20 Jul2007

This is the headline of the Philippine Daily Inquirer this morning (excluding the words in the parenthesis, these are my additions). And apparently some of the folks you might know have been caught up in these scams lately. First it was the Francswiss scandal that got middle-income to upper-income internet investors. Then now this news of PIPC and one of its senior officers alledgedly absconding with as much as $250Million!?! of “rich” peoples money… the innuendo being that it is the beso-beso crowd that networked with their like friends convincing them to march like lemmings to the cliff’s financial edge!?! Well, first of all, it is UTTERLY DESPICABLE and OUTRAGEOUS that folks would set up scams and cheat people, rich or poor, smart or dumb. That is first and foremost. I think if they are found guilty of this, they should be given novel food punishments like having to bathe for a day in a swimming pool of vinegar and salt with skin wounds all over. But let me rant on something else… the newspaper headline would be more appropriate for me if one of the suggested words in parenthesis were used instead. HELLO?! Why would you put your money with folks or companies who are of questionable pedigrees at best, when there are so many legitimate investment vehicles around? When folks are promising returns on your money that are too good to be true, it probably is too good to be true!!! I am currently hot under the collar as I occasionally get asked financial/investment questions by highly educated, well employed and well to do folks and friends like “should I put my money with so and so,” or “do you think this guy offering 15% guaranteed return is for real,” or other such questions… And my answer is always, go with the conservative option. Keep your hard earned money safe. Check out the institution. Be careful. It is weird that the same folks that store their $500 watch in a $1,000 home safe would so blithely hand out $50,000 to a relative unknown, simply because another “friend” vouches for them. I realize I may irritate a lot of my own friends and acquaintances with this post, but the reality is… LOOK CAREFULLY BEFORE YOU LEAP. As P.T. Barnum once said, there’s a sucker born every minute. Don’t get me totally wrong, I feel very badly for those who lost any money, and I am all for serious capital punishment of the perpetrators. But you have to look out for your own interests, particularly when it comes to money, period.

P.S. I wrote a subsequent post to this one here. For those who are interested in this topic and have just found it through a google search, you may want to read the follow-up post as well.



  1. Crissy says:

    That headline in Inquirer shocked me too. I can’t believe those kinds of schemes are still rampant. Worst of all, some of the masterminds simply run away from it.

    Jul 20, 2007 | 9:36 am


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  3. Apicio says:

    You did not include greedy within the parentheses probably because just being greedy does not make one a lawful prey of swindlers. It just makes the job of parting him from his money seem effortless.

    Jul 20, 2007 | 9:44 am

  4. zena says:

    One would think that folks would have learned their lesson from previously publicized (similar) scams. Greed seems to be the name of the game. There is no such thing as “Get rich quick” and similarly, no magic pill to lose weight/fat. What’s the connection? Some folks just don’t want to work for anything aymore and prefer the easy way. In the process, they lose the fulfillment of having achieved something via blood, sweat and tears.

    Jul 20, 2007 | 9:50 am

  5. Candygirl says:

    I was once texted by a med rep friend of mine offering me to invest at least $1000 so I could earn twice or thrice the amount in a given period of time. Of course I didn’t bite. It’s not that I don’t trust him, it’s the “quick money” invite that I didn’t trust.

    Jul 20, 2007 | 10:15 am

  6. Periwinkle says:

    I can’t believe why people are still easily duped espesh after the infamous gold coin and pyramid scam.

    Jul 20, 2007 | 10:21 am

  7. acidboy says:

    While the value and appreciation of working hard and getting your hands dirty for a day’s honest pay is diminishing in our society, these ponzi schemes will always flourish.

    Jul 20, 2007 | 10:22 am

  8. divalicious says:

    I don’t believe in “making your money work for you”. There is so much more value and accomplishment from working hard and honestly for your money.

    Jul 20, 2007 | 10:34 am

  9. LPD says:

    The Vice President of my previous company invited me to invest also but of course I did not bite his invitation for some reason. I’m wondering even educated ones can be victims of these scams. Too bad.

    Jul 20, 2007 | 10:41 am

  10. wysgal says:

    I get asked questions by my college educated peers about the most basic and mundane bank-related issues (interest rates on savings accounts, credit cards, loans) … it’s surprising how little people know about managing their money.

    And of course there’s me … I’ve studied a LOT of finance but am semi-hopeless with my own money. I’m far from being in debt, but I could be actively managing my financials better. =)

    Jul 20, 2007 | 11:10 am

  11. Roberto Vicencio says:

    This is the 2nd major Ponzi-scam that hit the country. The first one was the Multi-tel scam and now this Francoswiss. Of course the attraction of making such an obscene amount in interest is enough to entice the many. The most recent one guaranteed 4.5% interest “A DAY”! Greed would surely kick in. They took the risk, they allowed themselves to be attracted.

    Jul 20, 2007 | 11:39 am

  12. lee says:

    The same old garbage in a brand new package. The problem is that people still get amazed at the new package even if there are obvious hints of the old garbage. If it smells like a ponzi scheme, skip it. The problem usually is that it’s a relative, an officemate or a boss that “recruits” you. Say no and they will laugh at you and the “opportunity of a lifetime” you miss. And if everything fails, which is most likely to happen, you will be tempted but will be tactful enough not to start with the “I knew it” or “I told you so” stories.

    Jul 20, 2007 | 12:43 pm

  13. mayums says:

    i was even surprised with the attitude of some people who joined this type of “business”. like they couldn’t care less if the manner of earning their profits from their investments is illegal (and unethical!), as long as they earn.

    that’s sad.

