In essence, the monies coming in were used to pay trading costs, to return monies to investors, to take some monies out for the directors, and payments to some significant consultants.Investors were seduced with promises of returns of up to 70 percent. Some were even hired to develop further business. So much of Australias much vaunted financial regulation.
Talk about the wild west. The receiver said that the funds invested of up to $500 million from Ma and Pa investors were as good as gone. One of the owners was on the radio today saying that his model was great and just needed a few bugs fixed. Imagine running a business where you apply for as much credit as you can get and then spend it. Not very sustainable.
Sad. If it looks too good, it probably is.