Hello MaCloud.

Yes. The phrase “Death Spiral Financing” nails down the name of the abuse. I understood the concept as soon as I became aware of it. But I failed to realize how really poisonous it could be, until I became curious enough to take the time to read the actual wording of the Marquest offerings. To me, it’s amazing Marquest is so proud of the games they play with the tax code, that they publically explain how they do it on their website.

It’s the equivalent of a magician revealing his secrets. But in this case, it’s not amusing to learn how the game is played. Moreover, the game itself is not harmless good fun.

As I said earlier (in a different way), the Buyer of a Marquest “Flow-Through Partnership” agrees:

#1) With one hand to help the Canadian Natural Resource Industry by investing in it and
#2) Simultaneously, with the other hand, signs an agreement to do the opposite, that is, nullify the sale within one year and
#3) Simultaneously, again, with that playful second hand, signs into the third course of action—which is to use the money received from cashing out of the Natural Resource investment—to cash into a completely different kind of fund (which is promoted for its safety because it is totally unrelated to the Canadian Natural Resource Industry).

Afterwards, the Canadian tax authorities together with the Provincial tax authorities (in some jurisdictions)—in appreciation for all the fun they had playing Musical Chairs—do not only cancel 100% of the jokesters tax liability but dish out another 25% reward (which brings up the total tax benefit handed out to 125%, corresponding to the tax authorities’ level of admiration and gratitude).

Keeping score, after the game, there are winners and losers.

#1 Winner) By pledging, within one year, to do the exact reverse of investing in the Canadian Resource Industry, the Buyer of the “Flow-Through Partnership” is handsomely rewarded for taking money out of the Canadian Resource Industry.
#2 Winner) For systematizing the sleight-of-hand magic, the officers at Marquest earn a steady stream of income, affording them a comfortable standard of living.

#1 Loser) Canadians who invest in the Canadian Natural Resource Industry, together with all the other Canadians who pay higher taxes to make up for the deficit caused by the tax-free lifestyle of the #1 Winner and the deficit caused the creative and manipulative business of the #2 Winner.
#2 Loser) Canadians who invest in the Canadian Natural Resource Industry (a second time) because the gamesmanship creates a new class of insincere Buyers who (a) have pledged to indiscriminately dump their shares and (b) have pledged to reinvest the proceeds outside of the Canadian Natural Resource Industry.

MaCloud, I especially appreciate your having responded to my earlier post, being that (on second reading) I allowed my verbiage to get murky and to become hard-to-decipher. What I carelessly tried to say was, (even terrible as it is) we should try not to get overly upset about all of the above.

It’s outrageous. It defies logic. It’s irrational. But after all is said and done, there are an almost countless number of things we’ll never know (nor ever hope to know) that outweigh—by a wide margin—all the of Fancamp’s all-too-familiar missteps and blunders.

What I also, very poorly, tried to say was that I’m a Fancamp Buyer here, even though I already have more than enough shares. The reason is, we have an opportunity to turn adversity into advantage. Extra shares will allow ourselves To Have Our Cake And Eat It—in the future—because we’ll be able to take (considerable) profits, at some halfway point, while retaining our core positions for further gains.