    Jul 20, 2007 | 12:53 pm

  14. Marketman says:

    lee, what?!, me tactful? I would more likely blurt out a “was there a recent lobotomy I wasn’t informed about?…” and get into really hot water…

    Jul 20, 2007 | 1:12 pm

  15. Maria Clara says:

    Quick rich scheme that you kiss goodbye to your hard earned money!

    Jul 20, 2007 | 1:19 pm

  16. lee says:

    haha, I agree :)

    Jul 20, 2007 | 1:34 pm

  17. Jerry says:

    Ponzi schmemes in this country!? Sounds just about right considering we allow jueteng lords to rule and boiler rooms to mushroom in guise of call centers duping mostly foreign retirees of their hard earned savings. If you think the Ponzi schemes written in the papers were big, these boiler rooms would make them look like peanuts.

    Jul 20, 2007 | 1:39 pm

  18. elaine says:

    I fell for it once but never again!

    Jul 20, 2007 | 2:04 pm

  19. harry p says:

    I know a few people who invest regularly with PIPC and also know some of their “brokers”…in fact, some of their regular clients are bankers in high places already. From what I know, the people behind PIPC (at least, here in the Philippines) are from well-to-do and decent families, and would not resort to “scamming” people. Too bad this thing had happened. I only hope that the investments indicated (was it around US$250M?!?) were extra cash that the beso-beso crowd can afford to lose…oh well!

    Jul 20, 2007 | 2:11 pm

  20. Mila says:

    I read that the Philippines has one of the lowest savings ratios, plus our stockmarket is primarily floating on foreign investments. If those same people who lost their money in PCIC and Francswiss had put their money in perhaps lower interest yielding instruments or if they had gambled, locally invested, we might have taken a big step towards localized financial stability. What a waste.

    Jul 20, 2007 | 2:55 pm

  21. rickyg says:

    it is called the color of money, something too good to pass up. it is a quick rich scheme of just sitting down and earning without working up a sweat. Just good old “Greed”.

    Jul 20, 2007 | 3:36 pm

  22. dee says:

    This is really sad, considering there are too many legitimate investment opportunities nowadays. Take the local stock market for instance, is already up around 25% ytd.

    Jul 20, 2007 | 3:52 pm

  23. tings says:

    well, as the saying goes…

    If it sounds too good to be true, it’s because IT IS.

    Jul 20, 2007 | 4:08 pm

  24. francis says:

    As a friend of mine who was duped big time in a different scam said after being asked whether he will get the money back- “that was my ‘matrikula’ that I had to pay para matuto ako.”

    Jul 20, 2007 | 4:26 pm

  25. Mangaranon says:

    Greed. Pure greed.

    Jul 20, 2007 | 6:13 pm

  26. allen says:

    I remember Pinocchio was duped by a cat & a fox, planted his gold pieces believing it would grow into a vine of gold. Well, he was a puppet after all! I agree with Ting, if it sounds too good to be true, it is. If you want money, work for it. No pain, no gain!

    Jul 20, 2007 | 7:38 pm

  27. hazel says:

    my co worker here in Kuwait lost thousands of dollars to francswiss. she and her husband even tried to talk to us to investing but it was an obvious pyramid scheme and I wanted to blurt out, “Isn’t it obvious to you?” But they are the know it all types so I just kept my mouth shut. The following week, headlines in Metro Manila. we don’t talk about it though but we know they’re hurting big time.

    Jul 20, 2007 | 8:02 pm

  28. Marketman says:

    In my opinion, in most cases, I do not think it was driven by GREED – defined by different dictionaries as an excessive desire to acquire, obtain or possess more money or material possessions than one needs. I think these folks already had the money to begin with, and they thought they would just get a higher than normal return, they just didn’t think to critically ask how or why this was possible, if anything it is more LAZY than anything else… If they were greedy as a primary motive, then they would seek returns such as short term loan sharking, 5/6, and other more questionable adventures than a legitimate sounding investment company based out of the Citibank Building in Makati…

    And further, nobody who is anybody will be talking about this out in public. Folks who got burned will be too embarrassed, chagrined or mortified to admit they got caught up in this… and THAT is one of the main reasons scams like this continue to flourish, because NO ONE ADMITS they are victims and no one openly rails against the scam artists. Part of the reason I put this post is so that 7,000-10,000 of you are now hopefully more aware and will avoid similar pitfalls in the future. Everyone is vulnerable, not everyone falls for it.

    Jul 20, 2007 | 8:04 pm

  29. polypoo says:

    Hi.. i was an investor in the pipc product and did lose about 40kUSD.
    i see many comments here about ponzi scheme, pyramid scheme, networking ect. PIPC was none of the above. it was based on the very real world of currency trading, which goes on all over the world. buy high, sell low. sometimes you lose, sometimes you win. but on average at the end of each month you win if you have a good trader, and trade the correct currencies. its just like the stock market. would you advise everyone not to invest in the stock market either? i did invest in the stock market and lost allot of money. while the pipc scheme was working, it was a good option. pitty all control of investments was given to only one man. so.. to summarize, this scheme did not “collapse” becuase it was based on unrealistic profits. it was real. it colapsed beacuse the head man was a theif. this can happen in any company.. look at enron.. parmalat.. there are others.
    anway.. i am now much wiser :)

    Jul 20, 2007 | 10:20 pm

  30. Ted says:

    I’m not sure if there are Mutual Funds in the P.I. but I’ve been putting most of my money in 401k and IRA to Indexed Mutual funds, they are conservatively earning 8% or less but you never have to worry which stocks or bonds to invest into since they are all conservatively mixed into the pool. I never listen to all this ponzi schemes,,,Igigisa ka lang sa sarili mong mantika for a few months and then you know what happens next….Always think of the long term and not short term as your guide and you won’t be sorry.

