China's biggest Ponzi scheme: All you need to know about such scams

China's biggest Ponzi scheme: All you need to know about such scams http://str.sg/ZjKi

Source: The Straits Times, Published Feb 1, 2016, 2:33 pm SGT

Nearly one million investors may have been fleeced in China's latest Ponzi scheme, which over the weekend saw 21 executives from its biggest peer-to-peer money lending platform being arrested on suspicion of stealing 50 billion yuan (S$10.8 billion).

The police allege that the senior management of Ezubao had stolen that much money from 900,000 investors nationwide, which would make it China's largest-ever case of investor fraud, by both cash value and the number of victims.

By number of victims, it would be the largest Ponzi scheme in the world.

Here's what you need to know about Ponzi scams:

What is a Ponzi scheme?

A fraudulent investment scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by using the cash from new investors. Such scams actually yield the promised returns to earlier investors, as long as there are more new investors.

But they eventually collapse on themselves when the new investments slow or stop.

Who is the scheme named after?

One Charles Ponzi, a clerk in Boston, who did not invent the scheme that came to bear his name, but whose scam fooled so many people and made him so much money that it brought the such a scheme into the national spotlight for the first time.

In 1919, the Italian immigrant duped thousands of investors, promising them a whopping 50 per cent return in 45 days, or 100 per cent in 90 days on international postal coupons, which he never actually purchased. The international reply coupons from other countries were supposed to be redeemable in the US for postage stamps, with the profit coming from the difference in prices between countries.

A steady flow of new investors initially allowed Ponzi to pay existing investors, while pocketing millions of dollars himself.

But soon enough, the scheme began to raise eyebrows because there were not sufficient international reply coupons for his investment plan to work. It collapsed, bringing six banks down with it. Collectively, his investors lost an estimated US$20 million - equal to US$222 million (S$416 million) in today's money.

Ponzi went to prison for several years but after his release, he launched another scheme where he sold real estate that was literally underwater. He was jailed yet again and ultimately died penniless in Brazil, working as a translator.

Is a Ponzi scheme the same as a pyramid scheme?

They are similar in that both are based on using money from new investors to pay the earlier ones.

But there is one important difference: In a Ponzi scheme, the mastermind gathers all the money from new investors and then distributes them. Pyramid schemes, on the other hand, allow each investor to directly benefit depending on how many new investors are recruited. The person at the top of the pyramid does not at any point have access to all the money in the scheme. Pyramid schemes are illegal in most but not all countries.

For both schemes, however, eventually there is not enough money to go around and the schemes unravel.

What is the biggest Ponzi scheme ever?

There have been many famous Ponzi conmen throughout history, especially in recent years. But the biggest schemer by far was Bernie Madoff.

Madoff stole US$65 billion from thousands of investors from the ordinary to the ultra-rich and famous. A respected former chairman of the Nasdaq stock market, Madoff started his Ponzi scheme in 1986 under the guise of a successful hedge fund - and ran it successfully for 23 years.

But the global financial crisis led to his undoing. In 2009, Madoff received redemption requests worth US$7 billion, which he was unable to meet. He confided his problems to his two sons, who reported him to the authorities.

Madoff is currently serving a 150-year prison sentence. One son hanged himself in 2010 on the two-year anniversary of his discovery of the fraud; the other died in 2014, blaming his cancer relapse on the stress and shame he suffered from his father's massive scam.

Sources: Investopedia, Bloomberg News, Time

China police bust massive S$10.8b Ponzi scheme with over 900,000 investors 

http://str.sg/Zjzm  Published Feb 1, 2016, 11:28 am SGT


http://www.straitstimes.com/business/companies-markets/china-police-bust-massive-s108b-ponzi-scheme-with-over-900000-investors?movideo_m=1434885

SHANGHAI - Authorities in China have busted what may well be the country's biggest illegal fund-raising case in terms of money and the number of investors, according to media reports on Monday (Feb 1).

Police arrested 21 people involved in the operation of peer-to-peer (P2P) lender Ezubao, the official Xinhua news agency said on Monday, over an online scam it said took in some 50 billion yuan (S$10.8 billion) from about 900,000 mainland investors.

Ezubao was a Ponzi scheme, the Xinhua report said, and more than 95 per cent of the projects on the online financing platform were fake.

Among those arrested was the scheme's alleged high-flying mastermind - Ding Ning,chairman of Yucheng Group, which launched Ezubao in July 2014.

The suspects are accused of luring in investors with false offers of double-digit annual returns.

Mr Ding, 34, financed his lavish lifestyle with money fleeced from investors, the South China Morning Post reported on Monday.

