One Dream nightmare

The Securities and Exchange Commission’s website has an investment scam checklist, which comes with a fairly understandable chart, to aid page viewers on how to spot scammers who are out to dupe people in get-rich-quick schemes, either by taking their hard-earned money or enticing them to borrow.

In bold, the page’s title screams: “Offer of high or fantastic earnings on your investments or some business opportunities? Think, examine, and diligently study the offer!” The rest of the page deals with steps one should take when confronted with such offers.

The page also offers a link to SEC advisories (babala) on the left vertical banner. Clicking on this will open up a long list of issuances by the regulatory agency naming names of companies or entities that offer highly suspicious investment schemes.

Of course, the Internet is one of the least places for victims of investment scams to visit for advice, if they were looking for one, which could be one reason why these crimes continue to persist.

Charles Ponzi, the father of pyramid scams, must be so proud in his grave since his “legacy,” which he started in the 1920s when he started soliciting investments that promised returns of as much a 50 percent in just six weeks, still continues to thrive.

They never learn

In the Philippines, the first headline-hogging scam was Agrix by Sofronio Blando in the late 1970s which was based in Los Baños, Laguna. The news and investigations that followed seemed to have served as a good warning to the public – at least for a good 10 years.

Then came the infamous Bancap (Bank Capital Development Corp.) scandal where a group of young women were able to trick seemingly financial-savvy individuals and even some banks to purchase treasury bills that bore interest rates of up to 12 percent.

Today, it seems we eat scams everyday, starting from the simplest attempts via mobile phones – to the big-time solicitations, the most recent being that of FLAG (for Freedom Life Advanced Global) Prosperity aka One Dream.

The company, which was discovered (too late) to have been soliciting investments without the appropriate permits, had run off with an estimated P3 billion as claimed by just a handful of victims, alleged P3 B loss could have been based on a 10 percent per day return on investment agreement.

Still, with more claimants expected to surface, the original capital lost by the FLAG/One Dream victims could well be in the billion-peso mark. That’s still a lot of money from people, some of who claim to have borrowed their “investment,” to lose.

There ought to be a law

On the other hand, these “victims” are not entirely guiltless or guileless. With the impossibly unsustainable promised payouts, greed had definitely paid a large part in these people’s decision to participate in the investment charade.

Just as justice is served to the masterminds and instigators of these scams (if they are caught), there ought to be a law – a Solomonic judgment – that carries punishment for those who willingly invested and participated in them. After all, greed is a sin that deserves retribution.

There should also be a law that penalizes our government for acting too late in weeding out these unscrupulous deeds. The SEC warning, for example, was posted only after the FLAG/One Dream complainants surfaced.

In Congress, a bill strengthening financial literacy is still being debated on. While its main goal is to bring financial literacy to the classroom, there should be a component that provides for a wider base of Filipinos with safeguards against investment scams.

Adding up the amounts lost by victims of these schemes, the total comes up to a hefty figure. This translates to money that has been taken away from the country’s economic machinery which could have been generating more revenues today.

Grassroots financial literacy

There are a number of institutions, including those in media, and companies that have taken up financial literacy as an advocacy. Judging by the high prevalence of scams sprouting up these days, such good deeds are not enough.

In the Philippines, one of the better vehicles that could be put to use in ensuring such investment scams do not flourish is through the much-empowered local government units at the barangay level. They also make good listening posts that can act as early warning devices.

In addition, barangays can establish their own financial advisory boards, similar to those involved in health and other social interventions, that can provide advice in simple financial matters like saving in banks, to setting up businesses or investing in stocks or mutual funds.

As the country’s economic credibility continues to gain strength, there will be more opportunities opening up for our countrymen that can encourage them to become more productive; grassroots financial literacy is a good way to encourage this.

This is also a desirable way to discourage the growth of investment scams that can raze a family’s hard-earned fortune to the ground, and in a sense, plunder the country’s economic wealth.

Money smart

Let’s have a culture where Filipinos can be money smart – to become a nation that intuitively knows the real value of their earnings. This starts with people who know how to spend their money frugally and wisely, who can set aside funds in trust-worthy investments, and who can well manage productive ventures that can give jobs to others.

If Filipinos should dream, or have a truly worthwhile one dream, it is to have a better life through the right way, not by dreaming of instant wealth through impossible and unbelievable get-rich schemes, even through instruments like the state-owned lotto and other similar games of chance.

Let’s not be gullible or greedy by thinking P100 will become P1,000 in a week’s time, or that a gamble, no matter how small, will transform us into instant millionaires tomorrow. There is no substitute to being money smart and working hard.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us at www.facebook.com and follow us at www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.