    Jul 21, 2007 | 1:54 am

  31. kit says:

    i am no financial expert but a housewife who manages a humble family budget and stretch it out to secure my son’s future. my sis, who’s a prof in a very respectable university tried to convince me to invest into something that promises big bucks in a very short period of time and unrealistic interest rates. i told her sis use your common sense.

    Jul 21, 2007 | 2:22 am

  32. Ted says:

    I’m attaching an article regarding an interview to the 2nd most riches man…Warren Buffet.

    “You must do the thing you think you cannot do.”

    There was a one-hour interview on CNBC with Warren Buffet, the second richest man who has donated $31 billion to charity.

    Here are some very interesting aspects of his life:

    1) He bought a small farm at age 14 with savings from delivering newspapers.

    2) He still lives in the same small 3-bedroom house in mid-town Omaha, that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.

    3) He drives his own car everywhere and does not have a driver or security people around him.

    4) He never travels by private jet, although he owns the world’s largest private jet company.

    5) His company, Berkshire Hathaway, owns 63 companies. He writes only one letter each year to the CEOs of these companies, giving them goals for the year. He never holds meetings or calls them on a regular basis.

    6) He has given his CEOs only two rules. Rule number 1: do not lose any of your shareholder’s money. Rule number 2: Do not forget rule number 1.

    7) He does not socialize with the high society crowd. His past time, after he gets home, is to make himself some pop corn and watch television.

    8) Bill Gates, the world’s richest man met him for the first time only 5 years ago. Bill Gates did not think he had anything in common with Warren Buffet. So he had scheduled his meeting only for half an hour. But when Gates met him, the meeting lasted for ten hours and Bill Gates became a devotee of Warren Buffet.

    9) Warren Buffet does not carry a cell phone, nor has a computer on his desk.

    10) His advice to young people: Stay away from credit cards and invest in yourself. Remember money doesn’t create man but it is the man who creates money.

    Live your life as simple as you are.

    Don’t do what others say, just listen to them , but do what you feel good.

    Don’t go on brand names , just wear those things in which you feel comfortable in.

    Don’t waste your money on unnecessary things; just spend on what you really need.

    Jul 21, 2007 | 4:14 am

  33. Z-man says:

    I know a few people that got tagged by this scheme and to classify them as greedy, dumb or stupid is simplifying the matter too much. True, if this was a plain and simple theft then it could happen to any company (although more reputable companies have controls against that) but if this was a scam then it was a very well thought of scam. PI has been in operation for more than 8 years, paying out handsome (true sometimes unrealistic) gains. Even I was tempted to participate seeing my friends get paid every month or so. People invested and pulled out their money with no problems and I guess it won over their trust. Another friend of mine invested for 8 years and only pulled out his money recently so for him the investment paid off handsomely. I guess what I’m trying to say is if there’s someone out there to fool you, they’ll do it. It’s up to you if you let them.

    Jul 21, 2007 | 6:58 am

  34. Marketman says:

    polypoo, and any others caught up in the PIPC Brouhaha, I am glad you have left a comment, and I am sorry for your financial loss, but here are a couple of thoughts as this mess is sorted out in the months ahead:

    1. Was PIPC a properly registered FX Trading Company under Philippine laws and was it duly registered with the SEC as taking investor money. Did it issue the legal paperwork that advised clients what they were doing with their money. Were clients all aware and in agreement that they had principal at risk?

    This just in, I opened my newspaper and it screams “PIPC had no license to operate as an FX trader or offer investment contracts to clients” — the big DUHHH. They weren’t even supposed to be able to take YOUR MONEY, and you don’t see how that is FISHY to the highest degree???

    2. Did the company employ reasonable levels of controls on the money they took in? Did they have a reputable audit company such as SGV or other top audit firm checking its books and systems and controls? If not, why not and why wouldn’t its investors look into this first? With reportedly PHP5 billion or more in funds under management, wouldn’t you think an annual audit + monthly audits would be necessary?

    3. If you checked the internet alone, there are several threads of potential and sceptical customers of PIPC over the past 2 years that would have already alerted you to issues regarding the firm’s legitimacy, etc.

    4. You have to be joking if you think that their “traders” somehow managed to make a decent gain on FX trading on average EVERY single month. INCREDULOUS. You cannot possibly believe that now. And guaranteeing a return for the year is another dead giveaway of something fishy. And YES, I do KNOW a thing or two about FX currency trading set-ups as part of my professional career prior to retirement. In fact, I did a study to set what would have been THE LARGEST FX TRADING ROOM ON THE PLANET! If a trader is so consistently good, they would be billionaires, and obviously if they were working for PIPC, they weren’t. It is a tragedy that so many would have bought such an unlikely story.

    5. If this is in fact simply one person running away with the money, then who were his cosignatories on the remittance or transfer orders? It is impossible or plain stupid to have allowed one person alone to authorize massive fund transfers without checks and balances from other company officers.

    6. I don’t disagree that many, even in company management may have been fleeced or duped, but if they sit on the board of this company and they had direct managerial positions, they will have liability, I would imagine… but of course, that is for the courts to decide.

    7. The saddest part is that a majority of clients who were duped will not step forward out of shame, chagrin, embarrassment, making the discovery of the true story behind this debacle more difficult to uncover.

    8. This does not sound like a straight PONZI or PYRAMID SCHEME, but it certainly smells of an investment scam that used connections between people and funds of later investors to make the earlier investors do well… I would think that is ultimately illegal in some way… or at least I would HOPE that it is illegal.

