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Monday, August 07, 2006

Bogus schemes galore

by Jeremaiah M. Opiniano

MANDALUYONG—Pseudo-investment schemes such as Ponzi and pyramiding do not only promise quick cash to ordinary investors, but also rake in millions to billions of pesos for operators.Ponzi scheme operators, explains lawyer Lalaine Monserate of the Securities and Exchange Commission, pay exceptional returns to investors coming from the deposits of “a growing number of investors.”

Generally, an investor can receive seven post-dated checks, said Monserate of the SEC compliance and enforcement division.
Suspected Ponzi companies get helped by agents or counselors, either an individual or a corporation, who will recruit as many investors, she explained.
The company or individual agent then gets the deposit of its first investor, who tells others of this “good investment opportunity” and who also receives an interest income.
A second one comes in, gives his or her investment, and also earns from the interest.
The first investor is then paid by the agent her or his next interest income as a result of the money from the second investor.
When a third investor comes in, gives his or her money, and earns interest income from it, the second and first investors also get their next interest incomes. The cycle then continues (see diagrams A, B, C and D).

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