It said Ezubao was launched in July 2014 and embarked on a massive advertising campaign to raise funds.

On the surface, it was a P2P website with various projects, offering investors annual returns ranging between 9 per cent and 14.6 per cent. But in reality, the website's operators made up most of the projects listed on its website and used funds from new investors to pay old debts, Xinhua reported.

Chinese police said they had sealed, frozen and seized the assets of Ezubao and its linked companies.

The Ezubao case underscores the risks created by China's fast-growing US$2.6-trillion wealth management product industry, said Reuters. Many products are sold through loosely regulated channels, including online financial investment platforms and privately run exchanges.
 

Investors cry foul over tree investments gone wrong

Investors cry foul over tree investments gone wrong http://str.sg/ZyoY

Source: The Straits Times, published 25 Feb 2016

About 70 investors, including Singaporeans and foreigners working here, are crying foul over a scheme that effectively promised that their money could grow on trees.

In 2013, the investors poured sums ranging from $5,000 to $60,000 into a scheme to grow aquilaria trees - a prized tree that is harvested for valuable agarwood or oud oil, used in perfumes and spas.

The investors, who were approached via telemarketing, complain that the firm they gave their money to - Singapore-based Tropical Forestry Venture (TFV) - has folded. It vacated its office at Sago Street more than a year ago.

And so far, they have had no luck pursuing their grievances with the authorities here.

Under the scheme, an investor paid about $230 per sapling or $550 per semi-mature tree. In return, he could expect potential returns of three to seven times when the saplings matured in six to seven years.

For semi-mature trees, the timespan was shorter.

The sales agreements typically state that there is a guaranteed return of $400 to $600 for every tola of agarwood oil harvested. A tola is an old Indian unit of weight, and is 11.66g.

Each tree could potentially yield at least four tolas. The harvesting cost and sales commission added up to 13 to 15 per cent of the sales proceeds.

Depending on the firm, the tree plantations could be in Kelantan in Malaysia or Kanchanaburi in Thailand.

Further complicating the investors' woes is their claim that another firm, Tropical Forestry Assets Management (TFAM), had asked them for cash top-ups to maintain or upgrade their trees before they could be harvested for profits.

When contacted, Mr Ben Soo, founder and managing director of TFAM, said the claims that his firm collected payments related to TFV's past sales were "untrue".

He said he has informed TFV's customers that the payments are for fresh batches of agarwood trees.

Mr Soo said TFAM was in no way related to TFV.

Several of the affected investors have made police reports against the two firms over the past 12 months.

When contacted, the police said it is inappropriate to comment on police investigations, if any.

Retiree Eugene Kwong, 53, told The Straits Times that he paid TFV for 150 saplings at $230 each in November 2013 and 25 semi-mature trees at $550 apiece in January 2014, which worked out to a total of $48,250. He was given an additional 15 trees for free.

Mr Kwong received a certificate of ownership from TFV for his saplings but not for the semi-mature trees.

He alleged that in May last year, he was notified by TFAM that TFV had folded and TFAM had taken over the marketing responsibility for the trees. However, TFAM had no marketing rights for TFV's customers, he claimed.

Subsequently, he bought 50 two-year old trees at $100 apiece from TFAM to try to recoup his investment. These trees will mature in about four years' time. Mr Kwong has filed a police report against TFV.

A 33-year-old investor, who declined to be named, said she bought two batches of 25 semi-mature trees each from TFV in September 2013. Each batch cost $5,250 - $210 per tree - and she paid for the first batch. She was given four trees for free. She said TFV told her at the time that September 2015 was the earliest that she could profit from her trees - and that did not happen.

She alleged that she was informed by TFAM at the end of 2014 that it was taking over the customer accounts from TFV which had ceased operations, and that she could continue her agarwood investments with TFAM. She later paid $7,950 ($310 per tree and $200 to upgrade two free trees) to TFAM in January last year, which she believed was balance payment of her transaction with TFV.

She later found out that TFAM did not consider her payment to be the balance payment of her agreement with TFV, but as payment for a new batch of trees with TFAM.

"I'm very frustrated. I hope TFAM will refund me as it has given the impression that it took over TFV's business," said the investor, who has filed a police report against TFV and TFAM.

The Consumers Association of Singapore said it has received nine complaints against TFV but the complainants were mainly counselled or rejected as the association does not handle such investment cases.

It also received a query relating to another agarwood firm, Asia Plantation Singapore - which is currently on the alert list of the Monetary Authority of Singapore - involving agarwood investments, said the consumer watchdog.

