Spike in investment scams

TODAY’S scam artists have become more creative in their promotional and solicitation activities.

In the early 2000s, the well-heeled members of our society who already had a lot of money, but wanted more, were the principal target of conmen.

They were offered high-yield investments in foreign currencies and assets located in developed countries or reputed tax havens of the rich and famous.

To put an aura of elitism in these transactions, the invitation to invest was confined to those who can make a minimum investment of P1 million or its equivalent in US dollars or euros.

Those who did not have that amount of investible money were not welcome to invest, much less inquire about the terms and conditions of the investment.

Briefings about these schemes were held in five-star hotels, complete with Michelin-class food and expensive wines, and young and charming usherettes attending to the invited guests.

The resource persons in the investment forums came from Hong Kong or Singapore and were introduced as officials or consultants of multinational financial institutions.

The investment companies had catchy or attention-getting names, such as, “FrankSwiss,” “DeutchFranks” and Swiss Mutual Fund International.

Market shift

As in all Ponzi schemes, these scams eventually unraveled and exposed as frauds after the promised high returns did not materialize.

Criminal and civil charges were filed against the people behind the scams. Gathering the evidence, however, became problematic as many of the victims refused to come out in the open and submit their affidavits.

The reluctance is understandable because many of them belong to prominent families who did not want their naiveté (or gullibility) on financial transactions exposed and become the subject of humiliating gossip in their social circles.

Nothing has been heard of since the charges were filed. Chances are, the cases have been dismissed for failure to prosecute or the victims opted to suffer in silence their losses.

After the publicity on these scams died down, there was (or so we thought) a lull in reports about investment scams.

It looked like the warnings of the Securities and Exchange Commission (SEC) about investment scams worked. The if-it-looks-too-good-then-it-is-not-good advice apparently made a strong impact on the public.

Well, not really. The scam artists simply changed venues and target markets. They moved out of Metro Manila and plied their trade in the rural or less urbanized areas of the country. And they shifted their attention from the wealthy to the less affluent sectors of our society.

Contributions

This time, the solicitations were in smaller amounts, although they totaled in millions of pesos when aggregated or, to use the scammers’ sales pitch, “rolled over” upon maturity.

The investors were, as usual, promised high returns and, to “guarantee” payment of this bonanza, issued post-dated checks that can be encashed only with their issuer’s prior clearance.

To put some semblance of legitimacy in their operation, “statement of accounts” that showed the supposed investments made and profits earned were given to the unwitting victims.

Through word of mouth and with the use of slick promotional techniques, the scams attracted thousands of people who did not know they were being gypped or, even if they did, felt the returns were worth risking their money.

So Aman Futures Group, for example, was able to bilk a lot of people in the Visayas and Mindanao of some P12 billion. When the scheme collapsed, its alleged mastermind, Manuel Amalillo, quickly escaped to Malaysia and has not been heard of since.

The criminal charges against him and his local cohorts are pending in court and will probably languish in the judicial mill for the next five to 10 years.

Developments

To date, some 73 companies are in the SEC’s red list on unauthorized investment solicitations.

No longer confined to the boondocks, the scams have hit the residents of the cities of Lipa, Parañaque and Mandaluyong, which is right at the backyard of the SEC’s head office.

From the looks of it, the SEC’s cautionary notices and statements are not being heard or listened to by their intended audience, or something has been lost in the transmission of the message, in spite of the wide coverage given them by print, radio and TV media.

In a TV interview, a victim said she was aware of the warnings but took the risk anyway because the promised rates were very attractive and [this takes the cake] she did not want to be left behind by neighbors who were getting rich from the investment scam.

Obviously, the desire to earn money with the least effort [or to be blunt about it, greed] is the principal reason for the continued proliferation of these scams.

The challenge then is how to overcome or re-orient this human element and make the public aware that it is their best interests to stay away from get-rich-quick schemes and invest their disposable income in safe investment programs.

In the campaign against scam artists, the SEC can take a leaf from the way the Bureau of Internal Revenue and Department of Health have promoted their advocacies.

Through eye-catching print and TV advertisements, the BIR has been able to put moral pressure on tax evading professionals to pay the correct taxes, and for taxpayers to appreciate the value of contributing their share in nation building.

In DOH’s case, its pre-maternity TV advertisements have created awareness among mothers-to-be about the importance of early diagnosis and care of the little tykes in their wombs.

Law enforcers follow a certain rule in the fight against crime—see how a criminal’s mind works and work against it.

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