Cops detaining Chinese and Taiwanese nationals who are suspected of being part of a Macau scam syndicate in Kuala Lumpur. Last month, it was reported that 27 companies had cheated 1.7 million people out of RM4.4 billion. FILE PIC

They have been red-flagged by the central bank and investigated by police. But some companies running illegal investment schemes continue to flourish, thanks to the irresistible lure of making a quick buck.

POLICE, since 2013, have shut down 15 of the 27 companies offering illegal investment schemes they have investigated.

But they are not convinced that the people behind these 15 companies have completely stopped their “business”.

Commercial Crime Investigation Department (CCID) officers are doing due diligence, making sure that those involved in these companies had not just set up other entities to continue where they left off.

Federal CCID assistant director (syndicated/credit card/e-card) Assistant Commissioner Adlan Ahmad said police had arrested the masterminds behind the 15 companies.

However, he said police were still investigating whether the “downline” members of the companies had established new companies using the same tactic.

The other 12 companies, he said, were still believed to be operating as investigations were still ongoing.

“(We are investigating) but they are still operating. They want to prove to their ‘investors’ that they are legitimate companies, despite being listed by Bank Negara Malaysia (BNM) as operating illegal schemes,” he told the New Sunday Times.

There are almost 230 entities on the BNM list of companies suspected to be offering questionable, or even bogus, schemes.

The Securities Commission (SC), meanwhile, has a list of 204 companies, websites, products and individuals offering unauthorised investment or capital market activities.

Adlan, however, said police could only start investigating any company for such illegal schemes if someone lodged a report claiming to have been cheated.

So, there is no telling how many companies and individuals are trying to cheat people out of their hard-earned money.

In a shocking revelation last month, police said the 27 companies had, in total, cheated 1.7 million people out of a whopping RM4.4 billion.

From time to time, reports appear in the media about the thousands, hundreds of thousands or even millions of ringgit lost to get-rich-quick schemes. Yet people still fall for such scams, unable to resist the lure of making “easy” money, and quickly at that.

Victims are generally lured by the promise of rapid and vast return on investments by companies selling their schemes via direct sales or marketing platforms.

BNM has stated that clamping down on illegal investment schemes is down to four agencies — the police, SC, the Domestic Trade, Cooperatives and Consumerism Ministry and the central bank.

It has led the charge in prosecution of cases involving fake investment schemes, but a representative admitted that it was down to creating awareness about bogus schemes and of legitimate investment schemes offered by established financial institutions.

Second Finance Minister Datuk Seri Johari Abdul Ghani had twice issued warnings to the public not to be conned by bogus investment schemes, the latest made on Sept 28.

Johari said schemes that offered a monthly return on investment of 10 per cent or more were too good to be true, based on even established global financial firms offering similar returns annually.

But not only are companies busted for such schemes either reemerging under different brands or replaced by new ones, their modus operandi has also evolved to offer seemingly more complex “investments” and dubious gains.

Adlan said the companies that were still being investigated were being monitored and action would be taken once police gathered enough evidence.

“We don’t want to raid their companies (prematurely) but end up having to release the masterminds due to lack of evidence.

“We are aware that they are still active, recruiting agents and investors.”

Adlan said the people behind the companies were aware that they were being investigated, but continued their “work” nonetheless, as they were adamant in trying to prove to their “investors” that their businesses were legitimate.

Some, in fact, were generating publicity by sponsoring high-profile events, a move to further “legitimise” their operations.

Adlan said, under pressure from police, some of these companies used the excuse of “being caught in a dire predicament”.

He said they would say they could not shut down operations as they could not afford to return all the funds collected from their “investors”, as the “investors” would surely demand immediate refunds.

Asked why police had decided to release the names of the 27 companies, which included those still being investigated, Adlan said it was to ensure that “new investors did not put their money into these schemes”.

Police have divided such companies into three categories to simplify investigations: 

COMPANIES which have been running for less than a year. Police will take quick action against these companies as they are still new, not yet popular and easy to investigate;

COMPANIES in operation for one to three years. These companies are moderately easy to investigate, as they have already garnered some following; and,

COMPANIES in operation for more than three years. These are the hardest nuts to crack and take longer to investigate because they have agents nationwide and have many “investors”. 

Adlan said companies listed in the third category often have multiple entities, many of which are opened under proxies like family members of friends, offering different schemes.

He said lapses in enforcement provided motivation for such businesses to continue. 

“The reason why they manage to run such schemes and remain free is because the lack of joint operations by enforcement agencies in the past. Agencies, such as the Domestic Trade, Cooperatives and Consumerism Ministry, police and BNM, often conducted separate investigations based on each agency’s respective law. Even the victims were passed around among the agencies because of this. 

“These perpetrators were slick and knew how to get around. Recently, with the establishment of the National Revenue Recovery Enforcement Team (NRRET) of the Attorney-General’s Chambers, agencies got together and there has been more exchange of intelligence, even joint operations, to ensure that the perpetrators won’t escape the law.  Now we can sit down together and identify the elements of fraud and see which agencies can take action,” he said.

Still, the disparity between the 229 companies red-flagged by BNM and the mere 27 that are on the police hit list is evident.

But, Adlan said the synergy would soon be established.

“This is because (in the past), victims reported directly to BNM, and BNM kept the names of those companies in their records. However, there were companies which had done serious damage involving a huge number of victims and these victims lodged reports at police stations, hence the list of 27 companies. 

“Under NRRET, we will work with BNM and launch probes into companies listed by the central bank. But we need more time and will have to prioritise investigations on a case-by-case basis.”


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