Released on: July 7, 2008, 9:10 am

Press Release Author: Professor Scott Brown, Ph.D.

Industry: Financial

Press Release Summary: University of Puerto Rico, Rio Piedras, PR - Mon., July 07,
2008 - Local finance professor Scott Brown, Ph.D. gives warning to local investors
today. He explains that, \"A very strange Ponzi scheme is evolving in Puerto Rico
regarding a small, instable currency called the (New) Iraqi Dinar.\"

Press Release Body: FOR IMMEDIATE RELEASE

The University of Puerto Rico, Rio Piedras, PR \" Monday, July 07, 2008 \" Local
finance professor Scott Brown, Ph.D. gives warning to local investors today. He
explains that, \"A very strange Ponzi scheme is evolving in Puerto Rico regarding a
small, instable currency called the (New) Iraqi Dinar.\" Fraudulent businesses
dealing in the currency have popped up on the internet operating in a way analogous
to the Bucket Shops that helped precipitate the 1929 stock market collapse that led
into the Great Depression.

Bucket shops existed as a parallel black market taking bets on price movements of
stocks traded across formal exchanges, such as the New York Stock Exchange, akin to
off track betting on horse races. Speculators had no assurances of the stability of
the shop because there was no regulation. When the market collapsed in 1929 bucket
shop operators simply refused to open and stole everything. This decreased the
supply of money in the banking system as speculators rushed to pull out what money
they had left in demand deposit accounts.

The Depression became a national emergency between 1932 and 1933, and the U.S.
government established several agencies as a means for regulating financial markets
and intermediaries. The SEC and FDIC are two of these agencies. The FDIC assists in
banking regulation while the SEC regulates brokerage houses that deal in financial
assets such as foreign currencies. Regulation is intended to protect investors from
unregulated, fraudulent investment promoters.

THE IRAQI DINAR BECOMES THE NEW OFF TRACK BUCKET SCAM

Professor Brown explains why there is so much danger involved in buying large
amounts of Iraqi currency and that investors must understand foreign currency
markets. The FX (Forex) foreign currency exchange market is an out-growth of
commercial banking where importers and exporters are assisted by very large bank FX
brokers. The market for foreign exchange is the largest financial market in the
world, open 365 days a year, 24 hours a day with daily spot and forward contract
volume estimated at $1.88 trillion dollars per day according to the 2004 triennial
central bank survey.

The strongest currencies in the Forex market, in order, are the U.S. Dollar, Euro,
Japanese Yen, Pound Sterling, Swiss Franc, Australian Dollar, and Canadian Dollar.

But, Dr. Brown points out a serious problem for any intelligent investor. The New
Iraqi Dinar is virtually not traded in this massive Forex interbank market because
of the instability of civil war, the American military occupation, and prior
embargoes all of which have made significant export-import transactions impossible.

\"In short the Iraqi economy is effectively sequestered from the rest of the world.\"

TOURIST EXCHANGE WINDOWS AND KIOSKS ARE A DIFFERENT MARKET

There is a very small, insignificant exchange market in each foreign currency in
which small foreign national banks operate. It allows tourists to exchange tiny
amounts of currency when in Iraq -- it is not the Forex inter-bank market. It
operates semi autonomously within local national banks where people get exchange for
small personal purchases when in Iraq. Dr. Brown emphasizes that this is where all
the New Iraqi Dinar trading is occurring. Without the necessary liquidity of the
interbank market the New Iraqi Dinar has a minuscule float that is extremely
volatile to this U.S. currency Ponzi scheme.

Central banks abhor excessive speculative exchange rate volatility because it
confounds the process of economic policy implementation through supply intervention
(e.g. the U.S. Federal Reserve has its discount window). With no depth, breadth, or
width in a New Iraqi Dinar inter-bank Forex market, combined with the majority of
currency floating overseas due to the New Iraqi Dinar Ponzi scheme here in the U.S.,
this already economically uncertain government is facing a particularly difficult
monetary situation where policy interventions are potentially confounded by this
scam.

