Friday, July 20, 2007

Rich Filipinos lose millions in new financial scandal

I just read this interesting article from the Philippine Daily Inquirer this morning.

"Rich Filipinos lose millions in new financial scandal

By Daxim Lucas
Inquirer 07/20/07

MANILA, Philippines -- Another financial scandal has hit Filipino investors after online pyramiding schemes like Francswiss, which promised high returns, folded up when authorities exposed them.

This time, the victims appear to be the well-heeled.

As much as $250 million in investors’ funds may have been lost after the owner of a foreign exchange trading outfit disappeared, leaving the company’s bank accounts here and abroad nearly empty.

Because of this, an official of the trading firm called Performance Investments Products Corp. (PIPC) Thursday asked the National Bureau of Investigation (NBI) to help find the company’s Singaporean owner who is suspected of having salted away the funds.

In a letter to NBI Director Nestor M. Mantaring, Cristina Gonzalez-Tuason, PIPC general manager, requested the help of Interpol to locate Michael H.K. Liew, the owner of Performance Investments Products Corp. in the British Virgin Islands (Performance Investment, BVI)..."

Tsk...tsk... even the rich are not immune to the prospect of "easy" money. This is a big scam. Minimum investment is at 2 million pesos yata (around $40,000). It is estimated that the Singaporean owner Michael Liew had control of as much as $250 million of investors' money. The authorities have recovered around $2 million so far. Kawawa yung mga nag-invest at mga nag-refer ng clients sa company. Even the local partners and management staff claim to have invested their personal money in the venture. The loss of $250 million will have an impact on potential domestic investments. I imagine part of this money could have gone to the new company IPOs in the PSE.

I heard about Performance Investments (PIPC) from an acquaintance who told me that it is a sister company of the Performance Foreign Exchange Corporation (PFEC) that caters to higher-end clients. PFEC, by the way, is an online forex trading company in Makati. I wonder if he was able to pull out his investment in time. I didn't have the time and motivation to do some research about their connection until now.

Here's what I found out:

According to the PFEC website, its chairman is also a Michael Liew. He attended the inauguration of the Cebu branch. That information was taken down from the website when I last accessed it. I was able to save a copy of the web page.

Click image to see larger version

I don't know how common the name "Michael Liew" is in Singapore but I wouldn't "invest" in PFEC or any company in their group.

Mr. Michael Liew of Performance Investment Products Inc. (PIPC) as well as the other partners and staff of PIPC also helped establish a fund to renovate the OB-Gyn complex in the Philippine General Hospital last year. This donation may have helped build his credibility among the well-heeled crowd.

By the way, Francswiss was mentioned in the article as well. =) Francswiss was a pyramiding scam that made the rounds in Metro Manila recently. At least four people asked me about it and I told them that the offered returns were not plausible.


15 comments:

THE ANiTOKiD said...

Wow! One scam after another! What the hell is happening?

The Penniless Fat Guy said...

Honestly, I can't relate because I am penniless. This post is really an eye opener. There is notion that most rich people are smart because they easily make themselves richer. I guess this post will contradict such idea. Matalino man ang matsing, nauuto din. Tsk3!

towr said...

The government need to conduct a thorough investigation to other existing financial houses.

I believe that there are still many Forex trading('coz they are not 100% regulated) and other financial companies that are continously soliciting money to the public even though they already knowledgeable that they can't make a good trade.

Most of these companies invest heavily in marketing rather than in financial trading/researching.

Anonymous said...

PIPC is not a scam until hard facts are presented. It's been in business for 10 years and has invested a lot in the expansion of its business. Get the other facts before posting an opinion that gives people the impression that PIPC was a scam. Shit happens and there's always risk involved in every investment you make. The president ran away with the money but there were other signatories involved with the banks (ABN-AMRO to be specific). The bank gave away a huge amount to just one of the signatories. What happened doesn't make this investment a scam.

Anonymous said...

PIPC is not a scam. Yes, it would easily seem like it especially with how Inquirer wrote their article but it's not one. Please get the other facts before giving out an opinion that gives the impression that this was indeed a scam. The company has been around for 10 years and has invested a lot of money in expanding their business. Shit happens and there's always some risk involved in investments. The president ran away with the money. He was able to get the money from the bank (ABN-AMRO to be specific) despite the other signatories involved. That's controversial but what happened doesn't make it a scam. PIPC is a corporation and it is legal (until maybe you have hard facts to support that it's not then ill rest my case).

porkchaps said...

PIPC is not a scam. Yes, it would easily seem like it especially with how Inquirer wrote their article but it's not one. Please get the other facts before giving out an opinion that gives the impression that this was indeed a scam. The company has been around for 10 years and has invested a lot of money in expanding their business. Shit happens and there's always some risk involved in investments. The president ran away with the money. He was able to get the money from the bank (ABN-AMRO to be specific) despite the other signatories involved. That's controversial but what happened doesn't make it a scam. PIPC is a corporation and it is legal (until maybe you have hard facts to support that it's not then ill rest my case).

jedianalyst said...

@anitokid: Yumayaman na siguro mga Pinoy kaya marami na ulit scams.

@tpfg: I agree. Rich people has more resources but the emotional dynamics are basically the same.

@towr: i hear you. sadly, financial transparency and integrity is not the priority of our "legal" president.

@porkchaps: Haven't you heard of "legal" scams? Being incorporated isn't a guarantee that a company is not or will never be a scam. Some forex trading companies I know are like that. They just have good lawyers but what they do are essentially scams.

Let me qualify then for your sake... PIPC is a legal corporation with a good track record whose owner recently scammed investors of an estimated $250 million. Better?

Who knows if it was in his mind all along to run away with the money once it reaches a sizable amount? He couldn't have done this without a long and careful preparation.

