My Thoughts on “The Interview with a Marked Man”

Please see yesterday’s post for background on this issue.

Until now, I have remained silent with my opinion on the heated discussions taking place on the blogosphere about Moneymechanics and Martin Horvath. After having interviewed Mr. Horvath I feel I am ready to disclose what I feel needs to be said in my humble opinion only. I’ve had a few email exchanges with Oren Gutman and Martin Horvath. They seem like pleasant enough guys. The website is put together nicely. But these alone are not reasons to deal with financial advisors / consultants / promoters. You have to dig a bit deeper.

To cut to the chase: there are just way too many red flags, some of which still need to be addressed.

  1. No business address
  2. MFDA lifetime ban
  3. Claim on website: “There are such things as high yielding and safe investments.” (I don’t believe the market is 100% efficient, but I certainly don’t believe it is THAT inefficient.)
  4. Information withheld on identity of creator and founder of the “up to 100% income tax reduction strategy”.
  5. Information withheld on mechanics of warranty which guarantees against GAAR (General Anti-Avoidance Rule enactment by CRA).
  6. Information on the source of money to fund claims on warranty not satisfactory. My question asked that if a claim was made against the validity of the strategy, then all investors would have a claim which would need to be funded. The warranty covers expenses of fighting claims, interest payments on loan, denied tax savings, etc. So if one claim is required, they are all required and the money required to satisfy claims of warranty holders would have to equal the premium for the warranty. Since this would negate any benefit of the strategy this wouldn’t work, but the cost of the warranty is relatively small. The answer provided indicated that the strategy facilitator would be responsible for handling the shortfall. This is an unacceptable, especially in light of the lack of information on the identity of the facilitator.
  7. There currently is no opinion from CRA on the acceptance of the tax strategy.

There are more, but seven red flags are more than plenty. I’d like to know why the identity of the creator and founder of the strategy needs to kept secret. That’s a deal-breaker all on it’s own.

Have you identified any other red flags? Do you have more questions?

Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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Showing 9 comments
  • Tiny Potato

    With the abundance of investment products out there today and the amount of time required to properly conduct research it seems that point #2 and #3 alone should be enough to make investors stay away.

    For most individuals their time would be better spent on establishing a budget and investment plan.

  • Rachelle

    This post is a good reminder that there are many people willing to part investors from hard earned cash. The psychology of predators always remains the same…

    1 – Gain your trust
    2- Take your money (as much as possible)
    3 – If something happens they distance themselves and blame you.

    In any case they will not take responsibility for their actions and ultimately you will pay for their scams

  • Michael

    I don’t expect WDAMMG to turn into the Better Business Bureau anytime soon, but I have to say I have really enjoyed this investigation into what appeared to be (and still appears to be) a questionable investment.

    Good work Preet!

  • Mr. Cheap

    *sigh* I guess that means no second podcast! You should have recorded one more before you posted this! :-)

  • Canadian Capitalist

    CRA will not provide an advance opinion on whether any tax reduction strategy is in accordance with the ITA. CRA’s preferred route is to reassess and take the matter to tax court. At least, that’s how CRA deals with Charity Tax Shelters.

  • Tom C

    Yeah, I would say in these times of economic uncertainty, a certain degree of transparency would be required to at least take a glance at a financial product. With the red flags you noted, it wouldn’t even make sense to waste your time on this. Now, if these guys took action to remedy these glaring deficiencies, that might be a different story. But still, why wouldn’t they have acted transparently in the first place?

    Thanks for the post!

    Tom C
    Baltimore Estate Planning

  • heart rate watch

    I barely leave behind comments on blogs unless if I recognize the blogger. But it seems that I observe your blog to be very appealing and feels i should leave a comment. hehe.

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