Wednesday, September 26, 2012

Sad stories of people who lost money on fraudulent schemes

Mr. Goh (not his real name) is in his late 50s and now works as a security guard at Midview City. He told me that he had invested his life savings in a land banking product and is not able to get his money back. It must be the product which guarantees a return of the principal and interest at 10% after one year. His wife is very angry with him.

Without any savings, he now has to work long hours as a security guard at a miserable pay. He is very angry at the Government and Monetary Authority of Singapore for failing to stop this land banking company to cheat people like him.

Mr. Lee (not his real name) sought my help a few months ago. His wife had wanted to invest in the gold scheme, which pays 2% every month for and promised to return the 100% of the capital at the end of 3 months. She had stayed away from the product for one year, after reading my advice to avoid it.

Her friends had had invested in the scheme and were able to collect the 2% return quite safely. To catch up for the lost time, the wife and her family had put in a large part of their savings in the scheme, against the advice of Mr. Lee.

Mr. Lee has now read in the newspaper that the company promoting the gold scheme had been sued by another investor and did not appear in court to contest the case. Mr. Lee is worried that his wife still had a lot of money invested in that company, and could suffer the loss. He wondered why the Government did not take action earlier to stop this operation.

The lack of action of the authority has led to so many losses from naive investors. In Malaysia, these operations had been closed down by the Government, but they were allowed to continue in Singapore, leading to a false sense of security of the public.

Our government leaders can say that these investors did not open their eyes and were greedy.  This is not such a simple matter. Like Mr Lee, he tried to tell his wife to avoid the investment, but she would not listen.


yujuan said...

Not often the Govt is right, but this time you've got to admit they're absolutely spot on.
After the Lehman Bros saga, how come people never learn, the main reason is they could not overcome the temptation over greed. And from LB, can't people see MAS or whatever Authority, would just lay off their hands.
Fraudsters are using psychology to capitalize on Singaporeans' famed naviety and child like trust in strangers. Perhaps they think, if dun fleece them, other people would, and would be fools not to get a share of the pie.

Unknown said...

Replay of High Notes 5 and Minibonds ?

Savers all over the world are subsising borrowers due to artificially low interest rate. 1% deposit interest rate against 4-6% inflation. Can not blame these people trying to look for higher return.

Tan Kin Lian said...

It is the lack of action by the Government that these scams are sprouting up here and there. They scammers avoid other countries, but they came to Singapore merrily. They even advertised in the mainstream media, knowing that they exaggerated claims will not be challenged.

If the Government does not take action, more people will be scammed. They are too busy working to read about what is happening, and they trusted that Singapore is an honest place.

Sure, their trust is misplaced, but it does not absolve the Government of its responsibility.

Tan Kin Lian said...

I know of someone, whose family invested a few million dollars in the gold bar scheme. I warned him to get his money out, but he had to wait for the maturity date (i.e. end of 3 months).

I do not know if they have taken out their money or are stuck. I hope that they do not suffer a big loss.

Lye Khuen Way said...

Well, some do deserved to be cheated one might say.

Overall, I agree with Mr Tan that the non action by our regulator and it is well known to those bad hats that had enbolden many to seek their "fortunes " right here on this little red dot.

The hands-off attitude adopted seems to have been an attempt to "open up", be more "liberal ", inject more "buzz" after the initial decades of tight government.

That is how extreme a ruling party can swing in less than a lifetime .
And the sad part, is that they honestly believe that they are doing us a favour!

yujuan said...

Ever since when the Govt is responsible and accountable?
Then, MAS would not have washed their hands off losses suffered by Minibond and high 5 Notes investors.
All these other possible investment scams, it's peanuts, not worth their attention.

zhummmeng said...

Th consumers have themselves to blame. Very they think they are very smart...not smart, they are greedy and that is why got into the trap. There are a lot of conmen who will get the trust of the victims like the insurance salesmen. If the customer do understand they won't buy. It is because they are ignorant and comatose that they get into trouble. They are good at nodding their head and pretend to understand so they don't look like fools but end up fools nevertheless.
Beware of the conmen and conwomen. They masquerade as financial consultant, some as Executive Financial Consultants, investment advisers . They are wolves in Financial consultants' clothing.

sgcynic said...

I definitely do not subscribe to this government's hands off 'light touch' caveat emptor approach to regulation. And I strongly deplore the unethical deeds of those who rig up such unscrupulous ponzi schemes. They potentially destroy lives. I see little difference between such schemes wiping out the retirement funds of people and drugs which cause similar impact on the victims and their families. Harsh punishments must be meted out to the perpetrators, but fat hope I guess.

Unknown said...

14 years ago, at the persuasion of an OCBC relations manager I bought $80,000 worth of unit trust named Asian Technologies. That manager also said he personally bought in - the way he said it gave you the confidence plus backing of OCBC name behind it!
It was CPF-approved but after some 7 years there was a name change and it was not longer CPF-approved. Yet my original shares were transferred lock, stock and barrel to this new portfolio. After some 7 years my original investment lost 50% of it value.
This is terrible especially OCBC sells it due to high commission it was getting.
I made an official complaint even to up to its CEO but the reply was "go complaint to MAS...". What arrogance.

Unknown said...

Mr Tan Kin Lian: was I scammed?

Tan Kin Lian said...

Johnny, hard to say if you were scammed. But I know of many retail investors who had the same bad experience. They invested in unit trusts and lost 50% of their investment.
If they invested in the STI ETF orblue chip shares, they probably made a gain. So, why should the unit trust make a 50% loss?
It is highly suspicious!

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