Friday, July 23, 2010

Sunshine Empire : Lessons Learnt....

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 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,


lim said...

If we want singapore to progress, it is time to vote in a new government.. pap is complacent, and as long as the problems do not affect pap, action, if any, will be a long time coming...

Anonymous said...

I think only a minority of people got conned by scams and conmen.

20,000 members being conned may seem a lot but out of how many not easily conned? If 2 million are very smart and won't get conned, it works out to be only 1 percent of people who are easily conned. So statistically or politically it is still acceptable.

Politicians look at the big picture and make their decisions accordingly. And if they can remain in power for so long and still remain so strong, they must have got it right, including coming down hard on those who sell newsletters or books "wrongly" critical of them.

Anonymous said...

20 thousand people is not much, BUT, it is the amount of money ill-gotten by just a few that is the problem. It's liked the gdp benefitted a few dozen people yearly whereas the rest suffered.
It is just highly irregular and nonsensical.


Anonymous said...

How many of the victims will blame the PAP for being conned? Most of them will blame their own greed and stupidity.

Instead, the majority will praise the PAP for arresting these conmen, proving "once again" how safe this country is.

Singaporeans deserve the government, enough said.

ex conman said...

sunshine empire is a suitable name for the PAP govt or Lee dynasty.

noticed the extraordinary rainfall made the PAP sunshine empire rather lame.

ps: the biggest con artists are MIW
with 50 yrs track record.

Anonymous said...

IT rather very interesting that police and CAD and ISD will only take action after report and not looking this type of rogue idiots

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TG said...

Somebody says that our police and CAD will only take action after they are presented by the victims with sufficient evidence that can prove that a crime has taken place and that the perpetrator is identified , then only will the authorities start taking action to apprehend and charge the bad guys. They work best when there is "spoon-feeding".

Anonymous said...

The mini bond saga is also kind of a ponzi scam. Instead of using proceed to pay earlier investors, a large portions of the proceed are given to agent banks to sell these toxic investments.

Had anyone asked how much commissions are the banks getting for pushing those failed investments?

Issuer like Lehman do not have much intention for these investment to be returned to the investors, so they pay a large portion of the proceeds to these agent banks as commissions for them to push.

As we all know now, these greedy banks sold out their customers for an extraodinary commissions.

Anonymous said...

Dear Mr Lucky

CAD dun arrest hawkers.
The ISD dun arrest ponzi scammers.

The PAP wants to project a "business-friendly" image remember? How well staffed\funded do u think the CAD is?

Change will come when a minimum of 42 Mr Lucky(s) step forward and be counted in the GE.

Anonymous said...

Con or no con, as long as it adds to the GDP, the PAP govt will gladly accept. Doesn't matter if it swindles many people out of their hard-earned monies.

They will on react when there are enough people who were swindled and file complaints.

The only time they are proactive is to silence oppositions and critics.

Anonymous said...

To me,the modus operandi of the Gemini chit fund or the outlawed housewives tontines, are no different from the CPF in its current form. Maybe Gemini was out to scam, but tontines saved many a cash strap family in the 60s and 70s, The only difference is the financial standing of the operator, and the client base. when the population is forced to be part of the scheme by law, it may work, and if it doesnt, well just shift the goalpost.

The CPF Life is a shameful example of the operator blatantly telling the subcribers that they will guarantee you a payoff for life, but left the amount blank.

I trust a well organised tontine anytime. Anyway, they pay better rates.

Alan Wong said...

The greatest conman must be the one that is still conning us into thinking he is the most honorable gentleman that he want us to think he is when he is not.

He would be doing us a big favour if he can stop conning us and retire gracefully to enjoy the millions that he has conned over the years and maybe go shop for the best coffin that money can buy.

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Anonymous said...

Caveat Emptor.

Two words to absolve responsibility and oversight.

This tendency is actually very common in the world. e.g. in Oz, when Indians students were being bashed, the police tried to absolve this by saying that Indian were soft targets as they carried expensive things, such as iPod and laptops.

The difference is that over there, the populace saw this as an unacceptable response by authorities. The concept of "It's them today and the same can happen to me tomorrow" is evident to the Australians.

Here, the concept is more of "It's them today. Good thing it didn't happen to me."

If you want to see change, stop blaming the government.

As an Indian once said, "Be the change that you want to see in the world".