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Fraud: Taking money from some adults is like taking candy from a baby.

Monday, April 9, 2012

If people promise us easy money, we should have to be very cautious. What is it about? How is it possible? Why is it so? Don't be a victim of fraud.

Just a few weeks ago, a client told me how he was given some physical gold for investing some money in a company. Apparently, the gold given to him was worth some 60% of the money he invested. In case the company went belly up, a new investor would only lose 40% of his capital.

The promised annual return was some 25% of the initial sum he invested, if I remember correctly. So, after holding for two years, an investor would be "safe" even if the company were to close down.


The person who got him involved in this "investment" was with him at the time and tried to get me to join them. After all, a consistent 25% annual return is a mind-boggling feat! Needless to say, I declined. Yup, I declined. It sounds too good to be true and probably is. This could be another OilPods or The Gold Label Pte. Ltd.

About OilPods: "More than 2,000 investors, mostly Singaporeans, were victims of this multi-million dollar Ponzi scheme, which involved purported investments in oil and gas. They were paid even before the oil was extracted, with existing investors receiving dividends from subscriptions of new investors." (The Business Times, 4 April 2012)

Another example of fraud has to do with land banking. In June 2010, the Monetary Authority of Singapore (MAS) issued a warning on Land Banking plots schemes warning they may be a scam with specific focus on companies offering land from the UK and Canada. (Source: Wikipedia)

A multi level marketing company, Sunshine Empire, was also in the news. The company had gathered up to S$189 million in funds through investment schemes, alleged to have never materialised and in fact a Ponzi scheme. Initial trial revealed that over S$115m were paid out as 'investment returns', while another S$40m were transferred to associates as 'interest free loans' and the remaining believed to have been expended or paid out to directors as fees. (Source: Wikipedia)

Unfortunately, there will always be people who would join the party. I dare say that a vast majority of the population is probably naive enough to believe in such "investments".

Money is hard to make and my heart always goes out to victims of fraud. Often, they are quite naive but hard working common people who just want a better return on their hard earned money.

I still remember how a female clerk in her 50s sent all her life savings of S$20,000, which, to her, was a princely sum, to an offshore investment firm after receiving a cold call promising her higher returns. She cried buckets later on.

Fraud: In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual. (Source: Wikipedia)

Yes, it is a crime! 

Fraudsters should be put behind bars for life!

28 comments:

JCK said...

"There's a sucker born every minute" = P T Barnum

Derek said...

Hi AK,

This is interesting. Never heard of a derivative that give the investor physical gold for investing. Would be interesting to check with MAS but then again even MAS could be wrong.

FoodieFC said...

well, there's no free lunch in this world

Ray said...

I was pulled along to a OilPods seminar and shook hands with their US CEO. ha ha.
All of the friends who attended with me signed up. I didn't.
I just started work back then and really know nuts about investment. The sales people (or accomplices) are really good at talking and the food catering was good but something tells me the reward vs the risk is not proportional. I lost touch with these friends who initially told me the cheques were coming in on time but only recently I heard it was a Ponzi. Was glad I believed my instincts.

AK71 said...

Hi JCK,

That is a bit harsh but it is true. I fell into a few pits in my life as well... Important thing is to learn from our mistakes.

I have gone one step further by sharing my mistakes in cyberspace, hoping that others would not fall into the same pits that I did.

AK71 said...

Hi FoodieFC,

A saying that is close to your heart. ;)

AK71 said...

Hi Ray,

Wow! You had a close shave or shake, as the case might have been. ;p

The CEO was from the USA? I though this ponzi scheme originated from Australia. Oh, well. Doesn't matter.

AK71 said...

Hi Derek,

Yesterday, there was a full page write up on a new company doing this. Was in The Business Times. Company is called Gold Guarantee.

Apparently, there is another company doing something similar called Geneva Pte. Ltd. which is under investigation in Malaysia.

I agree that perhaps more should be done to protect people from such outfits. At least, step up efforts in education.

JCK said...

Hi AK

If Madoff can pull of usch a scam for so many years running, PT Barnum is not harsh.

Its just true. :)

Where i am, in Sabah, there was a forex scam the last few years which spreaded to Taiwan, Hk and Singapore.

The investment from Sabah alone was estimated at Rm100mil!

Yes, ther ARE Greedy suckers born every minute.
Thus scams are growing every minute

Ray said...

Hi AK,

OilPods was US. That was the time when oil were pushing higher and US had quite a few oil pods not yet excavated. The idea was for investors to invest money in this company for them to drill for oil in Texas iirc.
I didn't think it was a ponzi, I just thought for the risk involved, the money wasnt enticing.

Didn't hear that oilpods was from Aussie. Don't think Australia have any oil, do they?

AK71 said...

Hi JCK,

You are right. I just feel sorry for the victims of these scams anyway.

People should just work hard and invest in less esoteric stuff which might have some form of limited protection through legislation. They could still lose money in market cycles but at least the probability of losing money to scammers is much reduced.

Singapore Man Of Leisure said...

AK,

I think you know this sales technique.

Most doing sales hate big groups; they prefer to divide and conquer as its easier to close the sale.

But if we can identify the Opinion Leader, just by converting him/her, most members of the group will bite too. Herd instinct.

That's why all these seminars always say bring a friend along...

When you ask the victims why they buy? Most may say because their friend bought too.

AK71 said...

Hi Ray,

Thanks for sharing as I am not in the know. I read somewhere that the CEO was a Mr. Mark Chang and he was an Australian.

