'My heart sank when I realised my money was gone': Investment scam victim reflects on 6-year turmoil and over $26k loss, shares glaring red flags

A Singaporean man's attempt at earning quick bucks turned into a six-year nightmare that had him shy away from big investments ever since.

Kenneth*, who is now in his early 40s, fell prey to an investment scam scheme when his friend introduced him to an online trading platform in 2015.

Having marketed itself as an educational platform for newbies to dip their toes in investment, he felt it was a suitable place to start his investment journey. He deposited US$20,000 (S$26,500) into an account and later recommended it to his parents who jointly put in US$10,000.

After a painful six years with countless tries at withdrawing the money, Kenneth eventually came to the realisation that his money was "gone forever".

With investment scam cases on the rise over the years, Kenneth is just one of many such victims in Singapore.

According to the Annual Scams and Cybercrime Brief 2022, a massive $198.3 million was lost to investment scams in Singapore – emerging as the top amount lost across all scam types.

Speaking to AsiaOne, Kenneth looks back at his six-year turmoil and shares the glaring red flags that should've warned him that it was all "too good to be true".

Red flag after red flag

Red flag 1: Unreasonably high investment returns

Kenneth's first pitfall was being enticed by returns on investment that seemed too lucrative to pass on.

The platform's interest rates of five to six per cent every month far exceeded typical fixed deposit rates of about three to four per cent over a whole year. This meant a deposit of US$10,000 via the platform was said to yield around US$500 to US$600 every month.

"In hindsight, it is very unlikely for a legitimate financial instrument to provide such an interest rate," said Kenneth.

Kenneth admitted that he also let his guard down as the scheme was recommended by a close friend he met in polytechnic – who had fallen victim too.

Having looked past this initial red flag, Kenneth felt reassured when he saw the money growing in his account. But this comfort was short-lived as he was soon faced with another stumbling block.

Red flag 2: Difficulty in withdrawing earnings

Instead of a system where he could directly withdraw the money into his bank account, Kenneth could only receive his earnings indirectly by recruiting new members.

This means that if a new member wants to deposit US$10,000 into their account, Kenneth will transfer US$10,000 from his account to the member's account. In return, the member will pass him the amount separately. In essence, the money was still kept within the system.

Red flag 3: Offer of commissions

To acquire new blood, the platform also pushed out commissions for referrals. But in reality, legitimate investment schemes do not offer such commissions.

"Back then, I didn't know it was a red flag. It made sense that they gave incentives when you bring someone in," added Kenneth. This was also when he decided to refer his parents to the platform.

Red flag 4: Pressure tactics

Besides dangling incentives, the company also employed various pressure tactics to rush him into committing his money. Some commonly used tactics include limited offers and timed gifts or rebates.

To bolster its credibility, the company had created false records of past investments so he would feel assured about parting with his hard-earned money.

When Kenneth finally started to research more about the company, he found it on the Monetary Authority of Singapore's (MAS) Investor Alert List – a non-exhaustive list of persons unregulated by MAS who may have been misperceived as being licensed or authorised by MAS.

"I felt that things were fishy as time went on, but I was still blinded by the fact that they were sponsors of big sporting events," said Kenneth, sharing how the fictitious track records added credibility in his eyes.

A flash of hope?

With his money stuck in the account for about three years, Kenneth saw "a glimmer of hope" in 2018.

Leveraging on the cryptocurrency boom, the company had announced plans to convert all the members' money into their own cryptocurrency – which they valued at a sky-high price.

"By then, I knew my money couldn't be taken out directly. This was the next possible step or glimmer of hope I saw. A lot of us thought that if our money was converted to cryptocurrency, we could then withdraw it via a cryptocurrency platform," said Kenneth.

But alas, all hope was dashed after the company's ICO (initial coin offering). Upon its launch, the cryptocurrency value crashed below US$0.01.

"My heart sank when I realised my money was all gone," he shared.

The final straw

Two years later, Kenneth found himself embroiled in another scam when he hopped on messaging app Telegram in 2020.

As a last resort to retrieve his money, Kenneth had joined a group that was supposedly helmed by stakeholders of the company who wanted to buy back the cryptocurrency at their original value.

All he had to do was to transfer his coins to the company's wallet in exchange for cash. But here's the catch: he had to pay an administration fee of about 10 per cent of his valuation first – another huge red flag.

No surprise there, it was yet another fraud. Kenneth was faced with radio silence after paying a few thousand dollars.

"Anything that revolves around Telegram or other weird social media chats cannot be easily trusted," he said, emphasising the importance of checking on their legitimacy especially with the advent of social media ushering in a new wave of online frauds.

Better safe than sorry

Today, Kenneth has put the incident past him. While there were some tense moments with his family, they chose to sweep the incident under the rug.

"My bank account took a hit, but all I knew was that I had to work harder for the next year and get the money back," he said. Kenneth still dabbles in online trading today but keeps the investment amount below a few thousand dollars.

When asked if he had pursued matters, Kenneth said that he does not harbour much hope of getting his money back.

Kenneth now hopes to help others better guard against scams by sharing his experiences. His biggest advice to those looking to get started with investing? Do your research and trust nobody because it's your money.

"With so many online financial gurus giving free financial advice on platforms like TikTok or YouTube, ultimately, you still need to do your research using credible sources," he added.

All investments carry risks. To see through investment scams, MAS advises the public to check before you invest.

Besides checking for red flags, check that the entity you are dealing with is regulated by MAS. If you choose to deal with unregulated persons (including those based overseas), remember that you're also forgoing the protection given under MAS' regulations.

Be sure to also verify information provided by the entity about themselves or the investment opportunity. This includes the background of representatives and the entity's track record.

It is important to ask as many questions as you need to fully understand the investment opportunity. Be wary if the entity is unable to answer or avoids answering any of your questions. If an investment sounds too good to be true, it probably is.

To confirm the credentials of the company and its representatives, you can use available resources on the MAS website, including:

• Financial Institutions Directory: A list of financial institutions regulated by MAS and the regulated activities they are authorised to provide.
• Register of Representatives: A list of individuals who conduct activities regulated by MAS.
• Investor Alert List: A non-exhaustive list of persons unregulated by MAS who may have been wrongly perceived as being licensed or authorised by MAS.

All persons who suspect that they are a victim of a scam are advised to file a police report immediately and follow these recommended steps by the National Crime Prevention Council.

Click here for more information on how you can spot an investment scam and what you can do to avoid falling prey to one.

*Not his real name

This article is brought to you in partnership with MoneySense.

yukiling@asiaone.com

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