Ponzi recruiters can go to jail

So, you made money in a Ponzi scheme. It was a gamble you took and you went into it with eyes wide open. No big deal, it was your money anyway.

However, chances are you convinced your kumare, your cousin, your officemate, and your driver. It was their chance to get rich, you said. Hey, they made some money too — for some time. Unfortunately, bad people like the media and the government tried to get their cut and the entire thing went up in smoke. You shrug and say, I only invested what I could afford to lose.

Sorry to say, the happy story does not end there.

The Securities and Exchange Commission and the Anti-Money Laundering Council confirmed Thursday that recruiters in Ponzi schemes, even if they had no takers, could be jailed and their assets frozen. The technical term is civil forfeiture. That means assets can be frozen even while recruiters’ lawyers are still trying to defend them in court.

“If you recruited, you may be unduly linked to activities defined under the Anti-Money Laundering Act as a predicate crime,” AMLC executive director Vicente Aquino said. Jail term is from 7 to 21 years; fine from P50,000 to P5 million.

If you are merely an investor, however, the government cannot go after you. You are a victim and you are encouraged to approach the SEC and file a complaint in written form.

This is exactly what is happening right now. Victims are coming forward and filing complaints against Francswiss, Deutchfrancs and SMFund.com and other Ponzi schemes.

SMFund.com offers the same arrangement as Francswiss and Deutchfrancs except that the minimum investment required has been “McDonaldized” to $10 from Francswiss’ $1,000 and Deutchfrancs’ $10,000. It guarantees a return of up to 3% in a day.

“There is no legitimate venture on this earth that can offer a 4.5% or 6% return per day, even if it’s a foreign currency-denominated investment. Even pawnshops earn 3% per month,” Guevara said.

Names of six persons have been forwarded to the National Bureau of Investigation earlier this afternoon because they paid for advertisements soliciting investments for SMFund.com in publications based in Baguio City. I can just imagine how many investors have been taken in by similar advertisements, especially with the “SM” name, in other cities like Cebu, Davao, etc.

Good thing, two investors have already filed complaints against SMFund.com. One borrowed money to invest and the other used his own money. After the heat generated from the Francswiss arrests spooked the operators, they said they could no longer contact their uplines.

“Now they are left with an empty bag, so they have come to us and asked for assistance,” said Guevara.

The SEC is checking out around 100 entities as possible Ponzi schemes. AMLC’s Aquino said the government is working on banning these websites from the Philippine cyberspace.

Reports that Francswiss is trying to work out an arrangement with SEC to be legalized is pure bull, SEC said. I am paraphrasing here, but they definitely used a forceful tone of voice. “There is no way for this type of company to be legalized,” Guevara said.

Ponzi schemes are inherently and morally wrong because you rob Peter to pay Paul. “Persons earn interest not from a service or product, but from someone else’s investment,” Guevara said.

Recent investment scams have become transnational in nature and Ponzi operators move from one country to the next once the government of that country is hot on its trail. Swiss Cash, for example, has already been banned in Malaysia.

It made my head ache to realize that poor Filipinos were being used to pay investors from other countries. An unofficial count placed the money sucked in by these scams at P1.25 billion from up to 25,000 Filipino investors.

Who said the Philippines is poor? We have this much cash just lying around, waiting…waiting for the next scammer.

Don’t you fall for it, OK? Jails are never pleasant, especially in the Philippines.

Share This