The Singaporean head of a forex trading firm in the Philippines is reported to have disappeared with $212 million of customers’ money. This supposed ‘fund’ seems to not have been properly registered as a fund with the proper trustee structure in place. Instead, it was a company, called Performance Investment Products Corp (PIPC) which guaranteed investors a 12% annual return on their investments.

Whenever we hear about these scams, we always wonder why investors put money there in the first place. First of all, any company that guarantees a return higher than the risk-free interest rate will have to take some risks to get that return. If it has to take risks, then how can it guarantee that return? Secondly, the Philippines is well-known as a hub for investment scams.

Due to widespread corruption and lax control, many companies operate ‘boiler room’ call centers out of there. These call centers will call potential investors (more like potential victims) overseas, and try to get them to invest in some sort of investment scheme. Many times they claim they are launching a company IPO and use a real, registered UK company when speaking to the investors. They will then tell investors how to look up in the real UK registry that that company exists and it will inspire faith that they are real. But while that company really exists, they are not really handling the IPO and have nothing to do with it. So when enough investors send in money, they will close shop and move to another call center with a different company name.

We have had several friends approached by these and have compiled all the details possible and sent them to both Interpol and Serious Fraud Office in the UK - both of whom did nothing unfortunately. The SFO in the UK said they only deal with scams which have already stolen over $1 million GBP, while Interpol said they would look into it and that was the last we heard.

In the case of this forex scam, it seems like it was setup slightly differently. But since the head of the firm ran off with the customers’ money, it would seem that the intent from the beginning was to eventually defraud investors.

After all, $212 million is enough to buy a new identity and a new life in a far-flung corner of the world.

Lesson: Always make sure your investments are with a properly licensed firm, in a country that provides good protection to investors, and that the funds are held by a well-known licensed trustee.

Posted in Categories: Forex, Scams.

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