Scams and Ponzi Schemes

The local, national and international news reports nowadays are monitoring incidents of violence in southern Philippine provinces where a reported 12 billion peso ($290 million) allegedly a “Ponzi scheme”  has duped over 10,000 people.

Department of Justice (DOJ) Secretary Leila de Lima, at a news conference, said Aman Futures’ investment scheme could be the biggest scam the country had seen so far. When Sec. de Lima was asked whether this pyramid scam perpetrated by Aman Futures was bigger than that of the Legacy Group of the late Celso de los Angeles, De Lima said “it looks like it””. 

To be honest, if the news reports and figures are to be believed, this could be one of the biggest scams uncovered in the Philippines or maybe even in  South East Asia.

What is equally surprising is the fact that Aman Futures Group Phils. Inc. only started in February 2012 and had already victimized more than 10,000 investors. Normally schemes like this, for it to hit this number of victims and magnitude needs at least a good number of time to build or years to create “the illusion” of sound business, profitability, even to the point of hiring an External Auditor to add credibility when they give out Financial Statements (FS) which is the common “smoke and mirror” in bogus investment firms. I guess, Aman Futures is really one for the books.

Believe it or not, as early as 2003, I already have been writing a series of articles in The Freeman in cooperation with my good friend Nelia Navarro of the Department of Trade and Industry - Cebu about warning the public against “Scams, Frauds and Pyramiding Schemes”.   

Furthermore, with my 20 years of experience as the Assistant Vice President for VisMin Operations of the then Credit Information Bureau, Inc. (CIBI) now CIBI Information, I am privy to  a lot of reports and complaints pertaining to this modus operandi. Although my heart goes out to the victims, I could not help but be saddened by the fact that a lot of good executives, most of them victims’ themselves just stay silent and so in effect the scam artists are getting away with murder – so to speak.

So for the next couple of weeks, I will be coming up with series of articles on this topic with the hope that it could somehow prevent my readers to fall victim with this so called “get rich quick schemes”.

What is a scam? The Department of Trade and Industry (DTI) defines scam as “a trick to cheat you of your money, carried out by people who seem smart and charming but are actually looking for ways to take your money without your knowing it”.  Let us just take for example the classic “Ponzi-scheme”. The  Ponzi-Scheme “offers huge profits from small investments in short period of time”. It was reported that the term “Ponzi-scheme” was named after Charles “Carl” Ponzi who made roughly $ 9.8 million from 10,550 people including the Boston Police Force. This happened sometime in 1920. What is fascinating though is the fact that even after 92 years, the scheme is still victimizing a lot of people worldwide and I bet  more will be victimized still in the future. As they say: suckers are born every minute. (To Be Continued).

For comments, rejoinders and questions related to credit & collection, Mr. Ed F. Limtingco can be reached at [email protected].