Why scams pack punch

A Lamborghini seized during the arrest of Forex-3D boss Apiruk Kothi at a condo in the Thong Lor area of Bangkok is displayed outside the Department of Special Investigation’s headquarters on Jan 14, 2021. (Photo: Pattarapong Chatpattarasill)
A Lamborghini seized during the arrest of Forex-3D boss Apiruk Kothi at a condo in the Thong Lor area of Bangkok is displayed outside the Department of Special Investigation’s headquarters on Jan 14, 2021. (Photo: Pattarapong Chatpattarasill)

There has been no shortage of complaints about financial scams in recent years, ranging from selling non-existent products to promising to double the money for prospective investors in a short time.

Scams cost individuals billions of baht in estimated losses. The “Forex -3D” scheme, which surfaced several years ago and returned to public attention following the indictment of actress Savika “Pinky” Chaiyadej, is at its peak believed to have drawn up to 50,000 victims and total investments worth as much as 30 billion baht, according to the Secretary to the Minister of Justice, Acting Sub Lt Thanakrit Jitareerat.

In a recent scam involving a Thai YouTuber, Suchata Kongsupajak, better known as Nutty, about 6,000 people are said to have fallen for a scam with financial damages exceeding two billion baht.

While tracking down fraudsters and bringing them to justice might not be difficult for law enforcement agencies, recovering stolen money for the victims is another story.

Despite warnings from authorities, some people still go ahead with dodgy investments and end up losing their hard-earned money.

Get rich quick

Some individuals are lured into scams by promises of high returns which they can enjoy, the con artists behind them say, without the need for knowledge or expertise, said Piyasiri Wattanavarangkul, former director of the Department of Special Investigation’s Bureau of Illegal Financial Business Crime.

“They are motivated by the promises of high returns in a short time and earnings from recruiting new investors. Also, they don’t need to have any knowledge about the schemes. The economic situation may play a part. But these are external factors. The internal factors are greed and ignorance,” he said.

Mr Piyasiri, who now serves as deputy secretary-general of the Office of Narcotics Control Board (ONCB) after years of chasing fraudsters at the DSI, said some people repeatedly fall for such scams, which suggest they are aware of risks and willing to take them.

One key reason that Ponzi schemes are growing is that participants are not aware of the legal consequences they will face. It is important to raise public awareness that Ponzi scam participants risk losing not only their money but freedom as well if they invite others to join bogus investment schemes, he said.

According to Mr Piyasiri, there are seven types of Ponzi schemes in the country: foreign exchange trading; cryptocurrency investment; direct sales; commodity or service investment; forward contracts; fund mobilisation; and charity scams.

Under Thai law, foreign exchange trading must be licensed by the Bank of Thailand so legal operators are commercial banks, financial institutions and authorised agents. To lure investors, scammers usually organise workshops on forex trading which give them an opportunity to get access to their potential victims.

As for cryptocurrency trading, business operators in this market require a licence to operate and are subject to scrutiny by the Securities and Exchange Commission (SEC). However, many investors are not aware of this and invest with illegal trading platforms which claim to operate in digital asset exchanges overseas, he said.

Not all direct sales are scams, but they are scams when they focus on bringing in new members rather than selling products, and when members get compensated for recruiting people, rather than the sales their business generates.

Commodity investment and forward contracts involve speculative investments where individuals are tricked with promised high returns especially when prices soar. Gold, oil and agricultural products such as rice are used in these bogus schemes, he said.

Fund mobilisatiion scams are straightforward with investors urged to invest in stocks. Charity fraud scams can come in many forms and the most common is a cremation service fund where members deposit money on the promise their families would receive a lump sum upon their death.

Mr Piyasiri said the rise of technology and social media has provided scammers with an effective tool to swindle people. The use of celebrity endorsement adds credibility to the scams even though these public figures may have nothing to do with the schemes.

The Royal Thai Police and the Justice Ministry’s DSI are responsible for suppressing this type of crime while authorities such as the Interior Ministry and the Finance Ministry play a role in raising public awareness, he said.

