Tan Kin Lian's Blog: How to spot an investment scam

Thursday, November 19, 2009

How to spot an investment scam

Mr Tan

This article may be useful to some of your readers from the UK FSA . It also points out the issues with prosecuting overseas fraud and why recovering funds is very difficult. I think a key question for an investment scheme should be who is independently auditing on an annual basis and what are they auditing. http://www.fool.co.uk/news/investing/2009/04/30/transcript-how-to-spot-an-investment-scam.aspx

I was disappointed that he didnt mention land banking but did feel that this quote represents the issues with many investments (stock scams, ponzis, land banking, oil etc) where big returns are offered annually (Minimum 12% return etc). Most people lose of the actual money and just see numbers on a statement or page.
David:

It strikes me that the guys who actually get in early are the ones who are going to make the most amount out of it.

Jonathan:

No, because what actually happens is, normally the con man is good enough to convince the first guys to leave their money in, and that normally happens, they might take out a bit of interest, but essentially they leave their money in as well, and what everybody sees is a paper profit; we see the conmen, they'll give a fancy spreadsheet, they'll open up a laptop, show a graph, and say, "That's what your money was at the beginning" (pointing to the low point of the graph) "and that’s what your money is now" (pointing to the high point of the graph), it looks fantastic.

Steve

6 comments:

Anonymous said...: When economy is good, people who have excess funds are willing to take risk to invest in investment schemes that are too good to be true. Simultaneously,when economy is bad, they are just as willing to take such risks as they are desperate to go for higher returns than FDs deposited in Banks.
Con frauders know such human greed and fear well to con people to fall fpr their schemes.
The legal system here is very different from what is practised in US. Over there frauders are given very stiff sentences. Here in Singapore, sentences are relatively light in comparison.
As there is a Chinese saying:
Eighteen years out of prison, still a good man. At that time they can live off the spoils pretty well, spoils being stashed in secretive places, spoils that are said in court defences as being spent on casinos, lavish lifestyles, debt payments and expenses on mistresses, etc.
No guessing people nowadays are more and more tempted to get into this illegal lucrative trade.; November 19, 2009 5:13 PM
Anonymous said...: Today in the ST a man conned many professionals and ordinary people of $13 millions in an investment scam.
What made these people fall for the scam?
Greed? Trust? I think both go together, like husband and wife, when a cheat schemes to con people .
First prey on the greed of people. These victims can be from all walks of life. The predator set up an impressive outfit to look professional and show some cooked up or fake documents. The fisrt victim usually would become the reference or as evidence of trust people have in him, The first victim usually got paid from the second victim's money and on and on like the POnzi scheme to gain the trust of future victims until the conman could no longer pay fast enough that the scam began to show crack.
So conman prey on the trust and greed. So is selling life insurance. They can be used to prey on especially existing policyholders who already trust the agents.This is how many people end up with many wholelife and endowment policies. How on earth people need so many of these products. Is it because these people's needs were never addressed adequately or becuase of changes in their financial circumstances? I reckon that these people's needs were never met fully and there was always a gap cleverly left by insurance agents for future sale of more wholelife and endwoment.Are these agents cheats? In some way , yes. The agents scheme , create opportunities to sell wholelife and endowment. In the first place these people's needs should have been addressed fully in the first meeting.But becuase these people couldn't afford fully wholelife products.These people are taking risk without even their knowing it.
This how conman works. The ruse is to get the trust and then prey on the greed.It is scheming.; November 19, 2009 5:33 PM
Anonymous said...: Conmen and women are smooth talker and very polite. They ask for your well being , your family before they go for the kill.
Is this familair to you? Do you think insurance agents fit the bill? At roadshows they address you 'sir or madam or miss' and they don't dare to address you as auntie and uncle.They then roll out their lies and if there is a poster they prey on your greed by lying.
Well trained and that is what the training department of insurance company is doing, teaching them what and not to tell or bullshit.
Selling has degenerated into conmanship.; November 20, 2009 9:18 AM
Anonymous said...: What do insurance agents have in common with this man?
Chua Tiong Chye
loan shark leader
he earns $300,000 a month
he lives in a landed property
he drives a BMW
If insurance agents think being financially successful or having a lot of money or having all the Cs elevate his social status then Mr. Chua must be very successful and of high social status. Both can be in the same club as Ministers and business millionaires or in the well heeled circle.
Is this what 'successful' insurance agents think where they belong?; November 21, 2009 2:17 PM
Vincent Sear said...: The basics of investment scams usually hinge on two things, greed and speed. Large returns and fast. Recognise these and avoid them.; November 21, 2009 8:22 PM
Anonymous said...: illgotten commission must be returned.There is nothing to show off if insurance agents got rich through unethical or incompetent means. He or she is no different from Ah long san and any thieves. Having the 5Cs does not make you respectable .; November 22, 2009 12:08 AM