Why Pinoys keep falling for investment scams
MANILA, Philippines - When Aman Futures head Manuel Amalilio visited Pagadian City for the first time in April, he promised to make the city the financial center of the Philippines in a year and a half.
Improbable as Amalilio's promise sounded, it was still enough to convince Pastor Hipolito Paner and members of the Christ the Lord Glory Church to invest their hard-earned money in Aman Futures.
"He (Amalilio) said, 'I saw the people of Pagadian are very poor... In a year and a half, I am going to make Pagadian City the economic center of the Philippines," Paner said on ANC's On the Money special "Toppling the Pyramid", Monday evening.
Paner recalled that Amalilio even started giving him cash, starting with P5,000 and going all the way to P50,000, even without making any investment.
Amalilio initially convinced Paner and other church members to invest in Aman Futures by saying he wanted to teach them about stock market trading. The pastor eventually invested P110,000 of his own money and as much as P7 million of the church's funds in the company.
"He started to inform us about Bloomberg TV. We watched every day from 2:30 a.m. to 5 a.m., so we can learn about stock market trading. We believed with all our hearts this is something good because your money would double within a month or more than double your money," Paner said.
He admitted they tried their best to understand the stock market, but they didn't get much information from Amalilio, who said he made investments in commodities as well.
Any doubts the investors had disappeared when they started getting big returns. Some even got as much as 86% interest in just 19 days, Paner said.
"Akala ng ibang investors nasa amin ang pera kasi yun simbahan lumalago ang tithes ng mga tao, yun offerings every Sunday, umaabot ng P3.8 million, sa isang service lang yan," he said.
Pinoys too trusting?
Paner is only one of around 8,000 investors victimized by Aman Futures.
Unfortunately, the Aman Futures scam is only the latest in a string of investment scams that have victimized thousands of Filipinos in the last few years.
For instance, Multinational Telecom Investors Corp. (Multitel) duped investors of P25 billion in 2002, while the Legacy Group scam in 2008 reached P30 billion.
Despite media coverage about these scams and efforts of regulators to educate the public, it seems Filipinos still put their trust and money in these schemes that promise sky-high returns.
Securities and Exchange Commission secretary Gerard Lukban said investors should be extremely wary of "investments" that promise high returns in a short period of time.
"The first thing they do to lure investors is to promise big returns, returns that are too good to be true... We've been telling the public that if the offer is too good to be true, it's not true," he said.
"High" returns can mean anywhere from 4% interest in a month to as much as 40% to 60% interest, which Lukban noted is "impossible."
Asked why he thinks many Filipinos fall for pyramiding scams, Lukban said Filipinos are generally trusting.
"When they're offering something that's too good to be true, they start producing results in the beginning and that's what we call, 'pinapadama' daw yun una...So they get a taste of the good life to start with," he said.
"Some will say, you get the interest front-loaded, you get a new car and at the end of the term, you get back your money with interest. A lot of people will fall for that. We saw that in Legacy and other schemes. Little did they know the vehicles given to them were purchased through financing and the amortization were never paid. At the end of the day, the cars were repossessed and they ended up with nothing."
NBI Anti-Fraud Division head Cesar A. Bacani said investors should really ask questions on where their money is being invested.
"Maybe our people should ask where are they investing the money. Yung iba, hindi na nagtatanong because of trust, because of referrals. Eh, 'sige lang basta kumikita'," he said.
However, some of these "victims" of investment scams may not be totally ignorant of the risks.
"When we had the Francswiss (scam), we received phone calls from investors, asking us, 'why did you issue an advisory, we haven't withdrawn the money yet.' So you know that they probably knew what they were getting into," Lukban said.
Lack of gov't action
Even complicating the matter, government agencies cannot take preemptive action on an investment scam, unless a complaint is filed.
NBI's Bacani said their office in Pagadian City had already been alerted about Aman Futures as early as June, but could not act to stop the scam since there were no complainants.
"Our agency was even branded as spoilsport in Pagadian. 'Why are you entering the picture? We are earning money here and you will stop us from earning?' So we kept monitoring and waited for complainants to come in so we can formally start an investigation. Only in October that complainants surfaced," he said.
Victorio Dimagiba, director of the Department of Trade and Industry's Bureau of Trade Regulation and Consumer Protection, said the government should be more pro-active in stoppping these scams.
"We in government should get our act together. Baka we don't need a complainant before we can act and formally stop an operation... We know an investment security has to be registered with the SEC. If it's not registered... I
think on that basis, the government has motu proprio powers to file a complaint," Dimagiba said.
What to look for before investing
SEC's Lukban said investors should look for 4 things before making an investment in any company:
First, the company registration, which can be easily checked on the SEC's website;
Second, the company's secondary license to sell securities or investment contracts;
Third, registration of investment contracts and products;
Fourth, registration of the broker-dealers who are selling the investment products.
Teresita Lisama, Bangko Sentral ng Pilipinas Financial Consumer Affairs group officer-in-charge, said investors should make sure they know the company, the people behind it, the product and the recruiters before making an investment.
"We always say education is the best guard against any scam or fraud. Government agencies have the responsibility to educate the public, like the BSP we have an advocacy on this. BSP has a continuing financial education program," she said.
But when you have questions about a particular investment company, Lisama said it is best to consult the regulators.
"When you are in doubt, ask the government regulatory agency," she said.