How’s that for a guarantee? Think it will hold up?
Well I’m not sure, and it’s not a guarantee … I don’t offer them … it’s advice only from a lay person.
But I will say this. It’s informed advice and it will go a long, long way to insuring you don’t get scammed … ever … in the Philippines or in any other country for that matter.
Sounds like a good deal, no? What’s the catch? Well, truthfully there isn’t a catch. But what may seem like a ‘catch’ is that my advice is too simplistic for many people who absolutely know they are smarter than me. And and there are so many of you out there who just ‘know’ you’re smarter than me. (some of you are, actually, my talent lies in knowing my shortcomings, not in being the smartest guy in the group.’
The advice? Simple. If it isn’t yours, honestly earned you have no business trying to take it.
Where’s the rest of the advice? There isn’t any. That’s it. Most of us learned this at out mother’s knee, but oh how many every year forget about it and decide that some particular ‘easy way’ is for them. They’re smarter than the average guy and so they can take advantage of a ‘good thing’ and the rest of the world can just lag behind.
This is what’s behind every scam here in the Philippines I have ever learned about. In fact it’s right behind every scam I know about ion any other country, for that matter.
Nigeria: Here’s one most of you are familiar with. It’s officially titled the Nigerian Advance Fee Scheme or commonly known on line as the 419 scam …with “419? referring to the article of the Nigerian Criminal Code dealing with fraud. You’ve probably gotten a few of these ridiculously worded offers yourself. You’d never fall for them, right? Well the US Secret Service which is in charge of combating these schemes in the US reports US losses alone are well over $100,000,000 per years 9and the Secret Service only pursues cases reported to them, and cases that involve loss of more than #50,000 USD, so one can reasonably expect the official figure is well understated). In Great Britain the losses are in the 150,000,000 GPB range. I read a report last year where more than 1,000 practicing attorneys in Australia had fallen victim … imagine that these are people who not only have advanced degrees in the law, but are licensed to practice law in the public trust. Amazing. How did all these otherwise smart folks get suckered in? The promise of money that is not theirs and/or not legally earned Greed and lack of simple business sense.
Stock Market: A few months ago the US investment industry was forced to r4ecveal a lot of very unfavorable profit data and (to the surprise of no one) these forms who donate huge amounts of political campaign funds got a staggering bail out, administered, almost without supervision, by a former member of their exclusive ‘club’, Secretary of the Treasury Paulson. Just one example of Paulson’s ‘special friends’ that you and I are bailing out, regardless of whether or not we have a job is a fellow named Bernie Madoff. Now Bernie isn’t just any Wall Street sophisticate, he’s along-time president of the NASDAQ. A man of great intellect and experience Here’s how he operates:
….As the market got worse this year, Madoff continued to report to investors that his funds were up — as much as 5.6% through the end of November. That would have been a remarkable performance. During the same time, the stocks of the Standard & Poor’s 500, where Madoff supposedly did most of his trading, had dropped a weighted average of 37.7%. … read more on Bernie Ripoff here.
But Dave you’re saying, those people whom Bernie ‘burned’ aren’t stupid, some of them are long established experts in the investment business. You can’t fault them for investing when it appears this is just a case of one man ‘going rogue’.
I can’t blame the victims you say? Well I beg to differ. I think I very well can blame them, especially because of their es tensive experience and market knowledge.
Madoff’s company invested in common stocks. The market went down more than 37%. But Bernie’s victims were promised more than 5% increases … 43% more than any rational, intelligent and moral person had any right to expect., So even in the face of world-wide market contractions and well-documented adjustments, Bernie’s “smarter than dumbshits like you or I” friends jumped on a good thing and stayed aboard until the train crashed. Notice a pattern here? Money that was not ‘theirs’ and not legitimately earned. There’s no magic way to make 42% more than the rest of the market … unless you somehow think you’re so ‘smart’ that you deserve what the rest of the people in thee world don’t have a chance to get. This whole scam falls under the category of greed, not deception, in my view.
Rural Banks: OK, Philippine Rural banks … what I really meant to write about. Are Rural Banks subject to a lot of scam activity in the Philippines?
Well I don’t know how to quantify the term ‘a lot’ but I do know this…. Rural Banks are a special category of public banks that can not or will not qualify themselves to be a registered bank under Philippine banking regulations Originally they were dreamed up mainly as ways for farmers and other rural businesses to get banking services when the major “Imperial Manila” banks didn’t provide adequate service.
Many of these banks are likely honest as the day is long and perfectly safe to do business with. They are now all under the supervision of the BSP (Bangko Sentral ng Pilipinas), the Philippine Central Bank. They also offer PDIC (Philippine Depositor Insurance Corporation) coverage. So you don’t need to turn and walk the other way if you see that the town you plan to live in is only served by a Rural Bank. But Dave’s personal view is, you do need to turn and walk the other way very quickly if you come across a popular current Rural Bank scam that is unfortunately being heavily promoted by some foreigners in the Philippines. It’s bad business and again, easily predictable if you remember Mamma’s teaching … money for nothing is not yours to begin with.