    9. Did you ever even bother to wonder if you were paying the proper income taxes on the supposed interest/trading gains made? Does that mean if the BIR opens up that Pandora’s box, hundreds of previous and HAPPY clients may owe a lot of taxes on their miraculous monthly GAINS?

    Finally, in a rare instance, the SEC is coming out smelling like roses on this one as they already attempted to close down PIPC, and have issued several warnings against such scams and yet hundreds or thousands of folks have still been duped.

    I am not taking this “scam” lightly. I am annoyed that they continue to flourish. But it is the abundance of potential customers who do not question their investment decisions logically that ALLOW these to flourish.

    Z-man, I completely agree with your sentiments. And I think it was a well thought out SCAM. But it was ILLEGAL from day 1 as they weren’t even legally allowed to take investor money, PERIOD. :(


    Jul 21, 2007 | 9:11 am

  35. RobKSA says:

    There’s a lot of these types here in Saudi Arabia and I do pity those who fell for them. I too have lost lots of money in the US stock market crash(about 100K USD)but I know the risk and I’m slowly gaining a bit lately. I was once invited to a party selling gold coins and my best friend fell for it, nakakahiya daw wag kumuha dahil we were treated to a super dinner. I politely turned the offer and told the host point blank, I don’t subscribe to pyramiding scheme. He explained yada yada but to cut the the story short, he has not called me again, lucky me! My investment in the Philippines nowadays are funds manage by BPI (any take on them MM?) Mostly low yielding bonds (5% is OK for me).

    Jul 21, 2007 | 2:23 pm

  36. consuelo almonte says:

    I do believe that the scam only flourishes because there are greedy people who allows this to happen to them.
    A French man who mingled with the rich and famous in New York by personifying himself as a Rockefeller, gained almost US$40,000,000/- in gaining the trust of well off people to join his claimed investment plans. He lived high with money entrusted to him by prospective investor. He was found guilty and jailed for five years. He is now writing a book about his high rich and famouse life. But since he cannot profit from his crime in the United States through his book, he moved back to France where he became a celebrety. In one of his interviews he gave, he was questioned if he felt sorry for what he has done, if what he did was wrong. HIS ANSWER WAS THAT IF PEOPLE ARE STUPID ENOUGH TO BELIEVE ME, IS IT MY FAULT?, HOW CAN YOU FAULT ME. NO BODY CHECKED ME OUT. I DID NOT FORCE ANYONE TO GIVE ME THEIR MONEY. I WAS SELLING MY IDEAS TO THEM AND IF THEY VOLUNTARITY GAVE IT TO , HOW CAN I BE FAULTED. He was indeed a good talker and that was his only main investment. Investors should not do anything without checking the risk questioning and not merely by TRUSTING. I lost money in the stock market when it collapsed in 1999. I was not savvy enough and I sold before I thought I would loss more. If I did not panic,,, most of the stock I had are back now and doing even better. Lesson is to be always on top of your investment and have the stonach to ride with it if you believe the company is solid. I trust in the market, not on get rich quick.

    Jul 22, 2007 | 11:09 am

  37. Marketman says:

    The key word in his answer is “STUPID”, but I prefer “GULLIBLE,” and if being kind “CARELESS,” but “GREEDY” per se would be a fourth choice…

    Jul 22, 2007 | 11:50 am

  38. polypoo says:

    so someone can also go around killing people then say “if people are defenseless and weak then they deserve to be killed. its not my fault. carry a machine gun around if you dont want to get killed. if you don’t then its your fault.”

    or theives should be allowed to go steal stuff if people are stupid enough not to chain down their belongings.

    cumon guys. 12% ROI per annum is not unrealistic. thats 1% a month. and how can you call people who are trying to earn a bit extra cash greedy?
    why don’t you quit your jobs and go work for free? or just earn enough to buy a sack of rice for you to survive each month. cuz if you want enough to buy a car or a house then you might be considered greedy.

    Jul 22, 2007 | 1:13 pm

  39. Marketman says:

    polypoo, I completely agree with you that what the alleged absconder did was wrong, full stop. And it is completely wrong to take advantage of people simply because they allow themselves to be taken advantage of. But that does not stop the fact that any investor should at least do a minimum amount of checking to ensure they are not being duped, and investing in a company that isn’t even registered to take your money is a major question mark (see my longer comment after your first comment up above). Using your own example of a thief, if you left your front gate open, or the apartment door open and you left a sign pointing to a drawer where you kept $40,000 in cash, and there was no one around to stop them, and a thief stole your $40,000, then he would still be a thief, he would still be wrong, but folks would look at you and probably think, if not say outright, “duhh, why didn’t you close and lock your door?” 12% per annum may not appear unrealistic, but if it was GUARANTEED, given the current interest rates of 3-4%, then a 300% higher return should have raised eyebrows. Further, as other investors have stated in other internet threads, there were monthly positive gains, consistently given month after month after month, that is UNREALISTIC, as anyone who trades would know. I agree GREEDY is the least appropriate of the four words raised, as defined by say an OXFORD dictionary:

    1. GULLIBLE – easily deceived (DECEIVE defined as to cause (a person) to believe something that is not TRUE)

    2. CARELESS – not careful (CAREFUL defined as cautious, avoiding damage or LOSS)

    3. STUPID – not intelligent or clever, slow at learning or understanding things (INTELLIGENT defined as possessing great mental ability or the power to learn and understand)

    4. GREEDY – showing GREED (GREED defined as excessive desire for food or wealth; which makes Marketman greedy since I admit to an excessive desire for food)