Professor Brown explains that the Iraqi government does not want the price of the
currency driven up violently by fraudulent speculation. He gives this as explanation
for recent warnings to currency speculators issued by the Iraqi government. He
furthers that, \"if pyramid scheme operators were to drive up the price of the New
Iraqi Dinar it would inject unwanted artificial inflation into the already unstable
Iraqi economy.\" At some point the government would be forced to throw in the towel
and stem the inflation by retiring the New Iraqi Dinar and reissuing new currency.

In so doing anyone outside of Iraq holding the New Iraqi Dinar would lose their
entire investment in the currency. Worse for local investors, professor Brown
emphasizes that the Puerto Rico Iraqi Dinar internet bucket shops would immediately
disappear with all the US dollars local unsuspecting individuals have used to buy
what would suddenly become worthless slips of paper.

A somewhat similar, though not identical, scenario played out in Brazil in its
conversion from a military regime to a democracy that was initiated by President
Jose Sarney in the late 1980s in part with his moratorium on interest payments on
external debt accumulated by the prior military command economy. Retirement of the
currency was part of that plan and they had to retire their currency various times.

Dr. Brown has been bombarded with emails of individuals asking for New Iraqi Dinar
advice. Some have explained that Puerto Rico fraud promoters have pointed to the
appreciation of Kuwait\'s currency at the end of the successful military intervention
against Iraq\'s invasion. Professor Brown dismisses this argument explaining that
Kuwait was already a stable political economy before the Persian Gulf War. The
subsequent appreciation was a natural market reaction to a reduction of uncertainty
around an already stable currency.

\"That is absolutely not the case with the New Iraqi Dinar!\" exclaims Professor Brown.

PUERTO RICAN PHYSICIANS PUMP THOUSANDS INTO IRAQI DINARI BUCKET SCHEME

In Puerto Rico there is a prominent internet website that offers Iraqi Dinars. It is
unregulated by the SEC and aggressively promotes the sale of New Iraqi Dinars. A
local physician informed Dr. Brown that his colleagues in a local hospital had
purchased between 500,000 to 1 million New Iraqi Dinars. Shortly before this press
release they received a rush email message from another doctor in New York that
claimed that Chase bank exchanges 1 Dinar for $1.89 US. According to the physician
this meant that if a group of doctors bought $100 US worth of Dinars from the Puerto
Rican Dinar pyramid operator for $120 that they could resell them immediately for
$189 US. If the Puerto Rico fraud operator\'s claims were true they would receive an
immediate return of 57.5%.

Two of the physician\'s doctor friends bought tickets to travel to New York to
exchange their money with Chase Bank

Dr. Brown explains, \"This astute physician contacted me for help because he kept
getting calls from his colleagues telling him to buy Dinars. He felt that the
\"opportunity\" was too good to be true suspecting that the local Puerto Rico New
Iraqi Dinar promoter created the Chase Bank rumor to increase buying demand and
ill-gotten profits.\"

He explained to professor Brown that he contacted Chase directly and spoke with 2
people asking very simply and clearly:

\"Hello I am looking for information about exchanging New Iraqi Dinar for American
US Dollars.\" The second lady answered, \"You need an account to receive that
information\"
The physician said, \"I don\'t have an account yet but please help me get information
as I am planning to open one soon.\"

She said, \"Yes, Hold a Minute.\" After 5 minutes of silence on the line she came back
saying, \"OK what kind of information do you need?\" He asked, \"How much do I get for
1,000,000 Iraq Dinars?\" She put him on hold again but this time came back faster, \"
Sir, for 1 million Iraqi Dinars you will get $749,000 US.\" The physician was
unpleasantly surprised and asked, \"Can you tell me that amount again? Did you say
\'seven hundred forty nine thousand?\'\" She responded, \"Yes, that\'s what you will get
for that amount of Dinars.\"

The physician was shocked and perplexed at the low amount he would have received for
his New Iraqi Dinars. He explained to Dr. Brown that if he would have made the
mistake of investing $120 with the Puerto Rico operator he would have received only
$74.90 in return -- an immediate loss of $45.10 or -37.58%!

DIRECT AND INDIRECT SPOT RATE CURRENCY QUOTATIONS ARE RELATED BUT NOT THE SAME!

