Business Crime Fraud Under The Guise Of Investment
Introduction
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives. Gold price has shown a long term correlation with the price of crude oil. This suggests a reason why gold is sold off during economic weakness.
Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I.[citation needed] After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000.[citation needed]
Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world (code "XAU"). The following table sets forth the gold price versus various assets and key statistics on the basis of data taken with the frequency of five years.
Definition of investment
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Gold investment & investment Fraud
Investment frauds target individuals. The fraudsters use convincing arguments to make people part with their savings. These types of fraudsters usually want you to invest your money in a company or an opportunity which seems to be offering very high rates of return A precious metal that has functioned as a currency or served as a long-standing investment since the early days of civilization. Gold is a safe haven investment, which means that investors will put their money in gold during times of extreme uncertainty such as war, terrorist attacks, or financial uncertainty such as a sell-off in the stock market, or during times of high inflation. Traders in investment gold have special obligations in particular they are required to keep account of all substantial transactions in investment gold and to keep documentation to allow identification of customers for a period of at least five year.
Perpetrator in business
One of the side-effects of modern capitalisation is the emergence of business crime, which is also known as white-collar crime. Criminologist Edwin Sutherland defined the term as non-violent crimes most likely to be committed by white collar employees or employers, due to their industry's unique position in society that allow exclusive access and power over certain resources. The types of crime committed in this context are often fraud, bribery, computer crime and forgery; where money, property or services are exchanged to gain advantage in business or in private life. In summary, these crimes involve inappropriate use of confidential information by those who have access to it. Sensitive information is an essential corporate asset and a secured system to safeguard it is paramount
The Investment Understanding and Investment Activities
These criminals like to prey on the naive, inexperienced investor. However, any investor can become a victim. Any investor can succumb when the product is packaged attractively enough.
Don’t be a courtesy victim. Con artists will not hesitate to exploit the good manners of the potential victim. Remember that a stranger who calls and asks for your money is to be regarded with utmost caution and skepticism. You have absolutely no obligation to stay on the phone with a stranger who wants your money. It's not impolite to say you are not interested and hang up.
Don’t be rushed – check it out. Say no to any salesperson that pressures you to make an immediate decision. If he or she doesn’t have the time to explain the investment to your regular investment professional, or other party, or if they ask “Can’t you make your own investment decisions?” Say NO! You have the right and responsibility to check out the salesperson, firm, and the investment opportunity itself. Almost all investment opportunities must be registered with the Securities Division. Extensive background information on investment professionals and firms is available from the Securities Division.
Before you even consider investing, get the prospectus, review it carefully, and make sure you understand all the risks involved. But remember, even written material sent from the promoter can be fraudulent or misleading.
Always stay in charge of your money. Don't be taken in by anyone who wants your money and assures you that he or she is a professional and can handle everything. Beware of any financial professional who suggests putting your money into something you don’t understand. And never let yourself be talked into leaving everything in his or her hands.
Always watch over and protect your nest egg. Never trust anyone who wants you to turn over your money to them and then sit back and wait for results. If you understand little about the world of investments, take the time to educate yourself. Constant vigilance is a necessary part of being an investor.
Never judge a person’s integrity by how they look or sound. Far too many investors who are wiped out by con artists later explain that the swindler “looked and sounded so professional." Successful con artists sound extremely professional and have the ability to make even the flimsiest investment deal sound as safe as putting money in the bank. Remember that sincerity in a voice, especially on the phone, has no bearing on the soundness of an investment opportunity. Always do the necessary homework.
Watch out for salespeople that prey on your fears. Con artists know that many investors, particularly older investors, worry that they will either outlive their savings or see all of their financial resources vanish overnight as the result of a catastrophic event. It's quite common for swindlers and abusive salespeople to pitch their schemes as a way to build up life savings to the point where such fears are no longer necessary. Remember that fear and greed can cloud your good judgment and leave you in a much worse financial posture. An investment that is right for you will make sense because you understand it and feel comfortable with the degree of risk involved. High return almost always means high risk.
