Update on the PIPC scam

I first blogged about this last Friday because I'm interested in exploring the huge potential offered by foreign exchange trading to Filipinos. Scandals like these wouldn't help in the development of a mature trading community in the country. While I won't go as far as to call it an investment because of its highly speculative nature, I believe good, disciplined traders can earn enough to make forex trading a worthwhile undertaking.

I read the Performance Investment Products Corp. (PIPC) story last Friday and was curious enough to research its possible connection with the Performance Foreign Exchange Corporation (PFEC). I found out that the PIPC owner Michael Liew attended the inauguration of the PFEC Cebu branch as the Performance Chairman. The whole point of the initial post was that PIPC is somewhat related to PFEC. Given that relationship, I wrote that "I wouldn't "invest" in PFEC or any company in their group." I was surprised that a visitor to this blog took exception to the fact that I used the word "scam" in relation to PIPC. The Inquirer and the Daily Tribune calls it "$250-M scam" and "PIPC investment scam" respectively in their editions today so why shouldn't I call it what it is?

According to the lawyer of some clients, PIPC is "registered at the Securities and Exchange Commission as a research company and is not authorized to engage in foreign exchange trade. (Daily Tribune, 07/25/07 page 4).

This makes PIPC officially a SCAM. No ifs and buts about it.

Victor Agustin of Cocktales, Manila Standard (07/20/07) has a detailed insider look.

Forex scheme wallops Forbes crowd

"A NUMBER of Forbes, Dasmariñas, and Urdaneta crowd have suffered embarrassing foreign exchange losses after being suckered into placing a minimum of $40,000 in an Internet-based forex investment fund scheme...."

Emphasis mine.

"Performance Investment started in the late ’90s as Performance Foreign Exchange Corp., with Liew taking in on board an ex-Allied Bank officer in Singapore, Roberto Borromeo, to help the venture hurdle the thicket of local regulatory rules...."

I am right. There's a major connection after all.

"The forex venture did immediately run into opposition from the Securities and Exchange Commission, which sued all the way to the Supreme Court, only to suffer a loss after the Bangko Sentral sided with Performance."

They have good lawyers and lobbyists too.

"Borromeo, who admitted having already heard of the Performance implosion earlier this week, said he and Liew parted ways sometime in 2004, with Borromeo taking control of Performance Foreign Exchange..."

Sometime in 2004? Pretty vague... Performance Chairman Liew helped open the PFEC Cebu branch in 2004.

PFEC released an ad in the Philippine Star today denying any connection to PIPC and the Performance Group of companies.

"Borromeo sought to distance his company from the similarly named Liew venture, saying his Performance is limited to being an Internet-based financial intermediary, with clients themselves doing the foreign exchange trading using Performance’s software for a fee..."

Not entirely true. They do have that option but most clients don't trade and many that did usually lose money. They are discouraged to do so. PFEC account managers and executives usually do it for them. That's the best way to keep those commissions coming.

Some clients of PIPC are suing the local incorporators as well. Some of the local incorporators come from wealthy and known families. I would give them the benefit of the doubt because no amount of money can be worth dragging their family name into the scandal. However, I will never believe that Michael Liew acted alone. His accomplices have to be discovered and punished as well.

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.