Wealth is about value creation, as explained in my previous post. So can you be rich without providing much value? Yes, but not for long. If you cheat your customers, you will face the consequences one day, and you will likely be bankrupt.
A scam is a business that ‘pretend’ to provide value. The initial wealth that the business owner gathered is based on a perceived value he created. Once the scam is exposed, there goes his wealth.
Internationally, these are some of the infamous scams:
Bernard Madoff – Biggest Ponzi scheme ever. It was astonishing that his scheme could last so long,
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Nigerian Letter or “419” Fraud – I bet some of you have receive such an email to solicit your assistance to move millions out of Nigeria, and in return, this person will share the profits with you.
12DailyPro – This is under the autosurf scams. 12DailyPro is a website that claims to give you 12% on your investment in 12 days. All you have to do is put in some money and surf a set of advertisements daily. To be honest with you, I participated in this scam before. I was not sure how the company earn the profits to pay me this high amount of interests. I was skeptical but still went ahead with it. I did receive the money initially, but eventually it folded when the scam was uncovered. I was lucky to have taken my original capital back. What I lost was the “profits” earned. This is simply an internet-based Ponzi scheme.
FBI has a very good description of the various scams and how you can avoid them. Read them here.
Look at some of controversial individuals/businesses in Singapore (I am saying these are controversial, not stating they are scams. I would believe they are innocent until proven guilty):
Asset Wine Management – Shopfront has been closed for weeks without notice. Owners uncontacted and gone missing. Investors have report the case to the Police. Article from Lioninvestor, TODAY article, AsiaOne article.
Universal Asset Group – The company has folded when it cannot deliver the 10-12% returns to investors. Lioninvestor article.
Dr Clemen Chiang – Publicised himself as having a PHD in options trading, which happened to be from a unacredited university. Read report: Trading ‘expert’ ordered to refund fees
Benjamin Marc Wee – Ebay expert. Apparently did not fulfil product delivery, and did not refund money when requested. Note: To date, he has not been proven to be a fraudulent businessman. There’s even a website dedicated for revealing his behaviour.
Check the MAS Investor Alert List here.
sgfinancialfreedom did a poll on his blog, asking his readers what is the most toxic investment product. Briefly, here is the results:
1. Land Banking (54%)
2. Insurance Products (18%)
3. Wine Investment (27%)
4. Shares (0%)
In my opinion, all are toxic assets as long as a person is not sure what he/she is doing. Ignorance is not bliss when it comes to money.
Why Conmen appear again and again?
Humans choose to listen to what we want to listen. Just like how we hate the nagging from our parents, we ignore it. The route to wealth involves hardwork. We said we know, but we actually do not want to believe it. We want to get rich quick. We want others to tell us how to do it. This is why conmen will always be around. They are simply providing the supply to meet the demand for get rich quick schemes. The only way to suppress this human bias is to be financially literate, and rationalise the viability of these schemes.
I would like to say again, wealth is about value creation. If you choose not to provide value to people, and basically to cheat people, your wealth can only last till your scam is exposed.