    I still hope for your sake and hundreds of others that they catch the bastard, if he is guilty of wrongdoing, and that the money is recovered. But in the same way that you probably lock your car at an Ayala carpark, despite a card and security guards, or hold your purse closer to you in a crowded Divisoria Mall, investors need to look out for their own interests. Yes, the guy apparently stole the money, according to news reports and comments such as yours. But the flipside is that investors (THE VICTIMS) made it pretty easy for him to do so… Rape, for example, is NEVER right. A RAPIST is always in the wrong (unless he is held against his will, under the influence of some strange potion or drug, his family is held under gunpoint, etc.). But if the victim was wearing a flimsy negligee, inebriated, stumbling through the center of a huge wooded park at 3 am, just as the nearby red light district closed for business and their customers were headed home, then people would likewise suggest maybe she (the victim) should have been a bit more circumspect. It still isn’t her FAULT, but she was probably being “careless” or “stupid,” though not “gullible” or “greedy”…

    Jul 22, 2007 | 1:38 pm

  40. polypoo says:

    marketman.. 12% per annum is not guranteed. the people who say pipc was offering 12% guranteed are the ones who know nothing about pipc. 12% was a forecast based on their 7 years track record. and it wasn’t 12% for this year, it was more like 13% based on last years ROI. i know very reputable traders in europe that forcaste over 20% ROI. this is always based on previous years track record, but never guarantees what might happen in the future. they never guranteed anything. and yes, there were months where no profits were made. it was part of the risk. there we diffent programs.
    i did do minimum investigation of the company before i invested. you will notice that pipc has never had any bad press anywhere untill this scandal. so nowhere was i able to find any info that would have raised my eyebrow. i saw the fact the this company had a large classy office in the middle of makati as a sign that it was bonafide. otherwise why would the authorities let such a company operate out in the open? the fact the they did not have a license from the SEC just covers the SECs ass. A license from the SEC would not have stopped the owner of the company from taking the money and doing his disapering act. i put allot of questions to my agent before investing and he assured me it was all safe. my money would be sent to abn amro and put into a term deposit in a trust, and only a credit line would be offered to the traders, but no one would be allowed to touch the principle. a stop would be issued on credit line if principle went below 70%. i signed documents to such effect. now it it up to my lawyer to see what went wrong.
    you make it sound as if i (and all the other investors) met some unknown hustler on the street who promised to give us 1,000,000 for and investment of 1000 and we just handed him our then went home and waited for our profits to arrive. go to one of the chat rooms where you can actually discuss with pipc investors. you might learn they are not all so stupid.

    Jul 22, 2007 | 4:32 pm

  41. Marketman says:

    polypoo, as the details and facts behind the scam become more public, I am sure a clearer picture for all will emerge. Right now all we kind of know for sure is that a bunch of folks entrusted money to an individual (not a company it seems; or at least it would be a company with only single signatories) and that person has apparently absconded with the funds. I would be concerned about your investment “agent” making promises they cannot back up, and I am sure your lawyers will investigate all that is necessary.

    My GUESS, and I will admit it is complete and utter CONJECTURE that is not based on FACT at all, is that you will eventually find out that to some degree, this will emerge as a form of “pyramid scheme” in the later stages of the SCAM (say the last 2-3 years out of the 7-8 years of operations) where the funds of later investors were in fact used to give interest to the earlier investors and as the investments built up, at some point it was all going to become obvious and the pyramid would crumble. But the fact that the guy who set it up did it dubiously from the beginning is the strongest point to focus on. Here are some things your lawyers will have to check out:

    1. Who were the supposed traders, where were they trading from, who were the trading intermediaries (firms or systems) used?
    2. Is there a clear paper trail of all FX trades that occurred over the years and if there is, it will be clear if there was underlying legitimate trades going on or only superficial and insufficient trades for the value of investor money under management? This will immediately pinpoint if this is in fact a pyramid scheme of sorts…
    3. How was the money transfered abroad and into which banks and what type of accounts; with the transparency of all banking systems globally as a result of 9/11 and money laundering laws, within days they should be able to figure out the money trail and at what point it ends, and where the money was withdrawn from.
    4. Your lawyer(s) will inevitably look at culpability of the remaining officers of the company who appear to have been duped but let us not forget, accepting posts as officers comes with risks and liabilities…and their systems better have been up to snuff or there will be legal consequences

    The list could go on and on. No, I do not think you dealt with some hustler on the street, quite the contrary. I understand many of the ones duped were done so in a manner you would not normally expect; but that doesn’t mean you would act with less vigilance as say keeping your ATM PIN number private. And yes, I do know some of the VICTIMS personally and they would otherwise seem to be upright, educated and intelligent folks. That’s what makes this so infuriating and depressing at the same time… Oh, and I am very happy I put this post on my blog…with upwards of 10,000 individuals reading it in the days ahead, I am hopeful I/the commenters have educated/forewarned some of them and if only one of them avoids the fate you are in, then the post is worth a couple of million pesos saved… And I am not picking on you or the VICTIMS in any way, I have railed against credit card issues, real estate sales tactics, and airlines, to name a few…

    The company not having an SEC license would not have stopped them from taking the money you say, BUT IT SHOULD HAVE STOPPED YOU AND OTHERS FROM GIVING IT TO A COMPANY that did not have the proper investment licenses!

    For the information of potential investors, you can check if an investment company is legitimate by calling the SEC (may take several calls but it’s worth the minor hassle). You can also look up the company on-line on the SEC site. Agents should also be checked out before you deal with them. Here is a link to SEC homepage, that has had a CHECKLIST for investment scams up for several months; and for internet based PONZI schemes, they posted a warning on July 2, two weeks before the PIPC scam broke… Look further on their site and they list all legitimate companies (as of 30 March 2007) that can take investor money. In hindsight, doesn’t it seem silly that you wouldn’t spend a few minutes on the internet and a couple of clicks to see if the company was legitimate and a “safe” place to invest your hard-earned funds???

