Ponzi warning - Beware of doctors, lawyers pitching out-of-this-world earnings
Published:Sunday | May 5, 2019 | 12:34 AMCarlene Davis - Gleaner Writer
In the wake of fallout from get-rich-quick scheme Loom, which emerged in the island last year, and its collapse, Jamaica’s investments watchdog has warned locals not to be duped into Ponzis whose chief solicitors are high-profile professionals.
Highlighted in an October 2018 exposé by The Sunday Gleaner, the rise and fall of Loom has seen one of the alleged founders murdered; a popular social media personality in fear for her life; and millions of investor dollars going up in smoke. The illicit scheme, which used social media to attract investors, promised 300 per cent in earnings.
“You tend to have some schemes that are promoted by so-called professionals – doctors, lawyers – and people tend to give that more credence, and they say, ‘Well, it’s a doctor, it’s a lawyer, so therefore, this can’t be that bad,’” David Geddes, communications and international relations manager at the Financial Services Commission (FSC), told The Sunday Gleaner.
“The FSC probably just don’t know about this one, but if the FSC don’t know about it, then it’s not legal, because the product and the person have to be registered with the FSC,” he added.
Within a month of the Sunday Gleaner exposé, the FSC, which oversees financial institutions in Jamaica, had warned persons not to be lured by much-hyped solicitation. The Ponzi later imploded.
“You would have had a significant number of complaints just when things were beginning to crash, so that would be when you start to get a lot of the complaints and then persons would have realised from that point that something is wrong ... ,” said Geddes.
“So usually, these persons have invested a significant sum of money and now they’re in a quandary as to how they are going to get back this money, whether they took loans on their house or they emptied their retirement fund, or liquidated shares on the stock market, so we are relentless in our efforts and we’re not going to turn it down now. What we’re going to do is continue to advise persons not to invest in these type of schemes.”
In December, a popular social-media personality who was operating Loom used the Instagram platform to say she was receiving death threats and was now in fear for her life as she owed $6.7 million to investors. She said things took a turn for the worse when investors wanted a refund after hearing that Loom was a scam.
Some members were refunded and others, she said, were out for blood. She claimed she was just a promoter of Loom and someone else was the founder.
“That is always the problem, nobody’s going to admit to being the founder, nobody’s going to say, ‘Yes, I’m the head honcho for this scheme,’ so everybody is forwarding this thing and I keep warning people, whether by social media or any other means, do not encourage persons to invest in these things, because you can be promulgating criminal activity and also encouraging persons to finance criminal enterprises,” said Geddes.
Geddes said that it is important to be vigilant because these schemes have a way of re-emerging, sometimes under different names.
“We have to give a big thank you to the media, I mean the newspaper, for keeping this issue alive, that this is not something you ought to invest your money in.
“I saw one of the interviews that I did with The Gleaner Company being circulated by WhatsApp and other social-media platforms, as a means of encouraging people not to put their money in there, so we got on that social-media platform, not just with our messages that we had crafted specially for social media, but also the fact that persons were forwarding these stories that had been published in the newspaper around social media,” said Geddes.