Exercise particular caution if you have limited or no experience handling money. Ask a con artist to describe his ideal victim and you're likely to hear "elderly widow or widower." Many people now in their retirement years have limited knowledge about handling money. They often relied on their spouses to handle most or all money decisions. Those who have received windfall insurance in the wake of the death of a spouse are prime targets for con artists. People who are on their own for the first time in years should always seek advice of family members or impartial professionals before deciding what to do with their money.
Monitor your investments and ask tough questions. Too many investors trust unscrupulous investment professionals and outright con artists to make financial decisions for them. They then compound their error by failing to keep an eye on the progress of the investment. Insist on regular written reports. Check the written information. Look for excessive or unauthorized trading in your funds. Don’t be swayed by assurances that such practices are routine or in your best interest. Don’t permit a sense of friendship or trust to keep you from demanding this information. If you suspect something is wrong and you don’t get satisfactory answers, call the Securities Division and let us help.
Look for trouble retrieving your principal or cashing out profits. If a stockbroker, financial planner, or other individual stalls you when you want to pull out your principal or profits, demand to know why. Since unscrupulous investment promoters have probably pocketed the funds of their victims, they will go to great lengths to explain why your savings are not available. They may even pressure you to “roll over” non-existent profits into new and even more alluring investments. This will only further delay the fraud being uncovered. If you're not investing in a product with a fixed term, such as a bond, you should be able to receive your funds or profits within a reasonable amount of time.
Don’t let embarrassment or fear keep you from reporting investment fraud or abuse. Investors who fail to report that they've been victimized often hesitate out of embarrassment. Older investors fear they'll be judged incapable of handling their own affairs and be forced into a nursing home or other facility. Sophisticated investors don't want to admit that a smooth talker took them in. Con artists know all about such sensitivities.
They count on these fears preventing or delaying the time when the authorities will be notified about the scam. It's true that most money lost to investment fraud is rarely recovered beyond pennies on the dollar. In many cases, however, when investors recognized early that they'd been misled, they were able to recover some or all of their funds by being a “squeaky wheel”. One of the best resources for investors who fear they have been victimized is the Securities Division of the Department of Financial Institutions.
To deter white-collar crime, organisations need to systematically manage their sensitive information. The best deterrence solution is to implement a security infrastructure that restricts and monitors personnel's access.
Fraud case studies
As recently covered by mass media, Golden Traders Indonesia Syariah (GTIS), a Malaysian-based investment company, has been accused of perpetrating a Ponzi-like fraud using its gold investment scheme.
The investment scheme offered by GTIS is simple. A customer buys its gold at a higher than normal price and he or she will receive a higher than normal return. Media reports say at least two high profile figures, the chairman of the People’s Representative Council and the chairman of the Indonesian Ulema Council (MUI), have both endorsed GTIS’ investment scheme.
Recently, GTIS’ customers grew restless after news spread of the disappearance of its director together with a huge amount of company’s fortunes. According to the head of the Futures Exchange Supervisory Board (Bappebti), several investment companies in Indonesia have been running similar schemes involving investment in gold.
Experts say similar things have happened in Malaysia, where several companies similar to GTIS have run gold investment schemes and attracted many customers who then end up not receiving what they have been promised (i.e. investment returns).
Public suspicion of anything looking like a “get-rich-quick” scheme is not without reason.
Last year, for example, Koperasi Langit Biru (KLB) made the news by defrauding its investors with investment packages that were no more than “robbing Paul to pay Peter” schemes — otherwise known as Ponzi schemes — that pay investors not from the return on their investments but from their own money and the money of subsequent investors.
Law review of this case: Article 378 of the penal code (KUHP) formulated as follow:
"Whoever with intent to benefit themselves or others unlawfully, by using a false name or false dignity, by cunning or by a series of lies move others to give something to her body, or that provide debt or eliminate debt, threatened for fraud with a maximum imprisonment of four years. "
Conclusion
Many scams on the 'Net aren't new at all. They're just variations on classic Ponzi schemes, pump and dump scams, and offshore investing scams. Bulletin boards are especially dangerous because you don't know the identity of who is posting. Take all posts with a grain of salt. Newsletters are often written by paid promoters. Always be skeptical: if things sound too good to be true, they probably are.