However, authorities have to be proactive in tackling scams and they should take actions before damage is done, such as inviting suspected scammers in for a chat when they spot scams, or examining their tax records, he added.

According to Mr Piyasiri, Ponzi schemes cause more than financial damage to victims and in many cases families and communities collapse; some people are driven to commit suicide.

“The most important thing is that officials must make use of technology to reach victims and make sure their complaints are looked into promptly. It is necessary to recover the stolen assets as much as possible,” he said.

He suggested that the decree on loans of money amounting to public fraud should be improved to help authorities keep up with the scams.

Anyone can fall victim

Central Investigation Bureau (CIB) commissioner, Pol Lt Gen Jirabhop Bhuridej, said Ponzi schemes thrive because they promise high returns and lure investors with hopes of earning money fast.

They use an image of “new millionaires” to trick people and show how they can change their life by making a small investment. People, regardless of their backgrounds, tend to fall for such opportunities, he said.

Citing findings from forex trading scams, about 63.3% of victims have at least a bachelor’s degree, about 61.7% are office workers and 42.8% earn between 15,000-30,000 baht per month.

The figures suggest that many victims are well-educated and have job security, so unless people are made aware of tricks and how to spot them they can still fall for scams, he said.

According to the CIB chief, people running the scams design their investments to keep up with people’s changing lifestyles and new technologies and forex trading is just one example.

In essence, these business opportunities are not real and payments will keep coming until the schemes can no longer lure more new investors, he said.

Social media platforms and financial transactions made easy by smart phones contribute to a significant increase in financial damages, said the CIB chief.

Pol Lt Gen Jirabhop said police have been stepping up campaigns to raise awareness about scams but the best defence is always to be sceptical and conduct due diligence before making an investment.

“Be sceptical even though they are friends or close relatives. It is safe to assume that no business will or can give you more than seems reasonable to expect,” he said.

Pol Col Siriwat Deepor, deputy commander of the Technology Crime Suppression Division (TCSD), warned investors against being instruments in scams especially when they get paid for recruiting new members.

If convicted of persuading people to invest in a fraudulent scheme, they can face up to 10 years in prison and a fine up to 1 million baht, he said.

He also urged the public to call 191 or 1599 if they spot scams.

Voices of the victims

A middle-aged woman, who fell victim to a forex trading scam allegedly run by YouTuber Suchata Kongsupajak, said she invested two million baht in stock and luxury goods trading via an application.

She said she decided to invest because she was a long-time follower of the YouTuber who duped her into believing that she could make hundreds of thousands of baht in a matter of minutes.

“I got paid twice after the investment. When I needed the money and asked to withdraw, she told me she had been cheated by brokers and couldn’t access the application. Then I lost contact,” said the victim.

Another victim who lost several hundred thousand baht to the scam said he fell for the scheme because of the use of celebrity endorsement.

However, he found out later that those celebrities had nothing to do with the fraud.

Paisal Ruangrit, a lawyer who took a group of 30 people to file a complaint against the YouTuber, said he was attracted to this case because the YouTuber used her fame as a social media influencer to deceive people.

He said about 6,000 people fell prey to the scheme with estimated damages of two billion baht, and some of those victims have suffered mental health problems as a result.

Atchariya Ruangrattanapong, head of the Crime Victims Assistance Club, said some Ponzi schemes targeting small-time investors are not reported because victims lose small amounts and they do not think it is worth their time.

However, this is a loophole that scammers exploit and go on to swindle others, he said.

More importantly, even when these fraudsters are arrested, the investigation takes time which allows them to move the funds and make it almost impossible to recover the victims’ money.

In some cases, the defendants may serve only a third of their 20-year sentence, he added.

Mr Atchariya said his club is working on a Ponzi scheme involving cosmetic products and a complaint has been lodged with police.

The scheme screams fraud: an investment of 6,000 baht and a return of 15 million baht in three months.

“If we fail to tackle scams, I can tell you the economy will collapse. Hundreds of billions of baht are estimated to be circulating and that money will be moved overseas. Suicide and crime may rise,” he said.

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