Tan Kin Lian / Columnist
Someone sent me a link to an article in an English newspaper about scams recently. I looked through the article and found that some of these scams are common in Singapore. They include the following:
Phony jobs
This is usually an “advance fee” fraud where you wire money in the expectation you will get a job, usually one offering substantial money for “part-time work from home”. The money transmission may be called a “test”. Fraudsters often use the names of legitimate companies and “guarantee” earnings.
Mail-order brides
This is really sad. Scamsters look for lonely people – usually men – and offer them love on the internet or by post. The “beautiful” women, who often claim to be Eastern European or Asian, don’t exist: what victims see are pictures copied from entertainment, fashion or celebrity magazines.
Once hooked, men are asked to send their lovers money for air tickets, cash for “the family” or even amounts to pay off old boyfriends. To keep them interested, the targets may be sent sexy pictures or intimate clothing items. Victims are strung along until they realise they have been stung – or until they run out of money.
Investments
Persuasive salesmen cold call investors and try to persuade them to buy shares or commodities on the promise that “they will double or treble your investment in three to six months.”
The sales pitch may have a pinch of truth, but what is on offer is phoney. Investors are often shuttled between “analysts” and “senior analysts” but these titles are meaningless.
The shares are usually in companies that don’t exist, while those bets on currency exchange rates or heating oil are never made – often the salesmen tells victims they have quick gains, to encourage them to invest even more.
Nigerian scam
When the “widow” of a former Nigerian dictator emails to ask your help in getting access to the millions that happens to be locked in a bank account, most treat it as a joke. Using various names, this scam has been around for at least 30 years. While the dictator was real, and the fact that those in corrupt regimes stashed away money in offshore banks is not disputed, the widow is a total phoney – as is the promised bank account.
Land banking
Here you are persuaded to pay a large sum of money for a tenth of an acre in a field – on the promise the land will soon receive planning permission and soar in value. So far, no land banking site has ever gained the building go-ahead.
Most land sold in this way is green belt or zoned for agricultural use only. But land bankers seize on every government statement about the need for more homes to stress that this means that it is certain that the site they are selling will soon be covered in houses – like almost all scams, this relies on an element of truth.
A few more
I posted these scams in my blog (www.tankinlian.com) and received a few more contributions.
Oil Pods
This company used to advertise in many seminars and investing seminars. It appears that they and their investors were conned. The company has filed a Motion for Appointment of Receiver to administer and manage the business affairs, funds, assets and other properties for the protection of the investors.
Sunshine Empire
Recently the Sunshine Empire’s finances were frozen due to investigations. My uncle was quite sad over it as he had made some investment in it.
Stronger Regulation
I believe that there is a case for stronger regulation for the protection of small investors. I suggest the following measures:
> It should be a crime to cheat people or to mislead people. The regulator should take action against people who create these scams and should be ready to prosecute these promoters in court.
The courts can decide if it was a genuine business or the promoters had the intent to cheat the public. I have high respect for the former and current Attorney General of New York City as they are prepared to take action against businesses which were involved in questionable practices.
> Special attention should be given to businesses that promote the investment schemes in the main stream newspapers. These advertisements should be put to a higher standard of scrutiny by the authority.
If the authority is not able to decide on the fairness of these advertised products, how can they expect the small investors to make the judgment?
The small investors are likely to believe that an advertised product has gone through some scrutiny by the authority. If the authority is not sure, they can ask questions of the advertiser, or they can appoint an expert to give an independent opinion.
The authority can also ask the consumer association to engage the experts to give an opinion. The opinion should be displayed in a website for easy reference by the public.
Conclusion
It is the role of the authority (i.e. Government) to protect the consumer from being cheated by scammers or even by legitimate businesses that offer complicated financial products that are unfair to small investors.
It may be difficult for the authority to draw the line between what is fair and what is cheating, but this difficulty should not give the reason for the authority to abdicate its responsibility. They should make the initial judgment and leave the final decision to the court.
I concede that some of these scams will be difficult to detect and prevent, and that the problem will not be entirely eliminated by stronger regulation and enforcement action. But, pro-active action by the authority will go a long way.
———-
HELP keep the voice of TOC alive!
If you like this article, please consider a small donation to help theonlinecitizen.com stay alive. Please note that we can only accept donations from Singaporeans. Thank you for your assistance.Do you have a flair for writing? Volunteer with us. Email us your full name and contact details to theonlinecitizen@gmail.com
Anyway, for some background on 419 scams you should google it up and look for information at the Met’s (LMP) site, the SPF/CAD’s or the FBI’s.