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives. Gold price has shown a long term correlation with the price of crude oil. This suggests a reason why gold is sold off during economic weakness.
Gold has been used throughout history as money and has been a relative standard for currency equivalents specific to economic regions or countries, until recent times. Many European countries implemented gold standards in the latter part of the 19th century until these were temporarily suspended in the financial crises involving World War I.[citation needed] After World War II, the Bretton Woods system pegged the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000.[citation needed]
Since 1919 the most common benchmark for the price of gold has been the London gold fixing, a twice-daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Furthermore, gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world (code "XAU"). The following table sets forth the gold price versus various assets and key statistics on the basis of data taken with the frequency of five years.
Definition of investment
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Gold investment & investment Fraud
Investment frauds target individuals. The fraudsters use convincing arguments to make people part with their savings. These types of fraudsters usually want you to invest your money in a company or an opportunity which seems to be offering very high rates of return A precious metal that has functioned as a currency or served as a long-standing investment since the early days of civilization. Gold is a safe haven investment, which means that investors will put their money in gold during times of extreme uncertainty such as war, terrorist attacks, or financial uncertainty such as a sell-off in the stock market, or during times of high inflation. Traders in investment gold have special obligations in particular they are required to keep account of all substantial transactions in investment gold and to keep documentation to allow identification of customers for a period of at least five year.
Perpetrator in business
One of the side-effects of modern capitalisation is the emergence of business crime, which is also known as white-collar crime. Criminologist Edwin Sutherland defined the term as non-violent crimes most likely to be committed by white collar employees or employers, due to their industry's unique position in society that allow exclusive access and power over certain resources. The types of crime committed in this context are often fraud, bribery, computer crime and forgery; where money, property or services are exchanged to gain advantage in business or in private life. In summary, these crimes involve inappropriate use of confidential information by those who have access to it. Sensitive information is an essential corporate asset and a secured system to safeguard it is paramount
The Investment Understanding and Investment Activities
- Sleep People in this category mostly do not have enough investment knowledge and do not join the investment. Their reasons are they have limited funds; they have lack of information, knowledge and intentional/understanding; and they are also averse to risk.
- Sissy People in this category mostly have enough investment understanding but they do not join the investment. They are called risk avoiders. The reason used by this category are they have a limited fund and they averse the risk.
- Courageous People in this category do not have enough understanding of investment but they join the investment. This people are called risk takers. This following reason cause this category are brave to take the risk and doing investment because the other investors.
- Smart This category consists of people who have enough understanding of investment and they joint the investment. This category caused by brave to take the risk, regain conciousness of investing, and also understand the risk of investment.
These criminals like to prey on the naive, inexperienced investor. However, any investor can become a victim. Any investor can succumb when the product is packaged attractively enough.
Don’t be a courtesy victim. Con artists will not hesitate to exploit the good manners of the potential victim. Remember that a stranger who calls and asks for your money is to be regarded with utmost caution and skepticism. You have absolutely no obligation to stay on the phone with a stranger who wants your money. It's not impolite to say you are not interested and hang up.
Don’t be rushed – check it out. Say no to any salesperson that pressures you to make an immediate decision. If he or she doesn’t have the time to explain the investment to your regular investment professional, or other party, or if they ask “Can’t you make your own investment decisions?” Say NO! You have the right and responsibility to check out the salesperson, firm, and the investment opportunity itself. Almost all investment opportunities must be registered with the Securities Division. Extensive background information on investment professionals and firms is available from the Securities Division.
Before you even consider investing, get the prospectus, review it carefully, and make sure you understand all the risks involved. But remember, even written material sent from the promoter can be fraudulent or misleading.
Always stay in charge of your money. Don't be taken in by anyone who wants your money and assures you that he or she is a professional and can handle everything. Beware of any financial professional who suggests putting your money into something you don’t understand. And never let yourself be talked into leaving everything in his or her hands.
Always watch over and protect your nest egg. Never trust anyone who wants you to turn over your money to them and then sit back and wait for results. If you understand little about the world of investments, take the time to educate yourself. Constant vigilance is a necessary part of being an investor.