Exchange is quoted directly or indirectly. Directly means that it\'s from the U.S.
perspective answering the question, \"how many units of country X\'s currency do I get
per U.S. dollar?\" Indirect quotes answer the opposite question, \"how many dollars do
I get per unit of country X\'s currency?\" Quotes are out to 4 decimal places and each
is the mathematical reciprocal of the other.

So, in this case Dr. Brown explained to the physician that the kind lady was telling
him that the indirect quote at the time he called was that 1 New Iraqi Dinar would
buy $0.7490 US dollars. And, he further explained that this implies a direct quote
(ignoring a bid-ask spread) that $1 dollar US would buy 1.3351 New Iraqi Dinars.

This reciprocal relationship, simple as it is, between the direct and indirect quote
confuses people. He emphasized that someone in Puerto Rico seems to be confusing
people into believing that they can sell their Dinars for much more than they really
can.

Dr. Brown concluded that the fact that this group of physicians had to really hunt
to find a bank that would exchange New Iraqi Dinars is further evidence that there
is no strong inter-bank market for the currency. When people come back from travel
they often carry foreign currency in their wallets. For small, instable currencies
only a very large bank like Chase will bother with the hassle of exchanging the
currency. This is not a safe venue for a serious investor.

\"This is being pandered locally as a foreign exchange investment when at the very
best it\'s an overpriced collectible as was the case with Tulipmania. In 1635 many
uninformed people sold their house or farm to buy Tulip Bulbs as a price bubble
emerged. Eventually the market collapsed and families who had been suckered into the
scheme were immediately impoverished. The Dutch government finally, yet reluctantly,
intervened to no avail --. the damage had already been done.\"

SUSTAINED INVESTOR RETURNS START WITH QUALITY EDUCATION

An excellent movie every beginning investor should watch is \"Boiler Room\" where Ben
Afleck is one of the stars. In the investment industry \"rabbits\" are certain people
that are most conducive to suggestion through a good story as a smoke screen for a
bad investment with a big cut for the promoter. A \"rabbit\" is someone who a
dishonest investment operator can make a buck on fast. Rabbits are those people that
know they are very intelligent because they are highly specialized in areas that
require outstanding academic excellence to enter highly competitive professional
fields. When you combine smug intellectual arrogance with high income such people
are also prone to remain quiet after they have been conned.

The people that best fit this profile for investment \"sucker plays\" are physicians,
CPAs, attorneys, and engineers. The movie Boiler Room portrays the process
perfectly. Scott\'s father was a very successful optometrist. Dr. Brown holds a
highly regarded research Ph.D. in finance today and is an assistant professor of
finance at the University of Puerto Rico specializing in leveraged investments
because of all the con jobs he watched his dad get suckered into as he silently
watched as an unnoticed, yet observant and reflective, child during \"opportunity\"
meetings.

THE MORAL OF THE STORY

When the operation is small at the beginning of any pyramid scheme everyone makes a
return but eventually every fool is parted with his money!

ABOUT THE UNIVERSITY OF PUERTO RICO: The University of Puerto Rico at Rio Piedras
(UPR-RP) is the premiere MBA higher learning institution in the Caribbean Basin
Region. A popular lecturer and investment speaker, Dr. Brown is an assistant
professor of finance in the UPR-RP Graduate School of Business Administration where
he teaches Forex Risk Management among numerous other financial topics. He also
teaches investing to the public through http://www.WalletDoctor.com and offers
unbiased investing seminars through the Caribbean Investment Club
http://www.caribbeaninvestmentclub.com

Contact:
Professor Scott Brown, Ph.D.
Assistant Professor of Finance
Graduate School of Business Administration
The University of Puerto Rico, Rio Piedras
787-764-0000, Extension 87126
http://business.uprrp.edu/sp/facultad.html
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Web Site: http://www.caribbeaninvestmentclub.com

Contact Details: Contact:
Professor Scott Brown, Ph.D.
Assistant Professor of Finance
Graduate School of Business Administration
The University of Puerto Rico, Rio Piedras
787-764-0000, Extension 87126
http://business.uprrp.edu/sp/facultad.html
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