Is all Landbanking is a scam .? Every case in the UK so far has proved to be.
In the UK you can say Land Banking is a scam and the papers often do because there are many thousands of cases of good people losing all their money. There are no audited cases of end plot investors being successful . One of the biggest property booms ever just ended at the end of 2007 in the UK so you would expect that there should have been some plot based land banking success in 2006 and 2007 but there was none.
Many of the Land Banking companies with similar names to those now operating in Singapore offering UK plots have been shut down in the UK by the FSA and are NOT allowed to offer those plots to people living in the UK.
As a Brit let me say this. Imagine I was offered plots on the Padang in Singapore by a UK company that was not allowed by MAS to operate in Singapore. Would you Singaporeans suggest it as a good investment ? It is open land in the middle of the city. Ideal for building on and Singapore is short of building space. Would you expect the Singapore government to protect a stupid foreigner who made that investment ?
Dont invest in what you dont understand.
This Topic is a good one for the next speakers corner outing. Maybe more people will turn up as it does not touch on politics but more on their pockets.
If the topic is used for the next outing.. I would like some discussion on the current unregulated advertising of all sorts of “gurus” – forex, stock, internet … who uses explosive gains, fake phds to entice people to sign up for courses for a few thousand dollars.
I think it’s sick people are feel good profiting using unethical methods.
I is also a Brit in Singapore and I think you is the expert on land banking so I has to listen to you. There is this man tell me it was a good investment and she show me a brochure that many pupil has make money in land banking. Now I knows better.
Actually I thought that was a good piece of information about land banking companies in the UK being ‘shut down’ by the UK authorities and not allowed to offer plots to people in the UK. For what reason were they shut down?
Singapore’s model of financial regulation is based on the model used in the UK. But, the role of the regulator appears to be different.
In the UK, the regulator (Financial Services Authority) are quite active in taking action against business practices that are unfair to the public. The regulator in Singapore is not active in this area. This is why more scams are happening in Singapore.
Somebody asked why the newpaper article did not mention “land banking”. The answer is now clear. The regulator (Financial Services Authority) disallow land banking to be sold to the public in the UK.
It looks like these land banking plots are allowed to be sold in Singapore. Perhaps, this is an example of the pro-active action that should be taken by our Singapore regulator. If it is disallwed in the UK, there are reasons to study how to disallow it in Singapore.
It may be difficult for the regulator to act on private sales, but they can certainly act on advertisements in the newspapers and television.
It seems many bucket shops exist and they advertise their businesses with the Local Print Medias!
patriot
Sad to see so many people get conned =(
The structured products (e.g Mini BOnds, Pinnacle Notes) have caused a lot of loss to the investors.
There were fraud in the way the products were designed and marketed. Like a scam. I hope that the regulator (MAS) will take pro-active actions to investigate this matter.
Do not sweep it under the carpet.
[Actually I thought that was a good piece of information about land banking companies in the UK being ’shut down’ by the UK authorities and not allowed to offer plots to people in the UK. For what reason were they shut down?]
The buying and selling of land for profit in the UK is not illegal and can be very profitable if you know what you are doing. With plot based land banking most of your money is not going into land it’s going into paying for a service .
With plot based land banking you buy a small piece of low value land. You also buy a service to collectively apply for, and hopefully obtain planning permission and then sell the land onward at a profit.
In a real example UK land was purchased by the land banking company at S$1000 a plot without planning permission. That land is sold today by the land banking company at S$15000 per plot without planning permission.
What do you get for your S$14000 mark-up? The land banking company say they will apply for planning permission on your behalf and if successful negotiate a collective sale at much more that S$15000 per plot.
This by the FSA (UK Financial Services Authority) definition is a collective investment scheme because a group of investors rely on the future services of an individual company to make the investment work. If you offer collective investment schemes in the UK then you have to be licensed by the FSA because there is a huge risk for both mismanagement and fraud. Unfortunately once most or all of the plots are sold Land Bankers have been known to take the money and run, or go bankrupt with mysteriously no cash available to refund investors. Or simply there is no chance of planning permission and they fail to notify you clearly of the real risks.
Its a highly profitable business. These companies often operated for a few years before the FSA caught up with them. Presumably they could not meet the requirements to get licensed so were either shut down or chose to go into voluntary liquidation in the UK and move their operations overseas.
