How to spot investment scams

Buena Bernal
Want to ensure sound investments for you and your family? Here are a few tips to prevent you from being duped by fraudulent investment scams.

MANILA, Philippines – A few days before All Saints’ Day, the National Bureau of Investigation (NBI) Anti-Fraud and Action Division received an anonymous complaint about a growing investment scam in Southern Luzon.

The Grand Alliance of Business Leaders Association Inc (Gabai), reported to be the marketing arm of the South Luzon Multipurpose Cooperative (SLMC), allegedly duped its investors into paying as high as P175,000 weekly for a 40% return.

The local police is now investigating the matter, said NBI Senior Agent Normando Anire on Thursday, November 14.

SLMC’s allegedly fraudulent scheme is just one of many. Over the years, big-time swindlers have victimized unsuspecting investors with their promises of guaranteed returns. 

Thousands of investors lost their savings from the pyramid scams of companies Grupo Mateo Pilipinas Investors Association Inc and Multinational Telecoms Corporation, headed by Engineer Ervin Mateo and Rosario Baladjay, respectively. Mateo and Baladjay were arrested in 2003.

Money lost forever

More recently in 2012, complaints were filed over the P12-billion pyramid scam of Aman Futures boss Emmanuel Amalilio aka Mohammad Kamal Sa’aid.

Anire warned that too often, victims are unable to recover their lost monies, even as they go after the scam perpetrators in court. 

“Unfortunately, because the monies have already been spent or used as payment, I do not know of any [case] where monies were recovered… Usually, no money returns to the victim. So others are getting tired. Instead of filing a case, they opt to no longer do.”

– Normando Anire, NBI Anti-Fraud and Action Division

Unfortunately, dahil nga nagastos na yung mga pera na yan o kaya pinangbayad, wala ho akong nalalaman na naka-recover…Kadalasan wala nang maibabalik sa inyong pera. So napapagod na yung iba. Instead na magkaso, huwag na lang,” he told the crowd.

(Unfortunately, because the monies have already been spent or used as payment, I do not know of any [case] where monies were recovered… Usually, no money returns to the victim. So others are getting tired. Instead of filing a case, they opt to no longer do.)

Anire delivered his talk before a group of 200 overseas Filipino workers (OFWs) and their family members on how to spot fraudulent investments.

OFWs are often the target of investment scammers because of their liquidity or ready cash, he said. 

Estelle Osorio of the Biz Whiz Business Training and Consultancy was likewise present to share her expertise.

Osorio is a Certified Investment Solicitor (CIS), while Biz Whiz provides seminars on financial literacy, especially pertaining to the stock market, forex trading, and bonds.

The CIS explained that there are often “red flags” that can be observed from scam operators providing false information.


Here are some of the investment tips they shared:

1. If it’s too good to be true, it probably is.

Osorio explained that a “guaranteed return” is considered a “red flag.” She also warned against high-yielding investments.

There is no such thing as a risk-free investment, Anire echoed. There is always some level of risk involved. He explained that this is due to external factors that may affect the company.


2. No business gains solely from recruitment.

A business does not gain primarily or – even worse – solely on recruitment. Businesses capitalize on products and/or services.

Kung kikita sa pamamagitan lang ng pagre-recruit, bawal. (If you will gain solely through recruitment, that’s not allowed.) Profit must come from the product and not from recruitment,” Anire said.

4 Questions To Ask Before Investing:

  • What is the background of the company?
  • How much do I need to invest, and how much will I get in return?
  • When will I get my return on investment?
  • How is the investment making my money grow?

– Estelle Osorio, Certified Investment Solicitor (CIS)

The problem with these types of schemes, Osorio explained through a diagram, is that they often fail when investors can no longer lure new investors.

Older investors must be able to gain from profits earned out of the business itself instead of commissions from recruitment.

In the end, people lose their money when newly-lured investors cash-out and the promoters run away with the money already invested.


3. Vague information may mean deceptive information.

Osorio told the crowd to always probe to protect their interests. How much is the minimum placement? What is the rate of return? When are investments expected to return? One must be on a constant information-seeking mode when looking for where to invest one’s family earnings. 

Think twice about investing in a company that is not transparent about how profits are earned or offers vague and confusing explanations about where money is invested, Osorio said.

“If you don’t understand how you will make money, do not invest in it,” she said.

Anire also advised the OFW groups not to entrust their money to just anyone, much less people they do not know.

He used as example family members or personal friends who fail to pay their debts on the set date. “Paano pa yung hindi mo kakilala? (How much more those who you do not know?)” he asked rhetorically.

Pinaghirapan na pera yan biglang mawawala, dahil nagtiwala kayo agad…Laging nasa huli ang pagsisisi,” he said. (That is hard-earned money that will just be put to waste, because you trusted too easily…Regrets always come at the end.) 


4. Double-check with government data

Osorio advised would-be investors to do their due diligence. She said one must look into a company’s track record.

Check if the company is registered with the Securities and Exchange Commission (SEC). A SEC company registration does not grant the authority to sell investment instruments such as securities, bonds, and commercial papers. 

“For insurance products, I suggest always consult the insurance commission website… If the company is not on the list, don’t buy,” she said.  

Ponzi schemes

Osorio likewise shared a few features of Internet-based Ponzi Investment Schemes, based on a SEC warning. Named after scammer Charles Ponzi, a Ponzi scheme is a fraudulent operation intended to convince the public to invest their money. It generates returns for earlier investors by tapping subsequent ones.

The SEC said that Internet-based Ponzi schemes have investments in foreign currency (often US dollars), offer a huge profit in a very short period of time, have no paper trail such as contracts and receipts, provide for a lock-up period wherein an investor cannot touch his/her investment for a number of days/months, have unknown offices and officers, and conduct orientation seminars informally.

When dealing with investment offers by phone, e-mail, flyers, newspaper ads, or directly by any person, always know the company or the person you are speaking with. Get the landline number, which can be traced, instead of a cellphone number.

Anire and Osorio were invited guests in the OFW-targeted forum hosted by the Blas Ople Policy Center and Training Institute and the Villar Social Institute for Poverty Alleviation and Governance. –