such profits in the past, the material contends. Kestral contends it now is offering the opportunity to "average individuals."
The application form, however, covers only a $99 annual subscription to a newsletter and other information about "international opportunities."
Is it one of those things that sounds too good to be true?
Virginia officials say they know nothing about the company or its offer. And the company isn't talking, at least to the media.
Kestral Trust Limited has not filed as an investment company with the State Corporation Commission, according to spokesman Kenneth Schrad.
Nor has Kestral petitioned the state for an exemption from filing, Schrad said. One or the other of those two courses might be expected, he said. But no action was planned because the commission has not received any complaints.
The Division of Consumer Affairs of the Virginia Department of Agriculture and Consumer Services hadn't heard about the company either.
Stuart Ashby, coordinator for investigations, said the promotional material indicates a multi-level marketing company with "rather extensive promises of reward. . . . It does make some rather unusual claims."
The material, he said, was enough to "perk up our ears" even though the division staff has received no complaints.
Ashby asked people who have invested to contact the department if they have any complaints. That's at the Virginia Division of Consumer Affairs, P.O. Box 1163, Richmond 23209. Or call (804)-786-2042.
Getting information from the company, at least for a reporter, is more difficult.
One number listed in the material was answered by a man who said he had never heard of Kestral. He confirmed that the number had been dialed correctly.
A second, toll-free number led to an answering machine.
The automated device offered three options: push 1 for an information packet, push 2 for the names of group leaders or push 3 for "affiliates" who wanted information about their accounts.
The selection of 2 produced a recording that listed four names and telephone numbers for what Kestral calls its "group leaders."
One of them was Maverick Management of Nevada, where a woman said she couldn't speak to a reporter but did add that Kestral Trust Limited is "not an investment company."
Kestral, she said, provided only "a subscription to a newsletter. Whatever you get out of the newsletter is your option."
The account insurance, she said, was provided by a private company in Great Britain named Haworth.
She referred all questions to Roger Tise of North Carolina, who is United States representative for Kestral.
Tise refused to be interviewed without a written contract promising that his words would be printed verbatim, which is a condition that most newspapers, including the Roanoke Times & World-News, would not agree to.
Besides, Tise said, he had no interest in communicating through the mass media to the general public because Kestral involves a "membership by invitation only."
Tise, like Maverick, said Kestral is "not an investment." Kestral's literature, on the other hand, speaks in investment terms:
"KTL pools your capital with that of hundreds of other individuals to seek out the best opportunities around the globe - in any market, in any country."
It says Kestral "operates in a tax free environment and has established goals of 17 percent earnings per month. This may sound extremely high, but considering the past earnings experienced by the trust of a minimum of 229 percent over the past almost two years, it is very realistic. Where else can one get in on the action of the rich and famous who have zillions of dollars to invest?"
According to its own literature, Kestral is in the business of high risk.
One part of its pool is the global markets that involve the volatility of currency fluctuations in addition to the vagaries of the market.
The second part of the program invests in equity leveraging accounts maintained by European banks.
Kestral said those accounts are leveraged or borrowed against six to 10 times so that a return of 25 percent would be very profitable. The possibility of a loss isn't mentioned at all in the literature.
Another share of the pool is in the international commodities market or contracts for goods and food.
The minimum monthly "saving," according to the brochure, is $25 and the top is $10,000.
Unusual to the program is a multi-level marketing approach that pays members for the people they sign up for the program.
Kestral's brochure said the company pays members from $10 to $25 as a "training fee" for new "subscriptions." If the subscriber opens an account, members earn a commission of $1 to $2.50.
by CNB