High level FSA requirements are here.
http://fsahandbook.info/FSA/html/handbook/PRIN/2/1
Note that FSA licensing does not guarantee an investment but it does mean it’s managed within a certain set of rules.
I have no connection with either the FSA or any Land Banking Company.
so far, the authority has not declared land banking in Singapore as scam…hope my statement is correct…
You know, in Singapore many have this kind of thinking “if it’s a scam, sure the government will take action and the fact that government does not take action means land banking most likely is not a scam”…
i agree with Tan Kin Lian, regulatory should be more pro-active in tackling the scams that are getting more and more sophisticated in Singapore…
Here is a very recent article on this from the UK. Note this only about UK land plots – i can not comment on what other countries do but it does describe the UK situation very well. It strongly advises readers not to invest in UK Land Banking plots.
http://www.moneyobserver.com/content/sod%E2%80%99s-law-comes-little-too-late
“While the swindled try to recover their losses, devious landbanking companies are moving into other areas in their search for gullible investors. A quick search of online investment forums shows that parts of Ireland are still under attack from landbanking advertising and cold-calling; while the founder of UK Land Investments is reported to be active in the Middle East.
Incredibly, some financial media outlets continue to carry advertising from landbanking companies. In late June 2008, The Motley Fool website had to apologise after it sent an email to subscribers carrying an advert from CLS stating: ‘Landbanking gives you a VERY low risk and potentially VERY high return investment opportunity!’
It remains the case that Money Observer does not know of a single landbanking scheme that has received planning permission and created wealth for its investors. In contrast, there are still thousands of investors holding tiny, worthless patches of land up and down the UK. The simple advice is: don’t become one of them.”
Report on Land Banking companies being investigated in Malaysia
http://www.bernama.com.my/bernama/v3/news.php?id=367182
KUALA LUMPUR, Oct 24 (Bernama) — The Companies Commission of Malaysia (SSM) today raided three companies suspected of offering investments in illegal land investment schemes.
The raids were conducted simultaneously at the UK Land International (M) Sdn Bhd, Profitable Plots Sdn Bhd and Edgeworth Properties (Malaysia) Sdn Bhd.
There are three key questions to ask yourself on land banking.
1: If I could sell this plot today on the open market what will I get for it ?
2: What is the latest date that they will apply for planning permission on this land.
3: If the company should fail how do I get the planning permission service and sell my tiny plot and get my money ?
If you pay $100 for something that is only worth $2 then capital appreciation doesnt get your money back until you are long dead. Even then inflation will destroy any benefit.
The facts say with UK plot land banking most of your money is going towards a future service that almost certainly will not be delivered. If it is delivered it almost certainly wont be successful. Uncertainty * Uncertainty = not going to happen.
Most of your money is NOT invested in the land. The true value of the land is much lower than anything you hand over UNLESS the land gets planning permission. Based on all evidence it is pretty certain it wont.
Some people buy magic rocks , some people believe in father christmas, some people buy breast enhancement cream, some people buy land banking plots.
Some people like to believe in magic and they like to believe the magic favours them. Some people continue to believe in things that dont work despite all evidence to the contrary and will deny all attempts to inform them.
All scammers understand this and thats why a certain portion of any population is open to being cheated.
The negatives effect of businese friendly policies is that undisirable companies also come into Singapore either set up by local or foreign with local partners. Our gahment seemed to have a policy that Singaporean should look after themselves. However, they are the one that make laws and enforce them, so it is only natural for us to look up to them to do their parts. I had a unwritten rule that I will not give any personal details or buying anything over a telephone no matter how good a bargain it may be. Usually it is too good to be true. Just hold tight to one money and personal details should be the motto. Personally I had received many unsolicited messages offering all sorts of goodies at bargain prices both by phone and Email. For mail – just delete it without opening any attachment and for phone – Answer – I never buy anything over the phone. If it is so good, please send the information in the post for me to read and consider. That normally end the conversation and no further action needed.
It seem to me, we have a gahment that would do as little as possible for the citizen. Problems what problem? Take them to court if you want your hard earned money back. Gahment want the authority but not the responsibilities that go hand in hand with authority. A gahment that do not take its responsibilty toward its citizen seriously is a gahment ripe to be booted out. Let another party have a chance to govern us. Surely keeping the same is not a palatable option. Gahment is responsible for making laws, we know we have law about cewing gum and drug use etc. So it is natural as citizen to look toward the gahment to ban or procecute those irresponsible companies.