Investors lose RM1b in investment scams

Investors lose RM1b in investment scams

TheSun Updated: 05:35PM Wed, 17 Feb 2010 by Tim Leonard

PETALING JAYA (Feb 17, 2010): Investment scams promising high returns have become a menace in the country with investors losing over RM1 billion over the past five years. A Bukit Aman Commercial Crimes Department official said police recorded a three-fold increase in the number of investment scams over the period.

The scams are carried out by sophisticated criminals with elaborate set-ups, dealing in almost anything – gold bars, foreign currencies, beef production, birds' nest, organic fertiliser or fish farming, among others. "The victims of these scams come from all walks of life and include doctors, lawyers, judges, pilots and wealthy businessmen," said the senior official. "Victims fall prey easily because the scammers are so believable.

"These scammers have elaborate offices, wear designer clothes, drive luxurious cars and are often found mingling with high society," said the official. "Some of them actually own a farm, an orchard or a basic infrastructure for the products they are promoting and it is quite impossible to detect if they are genuine or fraud in the initial stages.

"They rope in investors from all walks of life, promising returns from 20% to 100%, and in some cases, even 300%. The official cited one company which went around collecting investments of between RM1,000 and RM5,000 per person for a real estate project, promising a 300% return on the investment. "Within one month, they raked in more than RM2 million in investments. But in reality, no real estate project existed.

"So if you are approached by your friends or relatives, or anyone promising unbelievably high returns for your investment, take note that the deal is often a scam," the official said. "In some cases, investors received their returns but the entire scheme is a Ponzi scheme where money from new investors is used to pay old investors.

"And when new investors stop coming in, the money runs out and the promoters of the scheme close shop. The official said in some cases, investors who receive their returns become greedy and re-invest in the scam before realising they have been conned, by which time it is too late. "Unless the investment scheme is licensed by Bank Negara or the Securities Commission, it is illegal and, therefore, provides no guarantee on the investment," he said.

Several investments schemes highlighted in the media recently include:

* A CEO of a company involved in livestock farming and beef production pleaded not guilty in the Seremban sessions court recently for illegal deposit-taking activities amounting to more than RM70 million within a period of eight months in 2008. Bank Negara officers raided the premises of Eastana Farm after complaints from the public that the company was allegedly collecting minimum investments of RM3,000 with promises of high returns;

* Several investors of a Macau-based casino investment scheme lost between RM1 million and RM4 million each in Penang last month. They were initially taken on paid holiday trips to Macau and given luxury watches as gifts but the perpetrators of the scheme eventually disappeared with the money.

*BNM already advise that they expected the scams will increase in 2010. Beware guys..!!!