Well, I hope your friends would have at least recovered their capital.

AK71 said...

Hi SMOL,

Indeed. Hahaha... I remember how a deal became four deals many years ago. ;)

Temperament said...

Very sad indeed! Sometimes i don't understand why some people can just part with their money when they hear an ordinary conman's story in the street or they meet one for the first time. If they meet investment con-artist, may God blesses them.
i know some people are just like that. May God blesses them in other ways.
Amen.

Derek said...

I was looking at Gold Guarantee and it only mention about buying gold from them at below the market rate. Not sure how they achieve that.

Our latest budget have new measures to make Singapore a gold trading hub. It will be interesting to see 'new' products coming out. Maybe this is one of them.

Derek said...

Someone posted the BT article on Gold Guarantee here. A good read for people like me.

http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/wtf-lee-song-teck-guy-straits-times-today-damn-rich-33-only-3568025-4.html

Musicwhiz said...

It's extremely hard to sell anything to me - if I feel something sounds wrong or the numbers sound too good by investment standards, I will ask questions or just decline immediately. So far the scammers usually stop there.

That said, on a serious note, I wish more people would become financially more savvy to prevent themselves from getting cheated. Using your example of the clerk who lost $20,000, that's serious lifetime savings for someone! These scammers should be shot!

AK71 said...

Hi Temperament,

Indeed, I wish for divine intervention sometimes but, then, I am more inclined to believe that God helps those who help themselves. ;)

AK71 said...

Hi Derek,

Actually, I believe that Singapore is a little slow in the area of precious metals investments. Charging 7% GST on investment grade gold coins looks at gold as goods when it is, actually, one of the oldest forms of money.

So, removing the GST on investment grade precious metals come October is a step in the right direction. :)

AK71 said...

Hi MW,

Very happy to hear from you! Miss your blogging. I have been so busy recently with other aspects of my life that I am also thinking if I should stop blogging. Perhaps, I would just take a sabbatical. ;)

Yes, scammers should be shot!

JCK said...

Another gold scam in Sabah...some greedy people never learn

"Buy 10 grams of gold giving monthly return of Rm700....."

till they lose their pants.....

AK71 said...

Hi JCK,

The Malaysian government took action against Geneva Gold, I read. I wonder how that has turned out. I hope they take action against this outfit in Sabah as well. Terrible.

JCK said...

The 'action' against Genneva Sdn Bhd is still ongoing since 2009?

i think the action is not for fraud but contravening some rules and regulations of monies collection if i recall.

http://www.bnm.gov.my/microsites/fraudalert/0301_status.htm#genneva

However, genneva is still happily operating under another umbrella...an Islamic umbrella

Go figure....

http://www.genneva-world.com/v2/

AK71 said...

Hi JCK,

Yes, it was an article in the newspapers in early April regarding Genneva that partly inspired this blog post. I know they are still operating in Singapore.

I pray for all the investors involved...

AK71 said...

Genneva Pte Ltd, a gold trading company offering a "buyback" scheme, appears to be in hot water.

At least one customer has recently won an interlocutory judgment against it in the Subordinate Court, pending an assessment of damages. It remains to be seen, however, whether she will recover her claim of about $190,000. Genneva failed to respond to the writ of summons or to contest the case.

The plaintiff, Lee Bee Ghok, is represented by Goh Kok Yeow of De Souza Lim & Goh.

A second writ of summons has also been filed in the Subordinate Court claiming a total sum of roughly $86,000.


The Business Times, 25 Sep 12.

If the person is able to recover 100% of the money, it would be a miracle...

AK71 said...

The Malaysian authorities have intensified a crackdown against fraudulent gold traders with raids against several companies last week.

According to the Malaysia Chronicle representatives of the central bank confirmed on Saturday that police and members of government agencies had staged joint raids against gold investment companies including Pageantry Gold, Caesar Gold and Worldwide Far East.

Earlier in the week members of law enforcement in both Malaysia and Singapore had raided the offices of gold trading firm Genneva, prompted by reports that the company had failed to pay both clients and agents.

The New Strait Times reports that the gold trading companies are alleged by authorities to have engaged in a broad range of illegal activities, including illegal deposit-taking, money laundering, tax evasion and avoidance and false description.

Officers of the central bank say they have received hundreds of complaints from aggrieved investors, who claim that the owners of companies fled without delivery of gold following receipt of payment.


Marc Howe | October 8, 2012
http://www.mining.com/malaysia-cracks-down-on-illegal-gold-trading-72115/

AK71 said...

At least seven police reports have been made against a Singaporean businessman who is believed to have gone missing after allegedly taking his clients' money and gold.

Half a dozen local investors of Valiant Capital, a Singapore-registered gold trading company, said they had not received the dividends they were promised and had been unable to contact its director Simon Goh Chee Kin since June.

They invested a total of more than $2.5 million with the company, the six told The Straits Times.

All are former clients of the now- defunct gold trading firm Genneva Gold, which was raided by the Commercial Affairs Department (CAD) in 2012. The investors say Mr Goh is a former employee of Genneva who set up Valiant Capital in late 2012, promising to help them make back the money they lost.

They said they received monthly dividends of 1 per cent to 2 per cent for several months, before the payments stopped coming.


Source:
http://www.straitstimes.com/singapore/gold-investment-firm-director-goes-missing

Alamak. This shows how stupid some could be.
"Fool me once, shame on you; fool me twice, shame on me."

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