Kai* is among fifteen Thais in Australia that SBS Thai has learned are seeking to recuperate $480,000 lost from a shady investing scheme they came across on Facebook.
Kai learned of the scheme through posts on many Facebook pages frequented by Thais in Australia. The messages, posted by a Thai woman based in Sydney, invited people to invest in her 'money-saving' scheme in return for an unusually high rate of paid interest.
"She offered some monthly and fortnightly 'money-saving' schemes,” Kai tells SBS Thai. “For example, if you invest $1,000 with her, she will give you interest of $60 fortnightly for the duration of three months."
After doing the maths, the interest rate came out at 12 per cent monthly and a little over 36 per cent for the duration of three months – a tempting return.
"She chatted to me online,” Kai says. “She said her business was legit. She paid tax. She said the investment was secure and I could get my money back 100 per cent."
A sample of Facebook post which shows an unusual rate, luring in new investors. (Source: SBS Thai) Source: SBS Thai
These schemes have successfully lured in several hundred Thais in Australia, including Kai who invested $25,000 of her own money into one scheme, while the Sydney woman continued to spin out similar 'money-saving' schemes to entice more 'investors'.
Warren Day is a Senior Executive Leader in Assessment and Intelligence at the Australian Securities and Investments Commission (ASIC), which regulates and enforces financial service laws to protect consumers in Australia.
He tells SBS Thai he has seen this type of investment scam many times before.
"It’s called a Ponzi scheme or a Ponzi scam,” he says. “It effectively is taking money from other people, who also think they are investing, to pay you.
"So, if you are the first person who has invested and you then get the [first] return paid, you think, 'This is going to be real. This is going to work.' In fact, you are getting paid part of the original investment from the next person who came along, and that happens each time. At some point, the last people who come along are going to lose all of their money."
Ponzi scams date back to 1920 when Charles Ponzi, an Italian immigrant in New York, promised that he could return his investor’s money with an incredible interest of 100 per cent in 90 days through investment stamps. In fact, there was no real investment, and Ponzi moved money as Day describes, robbing Peter to pay Paul on a large scale.
Over 30,000 people in the US fell victim to the scam. Once new investors dried up, the scheme collapsed, and eventually most of Ponzi’s investors lost all their money. Ponzi subsequently served 14 years in jail for 86 counts of fraud.
Kai faces a similar prospect of losing all the money she invested, even though she was paid some small sums of money as 'interest' here and there, in total around $3,000. However, the principal investment of $25,000 has never been returned to her.
Kai invested $25,000 of her own money into one of Ponzi scheme (Source: SBS Thai) Source: SBS Thai
While Kai, and the other 14 investors SBS Thai has learned of, discovered they would never see their total investment of $480,000 again, the scheme operator left Australia for Thailand and has not been heard from since.
ASIC's Warren Day warns that not only people from diverse communities in Australia could fall victim to this type of unlawful Ponzi scam, but Australians from all sections of society are at risk.
"I investigated a scheme in Geelong, here in Victoria, some years ago, and people in Geelong lost $70 million in that scam, run by a company called Chartwell,” says Day. “The two people who ran the scam were in Australia. They were arrested and went to jail for fraud."
In order to avoid such Ponzi scams and dubious investment schemes, Mr. Day suggested that individuals “do their utmost due diligence to protect their hard-earned money in the first place.”
The first step is to ask if the person seeking money has an , issued by ASIC.
"You can check on the to see if someone has an AFSL. If they don't have that, you shouldn't be investing with them,” Day says.
The next step is to ask both yourself and the person seeking your investment if the high return is fictional.
Warren Day is a Senior Executive Leader in Assessment and Intelligence at the Australian Securities and Investments Commission (ASIC) (Source: ASIC) Source: ASIC
"Check, write down and calculate their level of interest. If it is more than two to eight per cent per year, it's not possible. Ask about the offer, asking how is it that you can give this level of interest rate, because banks and superannuation funds can't. You will be amazed by the wild, the wonderful and fictitious answers that you are given."
Day says that people should also be cautious about investment schemes recommended even by friends and family members.
"If anyone in your family or in your community is saying this is a good idea, you should be asking them those questions as well.
“In Geelong, lots of people recommended their families and friends and said, 'We are making so much money. You should get involved in this as well.' Then, everyone lost their money. We found husbands and wives got divorced over this. There are fathers or mothers who cannot speak to their sons, and daughters who cannot speak to their mothers because of there embarrassment they felt later because of getting their family involved.
“So don't be afraid to say no and don't be afraid to say, 'this sounds too good to be true' and avoid it."
For Kai, she is struggling to find money to pay her credit card debt, and to pay back relatives and friends she borrowed money to invest in the 'money saving' scheme she found on Facebook.
She has reported the fraud case to police both in Australian and in Thailand, and hopes that the scheme operator, who is now in Thailand, will be prosecuted, and eventually she will get her money back.
If you come across suspicious investment schemes or you are a victim of a fraudulent investment scam, you can report them to ASIC and to find out who to contact for assistance at www.asic.gov.au.
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*Name changed for privacy reasons.
