Sunshine Empire ran a Ponzi scheme using more from new investors to pay existing ones. These schemes will eventually collapse when they cannot find new investors to pay existing ones. Using slick marketing and a number of well dressed hardselling sales people, Sunshine Empire pushed its investment profucts, known as memberships, to ordinary Singaporeans. It was reported that a number invested their entire lifesavings. Sunshine Empire promised roughly 2% returns per month and collected $180M from investors. At its height, its well renovated was packed with eager investors wanting to purchase memberships.
Here are the postings in my blog on Sunshine Empire:
Man Badly Burnt by Sunshine Empire Scam....19 Oct 2009.
Singaporeans try short cut to riches....28 Oct 2007
The authorities stopped Sunshine Empire only after it had already sold 20,000 memberships. It just shows how many people are unable to differentiate an almost obvious ponzi scheme from a legitimate investment product. This large number tells we are long way from being a completely financial literacy as a society and scams and con-men such as James Phang can inflict great harm on ordinary people. Very often the authorities take a 'buyer beware' approach expecting ordinary folks to be equip with the knowledge and experience to avoid such scams. The Sunshine Empire case shows us this expectation that people over time will develop the financial skills to avoid major scams is simply not realistic. It has been been 46 years since the 1st major Ponzi scam, the Gemini Chit Fund[Link] swindled thousands of Singaporeans and we still don't have a regulator with enough teeth and vigilance to stop such blatantly fraudulant scams.
Recently the media reported that a landbanking company, Profitable Plots, sold questionable products to many investors who are now trying to recover their money. In June this year, a group of Profitable Plot investors decided to sue company [Link]. All this happened long after Malaysian authorities raided Profitable Plot's office[Link] in Oct 2008. Today there is still no action from the authorities here and Profitable Plot investors have taken matters into their own hands[Link]. How long before the authorities start to act? When the case involve tens of thousands of investors?
Here in Singapore, the authorities have time to catch and fine people for hawking of newsletters. They will react strongly when people write books about them that they don't like[Link] and the laws are extremely and unnecessarily harsh to prevent certain types of criticism....so that authorities can arrest people quickly and throw them in jail for their views. Videos are banned if the contents don't boost their reputations and reinforce their version of history[Link]. However, when it comes to stopping financial scams and con-men to prevent ordinary Singaporeans from being hurt, there is no sense of urgency,