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Friday update on racing's Ponzi scandal

The fallout from this one isn't going to stop anytime soon - more victims will emerge, more details will be revealed in court, and we still have heard very little about the health of 'Jimmy', the $5m half-brother to Black Caviar. Today's revelations guarantee a special series of the high-rating TV show Underbelly.

Links to the underworld run a little deeper than Bill Vlahos buying Pillar of Hercules for $1.8m when Racing Victoria decided Horty Mokbel was not a suitable person to be owning racehorses. It is alleged that a key member of the BC3 staff has dated "Freddie the Bear", a suspected drug trafficker, for several years. D'Amico regularly attended the races with his brother-in-law, the nephew of Melbourne gangster Mick Gatto. Coincidental?

The Age is leading with a story today that BC3 was a vehicle to launder money for criminals and bikie gangs. Hardly a surprise after reading the previous paragraph. Tens of millions of dollars is the figure quoted, from one gang alone.

Crims, outlaw bikies linked to punters club

You start to understand why Melbourne Football Club has been such a basket case for so long when its former chairman Don McLardy invested $168k into the scheme. Rich Americans weren't immune from getting caught up in the scam, a tax-dodging investment fund based in Bermuda called Aloga is believed to have put in $26m. One of its members was LimeWire founder and tech entrepreneur Mark Gorton.

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Yarrawonga Football Club were denying their involvement yesterday and it sounds like Melbourne suburban football club Avondale Heights FC is in a similar position. A 'highly successful' Mortgage Choice broker, who scraped onto AFL lists for a few years but was a suburban league 300 game veteran, looks to be one of those early members who fell for it hook, line and sinker, and made plenty out of bringing in many other members - often by refinancing their mortgages - very dangerous ground indeed. BigFooty forum expands on the allegations:

Punting Scandal

The mortgage broker is believed to have disappeared in a hurry after a few threats. He may have been an innocent (but naive) victim of the scheme, but history doesn't bode well for people high up the chain in Ponzi schemes. Investigative journalist Andrew Rule in an interview on RSN this week listed several Ponzi scheme kingpins who didn't die of natural causes...

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The technical expertise of Mr Vlahos sounds about as weak as his pleas of innocence. His laptop has been torched - coincidentally just after US investment group Aloga opened NSW Supreme Court proceedings against him and demanded access to the laptop - but that doesn't really stop much if he'd been sending files around to the various syndicates within The Edge, or emails boasting about their fictional bets and account balances. Damn that modern technology eh? Perhaps he should have spent more time watching CSI instead of cavorting around town with some of the racing media.

Bill Vlahos' laptop with details of missing $194m in firebombed car, court hears

Punters' club cash clues up in smoke: racing identity Bill Vlahos' PC destroyed in car firebombing

And surprise, surprise - the money was used for just about everything but actually betting, shuffled around various accounts with Photoshopped versions being sent out to members to show how rich they were all getting.

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Celebrities caught in Ponzi style betting scheme

It's a shame not many people read this article, it's only from 2010!

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[Moral Rant]

WHEN YOU INVEST MONEY, EVEN IF IT IS 10 BUCKS ON A HORSE, DO YOUR BLOODY HOMEWORK!

Don't just look at the dream result and what happens when it works/wins, examine the contrary view to understand why it might not go according to plan. If someone's trying to sell you a dream investment scheme, particularly (but not only) when it involves betting, have a think about why they would share the goose that lays the golden egg. Is it really because they are such good blokes?

[/Moral Rant]

Betting markets are elastic, when the biggest player gets too successful, the value in the market collapses. $100k bets into standard Saturday pools on Australian racing will crush a market, and what was a 'value' bet is suddenly a negative investment. They either have to stick to 'modest' returns or switch to a bigger market. The famous Hobart syndicate headed by Zeljko Ranogajec was incredibly successful because they knew their limits. There's no point putting a shark in a goldfish pond...

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