Financing with "Precious Stones" or "Securities" as collateral CONVICTION OF WISDOM: Ingenuity, Necessity, Technical Ignorance, Irrationality.

Well developed scheme in Brazil (but not only), where someone approaches a businessman who needs a financing and proposes a line of financing coming from abroad with wonderful interests and conditions. The interest rates offered are easily well below 50% of the SELIC rate, or, more likely, expressed in the form of LIBOR plus (or even less !!) something, and the terms are 8-10 years or more, with shortages etc. ...

The funding would be based on a guarantee consisting of precious stones (often emeralds, but diamonds are also used) deposited in a bank (or not) and accompanied by reports indicating high values. The businessman should rent this guarantee that would later be used to file the request for financing with the foreign bank (which was supposed to be aware of the transaction and would accept this form of guarantee).

After signing the contract for the rental of precious stones (in which nothing is guaranteed beyond the right to use the stones to obtain a financing), and paid the rent, the entrepreneur will wait for the release of the financing until receiving the information that something has gone wrong and nothing will be released.

But the money from the "rent" obviously will not be returned, because in the rental agreement this hypothesis is not contemplated.

In a less refined variant, the lessors of the stones and intermediaries of the financing, after having received the rent, simply disappear.

In all cases you can be sure that the rented stones are worth nothing or almost nothing. Usually well less than the amount paid for rent.

In several cases, the coup defenders, in support of their thesis, argue that Brazilian law permits the payment of debts in court with stones (Article 655 C.P.C.). This is true, but it is one thing to pay a debt with stones through a court order and it is another thing to persuade a bank or any financier to accept this kind of guarantee to release money in a good and spontaneous way. let me know).

In addition, it is important to take into account that it is possible to appeal against a court order and above all it is possible to dispute the real value of the stones given in payment requesting an independent or judicial re-evaluation. That I know all the sentences that granted the payment in stones of debts with banks were appealed both in the merit and, above all, in the definition of the real value of the stones offered in payment.

Several similar schemes occur with "old bonds" of the Brazilian public debt or with "papers" of renowned private companies that according to the proponents would have some value above the real (which, in the case of old public bonds, is often zero or almost zero ) by some measure or action taken by them or by simple spontaneous acceptance or calculation of the bank or fund fund (see sections on some of these roles in link 1 and link 2).

The most used papers in this case are 1902 forward policies, both Federal Government and State Governments, Municipalities and other departments, obligations of Eletrobrás or Petrobrás, false Brazilian Investment Bonds (BIB) and TDE (External Debt Securities), LNTs, CVRD debentures (Companhia Vale do Rio Doce, also used in other fraudulent schemes) and other similar securities.

There are also variants where the scammers do not propose the rent of the stones (or titles that are) but the sale for a reduced value due to some unrepeatable opportunity.

Transaction values, both in the case of rent and sale, vary greatly depending on the type of operation proposed, but are often between 2% and 10% of the amount of the financing sought.