Gold investment firm director 'goes missing'

Source: http://www.straitstimes.com/singapore/gold-investment-firm-director-goes-missing
21 Oct 2015

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.

The company's Orchard Towers office has been vacant for months and the investors said Mr Goh used their money and gold to finance his operations in Shanghai.

Mr Goh, who is in his 30s, has also been accused of wrongdoing in China. A July 3 article in Shanghai Morning Post reported that about 300 Chinese investors, mostly senior citizens, were left stranded after investing an estimated 100 million yuan (S$22 million) with Valiant Capital's Shanghai office, and could not contact Mr Goh.

According to court records of Shanghai Xuhui district, Mr Goh and his wife Sophia Low are due to appear before the court next May as defendants in a civil suit over private lending.

In response to queries, the Singapore police said "it is inappropriate to comment on police investigations, if any".

Singaporean investor Chandran Nair, 63, lost $374,000 with Genneva Gold, and said he invested another $79,000 with Valiant Capital because he trusted Mr Goh.

"He said he's a former police officer and he has a wife and three young children. I went for his son's first-year birthday party."

The retired army officer and father of three said he is now working as a security officer to make ends meet. "I trusted (Mr Goh). He was a real sweet talker. Now we're all in limbo."

The co-director of Valiant Capital, who asked not to be named, said he had no knowledge of Mr Goh's whereabouts. He said that while he is still listed as a director of the company, he had stopped working for Valiant Capital months ago and is currently driving an Uber taxi.

"I had no power, I just followed Simon's instructions. People may say I'm the co-director and it cannot be that I didn't know anything, but it's true (that I didn't). My family and friends also invested and their money is gone."

He said Mr Goh's wife was finance director of the company. She is believed to be in Singapore, but could not be reached on her last known phone number.

Mr Goh had described himself in a 2012 interview with The Sunday Times as a "spender" and "risk-taker" who had been mired in credit card debt in his 20s before making his fortune trading gold and selling property. He also said he spent 11 years in the Singapore Police Force.

Valiant Capital is the latest gold investment firm to come under the spotlight here. In 2012, more than 10,000 investors lost their money to Genneva Gold. A year later, The Gold Guarantee founder Lee Song Teck went on the run. In February this year, more than 100 people lodged reports with the CAD against Suisse International.

The Monetary Authority of Singapore (MAS) announced last month that it plans to tighten regulations on certain unconventional investment products, such as gold buyback schemes.

New regulations, to be tabled in Parliament next year, will require such schemes to be authorised or recognised by the MAS.

But for some investors, the safeguards come too late. Mr Nair said: "My 36 years of work, my lifelong savings are all gone."

Too good to be true: Property deals that turned sour

Too good to be true: Property deals that turned sour ... eg. Brazil, Britain, Indonesia, Johor Baru

Source: http://str.sg/niF
5 May 2015

SINGAPORE - The Advertising Standards Authority of Singapore (ASAS) is tightening its rules on property advertisements here. The change is aimed at foreign property developers. Here's a look at several deals that have gone sour for investors here.

EcoHouse, Brazil

London-based EcoHouse enticed many investors with its unique proposition of investing in social housing in Brazil as part of the government's low-cost programme My House, My Life.

Investors were asked to shell out at least £23,000 ($47,150) per unit to help fund EcoHouse's development in exchange for an impressive 20 per cent fixed rate of return for a 12-month contract.

The scheme reportedly attracted over 2,000 investors globally, while at least 800 people in Singapore were said to have ploughed about $65 million into the scheme since 2011.

Initially, investment returns were paid promptly but concerns about EcoHouse's legitimacy started to emerge last year when investors did not receive payments on time.

After its Singapore office was abruptly closed down last August, the Brazilian government said that EcoHouse had no links with the country's social housing scheme. EcoHouse subsequently filed for voluntary winding-up in Britain.

Reports against EcoHouse have been filed with the Commercial Affairs Department (CAD), and a class-action suit has also been lodged in Brazil by a group of more than 100 Singapore investors.

Hotel and student hostel projects in Britain

About 200 Singaporeans are facing the prospect of losing about $20 million after investing in botched hotel and student hostel projects in Britain.

They had bought units in nine projects by British property developer Key Homes, which became insolvent and was put into administration last year.

Many of the investors are aged 40 and older with a number using their Central Provident Fund savings to buy these housing projects.

A group of 30 Singaporeans are looking to reclaim their losses by suing the lawyers who had represented them in the multimillion-dollar venture. The suit will be filed next month.

They are alleging that the firms did not inform them about the risks of the investments.