    If Performance Investment Products, Inc. (PIPC) is supposed to be the formal and registered name of the company, a quick search on the SEC website states there is no such registered company. As such, the officers and managers of the company would appear to be officers of a non-existent corporation. As the duped investors swarm like an angry mob trying to get answers and their money back, I would NOT WANT TO BE to be a manager or supposed director of this “company” and I would hate to think of the PERSONAL LIABILITY and the number of lawsuits that they will have to defend themselves against in the aftermath of this scandal… Now, who did VICTIMS make their cheques out to when they made the initial investment? To PIPC? Check behind the cancelled cheques and it will show which bank it was encashed in. If it is a local bank, ask them how PIPC was able to open an account without the proper SEC registration papers. If you were asked to wire the money to a bank account abroad, how could you possibly know whose account was getting the funds??? Arrrgh… this could go on and on and on… But one thing is for sure, I certainly wouldn’t have titled this post “Rich (Shrewd, Careful, Intelligent?) Pinoys Lose Millions in New Financial Scandal (PIPC Scam).”

    Jul 22, 2007 | 5:27 pm

  42. filet minion says:

    MM says “… And YES, I do KNOW a thing or two about FX currency trading set-ups as part of my professional career prior to retirement…”


    The only way i could possibly retire at age 40 and regularly travel the world over is if were to invest in pyramid scams. hihihi.

    Jul 22, 2007 | 9:00 pm

  43. Marketman says:

    filet minion, I got out in time… hahaha.

    Jul 22, 2007 | 9:03 pm

  44. CecileJ says:

    Just to throw in something for our brains to figure out: who is running a bigger scam: the ponzi scammers who, for those who got in early, gave a good ROI or the banks who give a measly 1-3% interest on your deposits and then lend them out to others for a 14% interest?…and when banks declare bankruptcy, how much can we recover from them? Just the pittance guaranteed by the PDIC?

    Jul 23, 2007 | 8:56 am

  45. Marketman says:

    CecileJ, ahh, how much time do I have to explain this. Banks are probably amongst the most conservative and on average one of the safest alternatives for deposits histroically. At the moment, they will be paying 3-4% (what bank do you bank with?), then they will lend it out at 12-15% for corporate or other business loans. Then they get 50% for credit cards. But the government requires them to leave 20% of your deposit in no interest bearing or low interest bearing reserves. Then they pay salaries for staff, computers and bricks and mortar. They pay insurance, etc. Actually, basic banking these days is NOT particularly profitable. But fee based banking can make a lot more, hence the desire to get you into all other types of insurance, home loans, etc. Historically, very few of the banks assets declare insolvency, in the past 20 years in the Philippines, I would be surprised if more than 3-4% of total banking assets went sour in bankruptcy proceedings (though bad loan write-offs may approximate 8-10%). And yes, you recover only P200,000 from PDIC for local bank deposits, but unknown to most, your deposits in a foreign bank are almost always typically FULLY insured. If you look at the history of all LISTED and TRADED banks in the Philippines over say 20-30 years, you will see that they tend to make a return on equity of perhaps 12-18% per annum on average, which means for those risking their capital in the stock market, they on average received significantly more than say the returns if they simply deposited their cash in a bank.

    As in all things with long histories and accurate data, the risks and returns are relatively well known…

    Illustrative percentages for example only:

    Little risk bank deposits — returns of 5% to 7%

    Time deposits (fixed term) — returns probably 6-8%

    Corporate Bonds (high ratings) 10-12%

    Real Estate — prime quality 10-15%’ poor quality can result in losses over time

    Common Stocks (western data) — 12-15%

    Highly risky securities — negative returns to very high returns; averages are less reliable, but should be at 15-20%+ on average

    I don’t make these things up, they are just the way the whole risk to reward profile works out. And while I don’t blanket defend banks; far from it, a good solid, conservatively run bank is usually a very safe place to put one’s money… But if you have more than say P1 million in cash, you may want to spread that out to two banks or more. There are few STRONG ECONOMIES without a strong banking system. The one to watch will be China, hopefully no banking catastrophe happens there or alternatively they are growing so fast it will make up for a poorly run banking system. Even the strongest countries in the world experience moments of banking distress, the U.S. and OECD countries are not totally immune either.

    Hmmm, I have been getting a lot of email from this post, maybe a finance seminar would be useful… :) Oh, and CecileJ, ponzi scammers and pyramid doodads are patently ILLEGAL, I wouldn’t put them in the same area as banks, as much as I can get infuriated at the latter…

    Jul 23, 2007 | 9:50 am

  46. CecileJ says:

    MM, thanks for the explanation. I know I was putting it too simplistically. My point being that banks, albeit they offer low risks, seem to offer too low interest rates to , ehem, interest people to save (pun intended!). (Doesn’t RP have one of the lowest savings rates per capita?) That’s why ponzi schemes take a foothold here. Not because people are lazy, but maybe just the opposite: they work very hard yet do not get good interest on their money hence they are looking for the “fast route” to financial freedom.(this is pobably why so many OFWs were enticed by the francswiss) And, yes, i know ponzis are patently illegal but I guess our kababayans are “kapit sa patalim” kasi parang the poor are getting poorer these days.

    Will eagerly await your financial seminar as I want to know how the rich get richer naman! Heehee!

