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This articles by Barbara Fox were published in U.S. 1 Newspaper on September 29, 1999. All rights reserved.

Martin A. Amstrong: Princeton Economics International

Last week Martin A. Armstrong, the once high-flying

investment guru now accused of defrauding investors of nearly $1 billion,

found himself in yet another skirmish with regulatory authorities.

He tried to declare Princeton Economics International, which has its

headquarters at 214 Carnegie Center, bankrupt in the court of West

Indies.

Federal prosecutors thought they had frozen Armstrong’s accounts on

Monday, September 13, when they charged him with swindling Japanese

investors of from $500 million to $1 billion dollars. Armstrong was

released that day on $5 million bail. But the Associated Press reported

that, because Princeton Economics International is incorporated in

the Turks and Calcos Islands of West Indies, Armstrong tried to file

for bankruptcy in West Indies court the following Friday. Federal

authorities got a court order to stop the liquidation, according to

the Wall Street Journal.

Armstrong’s Japanese subsidiary, Cresvale International Ltd., is expected

to close at the end of this month. Martin has denied all accusations.

At its peak Princeton Economics international and its subsidiaries

had 300 employees and offices on five continents. Earlier this year

the sponsor of an offshore fund controlled by Armstrong declared him

"hedge fund manager of the year" and touted the fund’s 60

percent return reported for 1998.

Now the fund’s Bahamas-based sponsor, Magnum Global Investments, is

closing the $14 million Princeton Global Fund and says the investors

are not subject to losses suffered by Japanese investors. Two other

funds that Armstrong managed are also closing.

But another company associated with Armstrong, Princeton Economic

Institute, is still operating. Though the publication of the monthly

"Armstrong Report" is running late, the institute’s computers

are churning out daily reports. Most institute clients get these reports

via Bloomberg terminals at a price of from $750 to $5,000 per month,

and, in spite of the turmoil, they are reportedly not canceling. Back

issues, more than three months old, are posted on the website for

free (see www.princetoneconomics.com or www.pei-int.com).

"Clients are happy to keep taking the service," says an institute

spokesperson. "It is our intent to continue to publish our research

and bring independent and objective information to our many loyal

clients around the world."

A charismatic iconoclast, Armstrong has written passionately about

his view that the stock market operates in predictable cycles (an

8.6 year cycle to be exact). He is said to have predicted the 1987

crash, the 1989 Nikkei crash, and the July 1998 high. By his model,

the next major turning points will be in November, 2002, and February,

2007.

Opponents to this method of prediction prefer to pay attention to

the fundamentals of a particular stock; to them, looking at cycles

is like telling the future by tossing chicken bones.


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