New scams, same old tune

Noet Ravalo wrote an excellent piece today on scams and how to do a quick sniff test so that you don’t end up being victimized by crooks.

An email writer also tipped MoneySmarts about a company that’s offering investment schemes with fantastic returns. I’m in a fighting mood today, so let’s see if this company passes our smell test. After all, if a company offers a legitimate investment option, it should be able to survive public scrutiny, right?

The company goes by the name Suise Financials, oddly similar to the name of Zurich-based investment bank Credit Suisse Group. Don’t confuse the two. They are not related.

You can find the company only by going to its url http://deutchfrancs.com/?pg=home. There is no office address or any whiff of information in the website on where this company is physically or geographically based. Very convenient, as the AMLC will now have a difficult task of finding out which regulator of which country to contact. It’s a “don’t find us, we’ll find you” thing, because the only way you can get in touch with its representatives is via an email form on the website.

The company promises to give you a 10 percent commission every time you successfully refer one person to invest on the left side of your network and another one on the right side of your business network. The persons that invest under you then get their own referrals to invest in the company under their own right and left trading post, and so on, giving you a chance to “leverage” on the efforts of others. In short, this is where you supposedly earn your quick buck: refer two persons, sit back and watch your money grow.

This is called a binary scheme, a marketing strategy that’s being used in many Ponzi schemes.

You become a “Suise financial consultant” when you initially invest, and then becomes a “Suise finance financial planner” when your network grows. If you just follow the company’s instructions, the company promises that your start-up capital of $10,000 gives you a return of $81,000 in six months, guaranteed. That’s an 800 percent return in half a year.

Let’s see how this company fared during my smell test.

Stink number one:
No physical location, no known regulator, no investment management credentials like a CFA charterholder managing my money when the company is supposed to be a world-class investment company.

Stink number two:
Companies make money by either selling services or goods. I don’t see any “financial product” being sold by this company that will create the return or the value it is promising. It does not explain how it will grow your money. It does not even pretend to explain. Its website says:

“As specialist in international investments, we offer variety of financial services and investment opportunities to individuals globally and assist them in managing and reducing the risk of their investment. So, we invite you to come and grow with us. Take advantage on the business and investment opportunities that awaits you and let your money work for you.”

So, what are these global investment opportunities? What are these financial services? No mention of bonds, equities, commodities, real estate, foreign exchange, structured bank products, lending…it’s all smokes and mirrors. It sounds nice especially if you don’t know a thing about global markets. But a closer look shows vague statements, at best. If it does not have a product, where will it get the money to pay the return you were promised? Most likely from the people you referred.

Stink number three:
The promise of unrealistic returns is the thing that stinks to high heavens. I’m sorry, but no company can guarantee an 800 percent return in six months. Not investment in stocks, not in lending, not in gold, mining or finding Yamashita’s treasure.

Stink number four:
Filipinos are generally risk-averse. That’s why we have P1.3 trillion in time deposits. We don’t like volatility. But we like guarantees. We are suckers, however, when it comes to default risk. As long as someone guarantees the return, especially someone that we know, we part with our money even if there is a possibility we might not see the person tomorrow.

If you read the stuff in its website, Suise Financials claims experience and investment expertise. What, does it have access to instruments that no other company in the world has, that’s why it can offer fantastic returns?

If something is too good to be true…it probably is. Trite but true

This company may be able to give you the return you promised. It’s possible that some investors have already received returns since this company was introduced in the Philippines a few months ago. But if the four stink bombs I enumerated are in any of the investment schemes being offered, just walk away instead of trying to sift through the confusing claims. Asking more questions when you know it smells bad sucks in victims. Investing, for all its technicalities, is not that complicated.

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