    Jul 23, 2007 | 1:36 pm

  47. RobKSA says:

    In June during my vacation, the savings deposits interest rate is .5% yes half of one percent and loans from banks is 9%.

    Jul 23, 2007 | 3:12 pm

  48. Marketman says:

    RobKSA, your bank is jiving you on deposits. At the moment, USD deposits of more than $10,000 should yield you 3.5-4.3% in Manila’s foreign banks. Peso deposits of PHP200,000+ should get you 3.0-3.5%, depending on your bank. Interest rates have started to rise a bit though not much. And Cecile, I agree the returns on bank deposits do seem incredidbly low, but that has only been the past 5 or so years. Before that, time deposits or government t-bills often yielded above 10%. And yes, I agree folks are more easily snagged by scams, but we should all be wary, very wary…

    Jul 23, 2007 | 3:32 pm

  49. LL says:

    I had a credit card bill for P11K (and some change). I didnt have change so i just paid the P11K ON TIME thinking I would be charged 3.5% for the UNPAID amount P400 charges for a

    Jul 23, 2007 | 5:46 pm

  50. Ted says:

    All investements have risks, there is no such thing as a guarantee unless you are putting your money in a CD or savings acct. You just need to know how to manage the risks….
    1) Do your research, research and more research before you jump into any investments.
    2) Be wary if the ROI is too good to be true, even some reputable firms doing hedge funds (very risky) investing in subprime loans are now going into bankruptcies.
    3) Know what you are investing into whether it is stocks, bonds, forex, futures, …etc, you should know the risks on all these kinds of investments, if not, you are better off putting your money in CD’s or savings account.
    4) You can never time the market, whoever says they can are lying to you. So invest conservatively.
    5) Only invest the money you won’t need in 5 years to stocks, bonds or combination thereof, otherwise put them on a savings account.
    6) Find a reputable investment firm, like the ones rated by Morning Star,,,don’t know if PI has that.

    Jul 24, 2007 | 7:29 am

  51. Blaise Fortuna says:

    I know someone who has invested with PIPC, this someone happens to have a lot of friends with their families who also invested with PIPC, another friend of his even invested his own lifetime investment.. According to him, it wasn’t really a scam, it is in fact legit and he has been an investor for the last seven years.. It is legit until the owner, Singaporean Michael Yu, decided he would run away with the money. I actually don’t know how he could run away, what with all that he took from multiple countries, would it be possible to even hide?

    I am currently receiving financial literacy, and one thing I’ve learned, don’t invest all of your money into just one investment house, or even in one or few stocks or bonds.. I don’t agree into just putting your money into a bank savings account, yes it is stable, but if you want to grow your money, you just can’t leave it at that, you’ve got to know where to invest..

    Jul 25, 2007 | 3:58 pm

  52. Blaise Fortuna says:

    Francswiss is definitely a scam.. Who on its proper mind could not tell that a 4.5% daily interest rate (roughly 90% per month) is scam? Duh..

    Jul 25, 2007 | 4:01 pm

  53. Blaise Fortuna says:

    Hey MarketMan, you should hold a financial seminar.. I’ll attend.. ;)

    Jul 25, 2007 | 4:50 pm

  54. polypoo says:

    some people have been really hurt by this:


    Jul 25, 2007 | 6:37 pm

  55. Marketman says:

    Polypoo, YES, a lot of people are hurt, but notice in that blog the writer asks themselves “how stupid or dumb can I be…” I don’t mean to be rude, but you guys got yourselves into a thorny situation from day 1. I have a little more information/heresay on PIPC and maybe will do a follow-up post for the curious…

    Jul 25, 2007 | 7:50 pm

  56. suzette says:

    there is really no such thing as a get-rich-quick scheme…

    Jul 25, 2007 | 10:57 pm

  57. denver says:

    what’s new? people have never learned their lessons
    when it comes to greediness. they deserved that.

    Jul 25, 2007 | 11:14 pm

  58. jedianalyst says:

    Thank you for a very enlightening post about PIPC. Heard about them about two years ago from an acquaintance and PIPC client who thought they were affiliated with ABN-AMRO. I did a similar post when the story broke out in the Inquirer. A visitor to my blog is still insisting on the legality of PIPC despite it not being licensed to trade client money in the forex market. Please do post more on the topic. $150-$250 million is a big loss to the domestic financial market. I’m interested in how its related with PFEC. PFEC is a high-profile forex trading house in Makati who also gets a lot of clients.

    Jul 27, 2007 | 2:38 pm

  59. sara says:

    You may want to read about this – its about one of the victims in the pipc scam…http://pipcscam.blogspot.com/ lives ruined

    Jul 27, 2007 | 8:55 pm

  60. inquirer says:

    I have read all of your blogs about this sensitive subject. To be honest with you all, if you read up on all the news and updates, the news has all second hand information. The news only had said it is a scam because it coincided with the Francswiss and SM fund.

    News also had said that they never directly interviewed PIPC GM because she is busy doing something about it. Now why would it be a scam, when the GM has hired a company to investigate of the matters. The operations of PIPC of 10 years are the same operations of what other banks use which is trading fx.

    Could it be that the media are just cashing in on the story. DO you believe everything the media as to say? MarketManila, you said so yourself, it is all over the news it’s hard not to believe?? Well if you want to truth, then do some research about it and don’t go with what the media has to say!!

    I hope all of you will eat your words when all of this is over. Because in the end, the MEDIA will be posting a PUBLIC APOLOGY of front page how they wrote about something from hearsey and second hand information. I am so disgusted how Philippines newspaper editors publish subjects with secondary information source. I urge you all to follow DAXIM LUCAS’ articles. Very inconsistent and doesn’t have the proper source. When Ferrier Hodson solves this case, he will be the idiot to apologize to the public of his attempt of deformation of character and publishing an ad which sources are not reliable.