The last baking day before the Christmas Holiday the BSP announced that at least 12 Rural banks were being forced to close and about 6 or 8 more have been added to the list since. The magnitude of the scam won’t really be known for some time now, but the gist of it is simple.
Banks make money by loaning money. They don’t make money because you deposit money in your account, they make money because for every say 100 pesos you deposit the bank can lend out perhaps 80 Pesos …and the difference on what they collect versus what they pay you pays the light bill, the rent, the people’s salary, buy shiny bullets for the guards guns and any left over provides profit to the stockholders Sounds simplistic but even some well educated foreign friends I have had this discussion with just can’t seem to figure this business model out.
As of the last day before the holiday break, here in the Manila area the ‘going rate’ for commercial loans is somewhere between a low of 9 or 10% and a high of 15 or 16%. That’s what banks charge borrowers. From that they have to pay the interest to depositors (5% or less) plus all their other costs of doing business Simple enough.
But thee are a number of people ‘hawking’ investment vehicles (often certificates of Deposit”) from certain Rural Banks that pay as much as 25% when held to their 5 year maturity. Sound good?
Go back to the earlier examples, please, if you think it does. How can a bank legitimately pay out as much as trice or more the legal rate they charge for the money being lent? It;s upside down, backwards, and when all the smoke settles it is likely to be just another Bernie Madpoff Ponzi Scheme. It can’t be real, legal and above board … and the actions of the BSP prove me out … they have been chasing some of these scam perpetrators for some years and now the ‘jog is up’ in some cases.
Legal and intelligently supportable investment vehicles (such as dollar denominated bonds for the Philippine government pay 10% or less. Bonds from Pag-Ibig, the Philippine low-cost housing agency are currently in the 8& range.
You already know what CD’s and other legitimate investment vehicles cost in your home country. So what, on earth, could prompt an otherwise well-educated and intelligent Brit or American or Aussie or whatever to buy certificates that pay 2 or 3 times what any legal and stab;e investment device does/
Sounds one hell of a lot like greed to me. Sometimes coupled with the very common foreigner attitude of arrogance. I’m from a first world country, I’ll show these Filipinos how we do things back in a ‘real’ country … and while I am at it, I’ll earn myself a whole bunch of money that wasn’t mine to begin with and wasn’t earned by any legitimate business practice … because I’m so smart, you see.
Be as smart as you wish, folks, it’s really no sin off my nose. But do remember one thing … that lesson your momma tried to teach you when you were little. If it isn’t yours and you didn’t earn it, best to leave it alone … or you might wind up just as smart as Bernie Madoff.
Popularity: 4% [?]
While talking to the New (less than 3 years) “Cano” up the street, he told me that he had loaned P15,000.00 to a local we both knew. My first question to him was; “This was the first loan?” The answer was yes, I explained that he would be paid back within a week. The next request for a second loan, the next month would be for a far greater amount, and then it’s a “dollar down and the chase is on!” He will never repay the higher amount, as he paid you the first time with your own money just to gain your trust. As I’ve said before; “Some people you just can’t help!” He loaned the guy P40,000.00 as he knows it all, and the man pulled a rabbit and is gone. I explained that some times you must pay for your schoolin’!
Yep, less than $1000 USD for a semster’s worth of education at my alma mater, the “School of Hard Knocks”. Over the years I have bbeen amazed at the umber of Americans and other foreigners who expect that they will at least supplement their income by money lending. Bad choice in many directions … losing you money may be the least of your worries.
There are three areas where I see a big presence of what you might call ‘organized crime’ here.
Jueteng (similar to the US numbers racket) (can go up to the highest levels of government … NO place for a kano).
Drugs, typicaLLy shabu (meth), certan people can sell openly, others are in jail for life just for being near it … very dangerous ground for Phil and foreigner alike.
Money lending. A huge business in the Philippines, banks just don’t lend to consumers. Typically very much the province of the ‘bumbay’ … often a Sikh on a motorcycle who makes his rounds’ every week. It’s part of a Sikh’s religion never to be without his beard or his dagger … you could wind up ‘salvaged’ so easily you’s never even hear it coming if you encroach on the wrong territory.
I never lend except within the family under extreme circumstances and before I say yes I decide if I can afford it as a ‘gift’. If I can’t afford it I say ‘no’, if I can I offer it up with no real expectation of it coming back. Sometimes it does, but if it doesn’t, no matter, I alreadywrote it off in my mind.
A “guy down the street” who asked to borrow? Never. Not ever. No way.
Here is some insight from ME who has been scammed in the Philippines – TWICE!
I do NOT consider that placing Deposits in Rural Banks to be a SCAM as they were BSP Registered, Controlled and Regulated and you Deposits were Insured by the PDIC.