PT Magic Kingdom Island Resort Paradise, Indonesia

In 2002, 1,000 Singaporeans who paid up to $3,800 each to join Indonesian country club PT Magic Kingdom Island Resort Paradise were left stranded when the club went bankrupt. Despite collecting about $2 million, the club never started the resort project.

Villa Temasek, Indonesia

In 2001, about 90 Singaporeans who paid $16,000 for units in the Villa Temasek development in Bintan lost their money after the developer disappeared before work was completed.

Anjung Seri Condominium, Johor Baru

In 1995, some 37 Singaporeans paid between RM150,000 ($55,566 in current day conversions) and RM400,000 for apartments at the 199-unit Anjung Seri Condominium in Johor Baru. Two of the five blocks were left uncompleted because the developer ran into funding problems.

Singapore trader loses RM250,000 in black money scam

My good friend's finance staff was cheated US$100k in similar fake US$ scam. US$100k she used is from the company bank account. So sad. Please beware.

Source: http://www.themalaymailonline.com/print/malaysia/singapore-trader-loses-rm250000-in-black-money-scam
14 April 2015

KUALA LUMPUR, April 14 — A Singaporean businessman’s greed to make quick money cost him a bomb when he was cheated of RM252,000 by a black money syndicate.

The businessman, aged 54, was introduced to three men from Cameroon and Guatemala by an acquaintance.

City deputy police chief Datuk Law Hong San said the businessman, accompanied by his acquaintance, met the trio at a hotel in Jalan Tun Perak last Tuesday.

“The three men showed them how pieces of black paper were turned into US currency after they were ‘washed’ with a liquid,” Law said.

They persuaded them to buy the black paper and a chemical liquid for US$70,000 (RM252,000) after showing them genuine US currency notes.

“The suspects were slick and the businessman did not suspect anything and handed them the cash,” he said.

“After receiving the cash, the three men told the victim to wait in the hotel room while they went to get more black paper and liquid from their car.

“Fifteen minutes later, the victim received a text message from the men saying police were raiding the hotel and asked him to leave immediately.”

Law said the businessman came out but did not see any policeman. He then realised he had been cheated.

The businessman lodged a report at the Dang Wangi police headquarters.”

Law said police arrested the three suspects in a raid on an apartment in Ampang on Friday.

“The police team seized a printer, counterfeit notes worth close to RM1 million and also a type of powder,” he said.

Law said the powder was used to give the surface of the fake notes texture.

The suspects, aged between 35 and 38, have been remanded to assist in the investigation.

He said the suspects had valid travel documents.

Scam alert: Police warn against airport contest fraudsters

Source: http://www.straitstimes.com/singapore/scam-alert-police-warn-against-airport-contest-fraudsters
28 Sep 2013

If you recived a call informing you that you have won return air tickets to Japan in a contest organised by Changi Airport last year, don't be duped into giving your personal information such as passports details and mailing address to the caller to claim the "prize".

The police said in a statement on Saturday that Changi Airport Group (CAG) has clarified that those calls are "not authentic".

"For contests organised by CAG, winners will be notified via telephone and email, followed by an official letter sent to them for their acknowledgement," said the police. "When in doubt, members of the public can call Changi Airport's customer hotline at 6595 6868 to verify."

Members of public are also reminded to be wary of such phone calls and adopt the following crime prevention measures: Do not disclose your personal particulars such as name, NRIC number, residential address and contact details to unknown individuals; and lodge a police report via the Electronic Police Centre (ePC) athttp://www.spf.gov.sg/epc/ or at any Neighbourhood Police Centre/Post if you receive any call of such nature, or dial '999' for urgent police assistance.

Japan Warns Of Property Investment Scam In Cambodia

Source: http://investvine.com/japan-warns-of-property-investment-scam-in-cambodia
28 Aug 2013

The National Consumer Affairs Center of Japan and related bodies are warning of a rise in fraudulent investment schemes involving real estate in Cambodia, where economic growth is boosting foreign investment, the Japan Times reported on August 27.

The center received 1,312 inquiries between October 2011 and early August 2013 from consumers who said they were approached about investing in Cambodian real estate.

It turned out that 27 out of 136 people who contacted the center had invested an average of about $31,000, with most unable to recover their cash.

In one case, a 78-year-old man sued a Tokyo-based real estate firm in March for the return $31,500 he paid for a condominium unit advertised to be completed at the end of 2013.

Before the purchase, the man got a call from someone claiming to be an agent for a firm who said it would buy the property for double what the man paid if he first bought it as a proxy. Investigations showed that a house stood at the site but there was no sign of any construction.

Experts advise to seek legal assistance before entering any property deals in Cambodia.