Tell it to SunStar: Beware of the Ponzi scam

Tell it to SunStar.
Tell it to SunStar.SunStar file photo

By Renester P. Suralta

Recently, a group of people went to different media outlets to report their unpleasant experiences. These people came from all walks of life and middle-class families. They are regular employees in government and private companies, businessmen, well-off individuals, and ordinary students.

They all have something in common. They put up some money expecting a considerable return, but it didn’t materialize as promised. They were victims of an investment fraud called a Ponzi scheme, commonly known over centuries as the “Rob Peter to Pay Paul” scheme.

According to Investor.gov, an official website of the United States government, a Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. The organizer often promises to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors or when a large numbers of existing investors cash out, these schemes tend to collapse.

Ponzi schemes are named after Charles Ponzi, an Italian swindler and con artist who operated in the US and Canada, and duped investors in the 1920s with a postage stamp speculation scheme.

The Ponzi scheme is characterized by unregistered investments, complex and secretive deals, unregistered sellers, no paperwork transactions, and high returns with no or little risk.

On May 6, 2022, former President Rodrigo Duterte signed into law heavy penalties against investment fraud. The new penalties are provided under Republic Act 11765, or the Financial Products and Services Consumer Protection Act.

Under the law, investment fraud covers Ponzi schemes and other schemes involving the promise or offer of profits or returns sourced from the investments or contributions.

The new law stipulates that any person found guilty of committing investment fraud will face a jail time of one to five years or face a P50,000 to P2 million fine or both.

In December 2023, the Regional Trial Court of Butuan City sentenced the masterminds behind the Kapa Community Ministry International Inc., namely Pastor Joel Apolinario, Cristobal Baradad, and Joji Jusay to life imprisonment after finding them guilty beyond reasonable doubt of eight counts of syndicated estafa.

Kapa was one of the biggest financial investment fraud scandals in Philippine history. An estimated five million people were duped by the religious company, which promised a 30 percent monthly return on investments for life.

If you have fallen victim to a scam, here’s something you should do:

For suspicious investment schemes, you may contact the Enforcement and Investor Protection Department of the Securities and Exchange Commission through e-mail at epd@sec.gov.ph or through landline at (02) 8818-6337.

For malicious messages, lodge reports to the National Bureau of Investigation (NBI) Anti-Fraud Division at (02) 8525-4093 or e-mail at afad@nbi.gov.ph. You may also send a message through the NBI’s website at www.nbi.gov.ph or their official Facebook account. You may also report these incidents to the Philippine National Police Anti-Crime Group through www.pnpacg.ph or hotline number at (02) 8723-0401 local 5313.

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