OK so these 12 Banks of the Legacy Group under Mayor Celso G. de los Angeles may not have been adhering to MORB Rules. However they had been offering 20%pa Interest Rates on 5 Year Peso Time Deposits since 1987, and only one Bank within that Group had been closed in 11 years. All Banks get Audited every Year, so how was it these unsafe and unsound banking practices went unchecked for so long? Personally I think the syphoning off of funds, only really started in 2008, when ‘United Capital Corporation got involved?
Central Bank asked us to to be Witnesses in a Syndicated Estafa Case against Celso, using our Pre-Need Buy Back contracts as evidence. There was a Notice of Hearing issued by Cebu City Courts, but subsequent ones his lawyers gor moved to Makati City RTC. Next we here, Justice Secretary dowturns it to ‘Estafa’ as many names got dropped off.
In Cagayan do Oro such Sundicate dEstafa Cases were upheld, and Arrest Warrents Issued, but Celso still not in Jail!
Perhaps with this new Aquino Government, we might see Celso go to Jail?
I never bothered with Celco’s Pre-Need buy Back Plan to start with. In fact it was only when they announced they were going to withdraw it, I decided to get to hands on experience of this higher gain investment of buying a Pre-Need Pension Plan of LCPI, then selling it to Legacy Card Inc. It was a very good ROI and delivering 41.67%pa, so I decided to look more closely at this PNBB2 investment.
If one goes to the SEC website and looked at their ‘Investment Scam Checklist’.
http://www.sec.gov.ph/invstmnt_scams_chklist.htm
I went through all that Anti-Scam Check List and Legacy consolidated Plans Inc. seemed to come out OK and the SEC had issued them with a Permit to Sell such Pre-Need Plans.
The SEC were not doing their job of Controlling and Regulating these Pre-Need Companies. Had they done so, no such ‘Permit to Sell’ would ever have been issued to LCPI and I and many others would not have put funds in and not lost any either. Had I not re-invested to increase my Capital. I would only have lost about 6% of my investment as I had received 3 x Quarterly payments as ROI.
Evidence that the SEC failed in their job is the fact that Pre-Needs Companies are now under the Control and Regulation of the ‘Insurance Commission’ (IC),
See http://www.abs-cbnnews.com/business/03/10/10/pre-need-implementing-rules-out
So the SEC’s Anti-Scam Check List proved no good, but still worth following and reading their ‘Investors’ Alert’ – even if not up to date:
http://www.sec.gov.ph/index.htm?investors_alert
The 2nd Investment that I put funds into that turned out to be a SCAM was ‘V8 Motorcycles & Parts Dealer’.
The Business Plan was basically sound. Raise at least Php25M to place a contract direct with a leading Chinese Motorcycle Manufacturer, ‘Zongshen’, who would produce OEM customised Motorcycles for extremely low prices (compared to Philippines and the rest of the World). Have their licensed Philippines Agent import legally to the Philippines unassembled, and assemble them from ‘kits’. here in Cebu. Philippines.
That is how the Honda XR200′s are imported from Japan and sold here.
Indeed some 900 x ‘V8′ motorcycles did get imported by December 2008. I saw 3 such models assembled as ‘show bikes’ and have photos to prove it.
What we did not know and were not told until April 2009, is these motorcycles would not start so could never be sold/used? Why because Zongshen did not trust Catherine L. Soronio as she never paid in advance, so they shipped with essential parts missing until Php10M was received.
It never got paid and Soonio and the Bank Officers who provided the Bank guarantee, must have stolen the funds. We filed a case of Syndicated Estafe in May 2009. 12 months later it got down turned to BP22 Estafa Case only. Soronio never turned up @ the Court Hearing so a Warrant been issued for her Arrest,
The Courts should have seized those 900 x Zongshen Motorcycles and all the Appliances in her Showrooms and any unsold Motorcycles.
I do not know if I will get the Php5M worth of Claims that me my wife submitted (and included Php500K of 2 x friends also). Since much of that Php4M of ours, was re-invested funds, I/we lost about Php2M in total, and our friends together Php1M.
Will we ever get our money from the Courts?
Depends if Soronio left the Country or not? It has taken over 14 so far and likely to take another year or more as the Philippines Justice System is so very slow with huge backlog of cases. BP22 cases go via ‘Mediation’ first, but even that can take 2 years. Dr. Libre, Chairman of the Rural Bank of Mabinay (that Soronio was President of) was also listed in the Syndicated Estafa case, and he sits on such Mediation Panel in Negros.
I have put much of the funds received from the PDIC into a new investment. This is paying 10% every 2 months. Is this a SCAM also? Seems not so far as we have been receiving for 12 months now and should get our capital back by end of this month (unless we extend).
Still if we win more on the Roundabout, then we lost on the Swings, then we will have won out! Not too different from investing in some companies that turned out to be a Loss, then finding a good company that you made a good return on.
This company is offering Shares in the company if we don’t want cash funds back. I will be asking Questions of the SEC before I agree to this.
David & Sha-Sha