    Along with this blog, this is how rumor starts. If you don’t go directly to the source, you misinterpret things. You are all a product of media manipulation.

    Jul 30, 2007 | 11:43 am

  61. Marketman says:

    tiny tim, I checked if the company was registered… and it is not for the purpose they engaged in. That is flag number one. And a big one. I do have other information from second hand sources which I will post soon. But I think our conjecture based on the limited information out there is just as good as anyone else’s except the guy running the business himself. I am not in any way saying that all company officials are in on the “scam,” but I suspect it will be you who will need to go public with an apology when all the facts are in… If everyone who got nailed would just come forward and file formal complaints, show the types of investment contracts that were signed, show the paper trail of supposed trades that occurred, show that the appropriate taxes were in fact withheld and paid to the government, identify actual returns for the company as a whole, show legitimate and clear audited financial statements from reputable audit firms, etc. then we would all be better informed. But if most of the folks hit by this disappearing act remain quiet and hidden, then it will be more difficult to do. I would love for this to end as some huge misunderstanding and a temporary nervous breakdown on the part of one individual who simply borrowed your money and is now willing to make it whole (for the sake of thousands of investors who are missing money)… but keep dreaming in fantasyland is all I can say…

    Jul 30, 2007 | 11:46 am

  62. Teresa says:

    Hi MM! very informative post. I am not aware of this current PIPC brouhaha in Pinas so I am still learning what the fuss is about. Reading your post and the comments lead me to conclude its a scam much like the Multi-tell and other Ponzi schemes that became so popular in Pinas in the previous years. I was also offered to invest in Multi-tell about 5 years ago and I turned down the “opportunity” to get rich quick. The investment process didn’t sound good to me. Now, who don’t want to be rich, retire early, not work while enjoying life, right? The problem is, there is no such thing as get rich quick! There is no overnight billionaire at all. All great men who struck gold in their businesses and empires did it in many many years, sometimes not even in their lifetime. Now like anyone else, I also invest my hard-earned money in the anticipation of getting more while not using it. But like anyone else, I do make a research on where to invest my money in and that I make sure that I diversity. Nothing is more devastating than putting all your eggs in one basket. Diversity is the name of the game to avoid losing everything in one sweep, and be conservative. If the return rate is too good to be true, it’s because it is. Do diligent research where you put your money in. Know the company and know the people behind it too. Who they are is how they run your money. I feel sorry for the people who lost their money on this scam but I hope what happened to them will serve as a lesson to others, to all of us. We don’t want to hear any more pinoys losing their hard-earned money on scammers. Thanks MM for sharing this eye-opening post. Once again, as always, I enjoyed visiting your site. More power!

    Jul 30, 2007 | 9:20 pm

  63. Lissa says:

    Hello Marketman, if you ever hold a financial seminar, I’d like to sign up!

    Jul 31, 2007 | 9:04 am

  64. mita says:

    if PIPC was not registered in the philippines, were investors paying taxes on profits then? this whole thing reminds me of a saying – “you can’t cheat an honest man…”

    i get it that people were really hurt by this scam…BUT

    Jul 31, 2007 | 9:42 am

  65. alilay says:

    looks like a modern version of the futures exchange that exploded in the 80’s. i remember a lot of investors mostly in fx trading lost a lot of money and up to now still hoping to recover money invested through the receivers.

    Jul 31, 2007 | 1:42 pm

  66. polypoo says:

    if you want to read more fact about this and less bs by people who dont know what they are talking about.. go here:

    Jul 31, 2007 | 9:58 pm

  67. aguho says:

    Substitute FOREX with real estate,or prepaid legal,or Amway, or mortgage fraud, the list of Ponzi schemes goes on and on.Unfortunately, this is the path that many over encumbered Filipinos here in Southern California have chosen as their plan for ” retirement”. Ooops forgot the mother of all schemes that SoCal pinoys fall prey to…. the casinos,card rooms, and lottos.

    Repeat after me ” Get rich quick schemes do not work”

    I would suggest that many Filipinos here in So Cal will never be able to retire, and will work until they drop dead… Watch as the coming housing/credit bubble crushes thousands of kababayans here in California.

    Here is a simple piece of advice to live by…. If you cannot afford something DON’T buy it…


    Aug 4, 2007 | 9:13 am

  68. investors says:

    Guys, for some updates on this PIPC scam go to Pinoy Money Talk and read the following:


    Aug 12, 2007 | 2:07 pm

  69. They never learn says:

    I admire your logic, Mr. Marketman. I think Polypoo must be one of those marketing agents of PIPC who received huge commissions for enticing people to invest. Polypoo just cannot seem to come to reality that this is an outright scam that enriched the officers and the marketing agents of PIPC at the expense of gullible investors.

    Aug 20, 2007 | 8:04 am

  70. WHB says:

    Inquirer, i hope by now you know the so called PIPC is a scam as the investigators hired by the GM or FH has already told the investors that they had found out that it was a scam form the start.

    Aug 23, 2007 | 2:27 am

  71. WHB says:

    And i was enticed to join as well. have a lot of friends who were making money with PIPC for years now but a good friend of mine who is a banker kept on telling me not to bec. when its too good to be true, it is. My friends- their own families are suing them for getting them into this- all their money, inheritance. not everyone there had excess cash in- a lot did but there were others whose life savings were there. I dont know how they can sleep at night knowing they had casued so much stress/ heartache to those that put their money in there.

    Aug 23, 2007 | 2:32 am


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