Does this constitute a "scam"? You tell me.

Stop nit-picking on the terms. Scam or fraud, its not the central issue. How do you think investors feel?

Next time please include a URL link to your site so we can be more transparent.

j3nn said...

Hi! Am new here. I'm just curious how what happened at PIPC will affect the stock exchange and the dollar bonds in the Philippines if at all? How about the mutual funds, etc?

porkchaps said...

jedianalyst, i dont have a site and i just stumbled upon this blog while searching for information about the news. For your information, I'm an investor. How do I think the investors feel? Like hell, for sure. I should know. But let me get this straight, a scam for me tricks people into investing without them gaining anything in return. This was not the case for this investment. Well yes, the owner could have planned it all these years but on the other side of the coin, there could be a different story altogether. I'll say it again, before jumping to conclusions about this being a scam, let's get the hard facts first.

Anonymous said...

pipc is a scam. when it was offered to my relatives few years ago, i told them not to put money as it is a pyramid scam again. they give commissions to anyone who refers and they tell you that capital is guaranteed. for most people who is not in the financial business they immediately believe this. please ask yourselves the question "who is guaranteeing my capital?" pipc? Abn amro? did i open an acct with abn amro or was it under pipc? no investor opened any account with abn amro or other banks. pipc is a bvi company. a bvi company can be bought for 650usd only. any guy can have a bvi company that doesnt need capitalization or a single centavo in the account. this is why it is a big scam. big scams dont happen overnight. they wait patiently for the right time to drop the bomb. it can take years and years. the one who sells pipc are not even bankers. it can be housewives, your sister, brother, friends...you dont need to be licensed. they are not even bank tellers. pipc has no risk and compliance. this is why their brochure asked investors to keep this a secret and that you are among the privileged few to know about pipc. you know why a secret? it's like someone molesting you and asking you to keep it a secret. the sad part is, 12% or 15% isnt a big return. legit funds like sunlife, philamlife and even the stock market can give you double of that in a much more secured manner. the government cant stop greed of people. if it is too good to be true, then most probably it is.

Anonymous said...

next time someone offers you something and it is incorporated in bvi, there is a reason why it is bvi. also if the singaporean guy is in singapore, there is no where to hide in singapore. i dont think the singaporean ran away. it is all the people here who received commissions for referring are also responsible. and for the record, you dont need 1,000 banks to wire funds in the usd250mm. it takes only one bank. amla doesnt stop one from wiring funds. amla will just monitor large transaction and asks bank to record this large transactions. i dont believe one guy ran away with everything. this was all planned years ago. terrorists dont plan an attack overnight. it takes them years and years of careful planning and execution. the ones left are the innocent bystanders of the grand plan or the collateral damage. the funds in pipc were never invested in forex. there is no way to capital guaranttee forex in two months time. even george soros, warren buffet cant do this. leveraging your funds would mean investors have to pay interest on the loan, then you pay the one who referred then you pay 12% interest or 15% to the investors. there will be nothing left in your mnoney so they have to get new investors to support this whole thing. if you wanted big money and can take risk, you are even better off in a casino...i informed a friend two weeks ago that pipc is a scam, no she didnt believe me and said high risk high return...if capital is guarantteed, why would there be a risk? it's a scam

Anonymous said...

That's probably true, PIPC is not a scam and is a legal company established under Philippine laws .... difference is, its a legally established company that after 10 years of operation PIPC, and its head M Liew, decided to 'scam' its investors by somehow magically running away with the money ...unfortunately everyone working under Liew was caught unaware of his intention...and this is sad ! His employees were left holding the bag (and an empty one for that matter!) So now, no matter what you say, PIPC is a legal company that scammed its investors...and that is being politically correct.

There is a rule in the finance world, HIGH RETURN, HIGH RISK. And if you dont have the stomach to reap what you sow, you have no business sowing...

PIPC , employees , agents and etc.. all acting in its name, now have to stand up and face up to the charges that will be thrown its way...

Yup, whoever you are , enjoyed the high return of PIPC for 10years...now you have just experienced the consequence of this choice...

The world was, is and always will be ROUND...

Anonymous said...

I agree with jedianalyst. PIPC does have the makings of a scam. Any proper person involved in forex trading KNOWS that #1 capital in the forex market can NEVER be GUARANTEED (not even the best fund management groups/ investment banks in the world can provide this) #2 returns, even if PIPC claims to just give a 12% return per annum as they claim (though sources say that clients recieve much more than this, especially on the earlier years of the company). In this case, i believe PIPC promised both. It was only a matter of time that the PIPC bublle would blow up. True enough it did. I feel bad for all the people who lost all their life's hard work

jedianalyst said...

@j3nn:

My 2 cents

The amount of money taken by Michael Liew is estimated to range from $140-$250 million. That represents a lot of investment potential taken out of the domestic market. At the very least, the victims and their networks will be wary of making new financial investments in the near future. Our stock market will still attract foreign investors because of developments in the mining sector and some anticipated IPOs but they will leave at the first hint of trouble.

We've already breached our budget deficit target for the first six months of the year and it is expected that we will breach the annual budget deficit target especially in the light of GMA's SONA projects.

I don't think dollar bonds will be as affected by the PIPC scandal because its a long-term holding. The economic fundamentals remain the same, as of now.

What do you think?

jedianalyst said...

A skyscrapercity.com message board post when referring to financial scams like FrancSwiss and Multitel:

"These investment schemes, however, can seriously hamper the growth of financial markets because they tend to burn new investors and savers, who could have been new investors in legitimate financial instruments like bonds, stocks, mutual funds and structured bank instruments."

I think this is also applicable to the PIPC scam especially with the amount involved.