Scam victims: Gullible or greedy?
FULL DISCLOSURE - Fidel Abalos (The Freeman) - June 10, 2019 - 12:00am

Recently, the Securities and Exchange Commission (SEC) warned the public about another brewing investment scams. Appropriately, after a multitude of scams that victimized the investing public for the past several years, the SEC has stepped up its information campaign against fraudulent business practices.

Notably, apart from the KAPA-Community Ministry International Inc. (KAPA, for brevity), which notoriously used the pious facade of its denomination to lure gullible investors, there are other companies that are fooling or are trying to trick the public as well. Using the social media for their marketing campaigns, these are MGA Business Enterprises, Coophub Multimedia Services, Jogle Innovative Marketing, Global Dream Zion, Grappler, Sherpan, BCT Marketing/BCT Motorcycle and Car Trading, RTM/RTM Pharmacy and General Merchandise, Diamond Marketing, Fusion Marketing, FMarket, Cirfund, Vibearn, Onepro, BCC/BCC Cosmetics Trading, Unlishop Compensation Plan Marketing, VUCC, Bitrain, Tcoin, Crowd Royals, ADA Farm Agri Venture and Nermie Marketing/Nermie Health and Beauty Products Trading.

To recall, in 2012, some of our “get-rich-quick” enthusiasts were grieving for the loss of their hard-earned money or were spending sleepless nights staring at the prospect of losing their homes, which were used as collateral to obtain money for very high-yielding investments perpetrated by the Aman Future, a Ponzi scheme.

Ponzi schemes, actually, are not difficult to understand. Commonly, all these schemes have three basic steps. First, they convince a few investors to trust them with their money for investment purposes with beyond normal but supposedly believable interest. Secondly, after a specified time, return the invested amount plus the agreed interest or rate of return. Lastly, emphasizing the historical success, convince paid early investors to tell their friends of the benefits and lure them to reinvest theirs.

However, these steps are easier said than done without the basic ingredients for a Ponzi scheme to succeed. There are five key elements. These are beyond (1) normal benefits, (2) a systematic flow of how the rates are achieved, (3) initial credibility of company owners, (4) pay-off of early or initial investors, and (5) the “word-of-mouth” approach in advertising or communicating pay-offs.

So that, in the Aman Future scam in Pagadian City, in particular, they (scammers) promised 49% interest in 17 days. Considering that 91-day T-bills and bank deposit rates then were just even less than 1% to a high of 3% in a year, such yield was suspiciously exorbitant but temptingly irresistible. Secondly, they were trying to tell prospective investors that their money shall in turn be used to purchase gold or invested in oil exploration related undertaking, thus, the higher yield. Thirdly, they showed good initial track record by paying on time the early investors. Fourthly, they urged initial investors to tell their friends of these benefits and reinvest theirs to earn more.

Obviously, therefore, of these five, the four key elements are a lot easier as these will simply require good communication skills and great first impressions on pay-offs. The initial credibility of the owners, however, is the hardest to establish. In Aman’s case, the owners’ credibility wasn’t established, yet, they invested because the scammers cleverly invited influential people (like, mayors) to put their money on it and pay them off too.

To recall further, in 2008 we were witnesses of how Bernard L. Madoff Investment Securities LLC pulled the biggest Ponzi scheme in history by fooling Americans of about US$50 billion. However, it was able to do so because it had great credibility. The founder, Bernard L. Madoff, had been in the investment business since 1960. Madoff had also been the chairman of the board of directors of NASDAQ, an American stock exchange.

The same is true with KAPA. As some of the investors/victims revealed, this organization is a Christian ministry. Headed by a pastor, there is no way that they will doubt or question the person’s and the ministry’s integrity. In fact, as documents would indicate, their supposed investments were sneakily taken up as “donations” and the returns or supposed dividends they received were shrewdly referred to as “blessings”. Slyly, that’s great packaging.

So that, today, as we stare on the prospect that these new scammers will take advantage on some potential investors’ gullibility or lust and greed for money, we should be constantly reminded by the misfortunes the victims have suffered then and have continued to agonize until today. Moreover, let us all heed the legitimate warning of the SEC. Ignoring both is a monumental display of stupidity.

SECURITIES AND EXCHANGE COMMISSION
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