Never judge a person’s integrity by how they look or sound. Far too many investors who are wiped out by con artists later explain that the swindler “looked and sounded so professional." Successful con artists sound extremely professional and have the ability to make even the flimsiest investment deal sound as safe as putting money in the bank. Remember that sincerity in a voice, especially on the phone, has no bearing on the soundness of an investment opportunity. Always do the necessary homework.
Watch out for salespeople that prey on your fears. Con artists know that many investors, particularly older investors, worry that they will either outlive their savings or see all of their financial resources vanish overnight as the result of a catastrophic event. It's quite common for swindlers and abusive salespeople to pitch their schemes as a way to build up life savings to the point where such fears are no longer necessary. Remember that fear and greed can cloud your good judgment and leave you in a much worse financial posture. An investment that is right for you will make sense because you understand it and feel comfortable with the degree of risk involved. High return almost always means high risk.
Exercise particular caution if you have limited or no experience handling money. Ask a con artist to describe his ideal victim and you're likely to hear "elderly widow or widower." Many people now in their retirement years have limited knowledge about handling money. They often relied on their spouses to handle most or all money decisions. Those who have received windfall insurance in the wake of the death of a spouse are prime targets for con artists. People who are on their own for the first time in years should always seek advice of family members or impartial professionals before deciding what to do with their money.
Monitor your investments and ask tough questions. Too many investors trust unscrupulous investment professionals and outright con artists to make financial decisions for them. They then compound their error by failing to keep an eye on the progress of the investment. Insist on regular written reports. Check the written information. Look for excessive or unauthorized trading in your funds. Don’t be swayed by assurances that such practices are routine or in your best interest. Don’t permit a sense of friendship or trust to keep you from demanding this information. If you suspect something is wrong and you don’t get satisfactory answers, call the Securities Division and let us help.
Look for trouble retrieving your principal or cashing out profits. If a stockbroker, financial planner, or other individual stalls you when you want to pull out your principal or profits, demand to know why. Since unscrupulous investment promoters have probably pocketed the funds of their victims, they will go to great lengths to explain why your savings are not available. They may even pressure you to “roll over” non-existent profits into new and even more alluring investments. This will only further delay the fraud being uncovered. If you're not investing in a product with a fixed term, such as a bond, you should be able to receive your funds or profits within a reasonable amount of time.
Don’t let embarrassment or fear keep you from reporting investment fraud or abuse. Investors who fail to report that they've been victimized often hesitate out of embarrassment. Older investors fear they'll be judged incapable of handling their own affairs and be forced into a nursing home or other facility. Sophisticated investors don't want to admit that a smooth talker took them in. Con artists know all about such sensitivities.
They count on these fears preventing or delaying the time when the authorities will be notified about the scam. It's true that most money lost to investment fraud is rarely recovered beyond pennies on the dollar. In many cases, however, when investors recognized early that they'd been misled, they were able to recover some or all of their funds by being a “squeaky wheel”. One of the best resources for investors who fear they have been victimized is the Securities Division of the Department of Financial Institutions.
To deter white-collar crime, organisations need to systematically manage their sensitive information. The best deterrence solution is to implement a security infrastructure that restricts and monitors personnel's access.
Fraud case studies
As recently covered by mass media, Golden Traders Indonesia Syariah (GTIS), a Malaysian-based investment company, has been accused of perpetrating a Ponzi-like fraud using its gold investment scheme.
The investment scheme offered by GTIS is simple. A customer buys its gold at a higher than normal price and he or she will receive a higher than normal return. Media reports say at least two high profile figures, the chairman of the People’s Representative Council and the chairman of the Indonesian Ulema Council (MUI), have both endorsed GTIS’ investment scheme.
Recently, GTIS’ customers grew restless after news spread of the disappearance of its director together with a huge amount of company’s fortunes. According to the head of the Futures Exchange Supervisory Board (Bappebti), several investment companies in Indonesia have been running similar schemes involving investment in gold.
Experts say similar things have happened in Malaysia, where several companies similar to GTIS have run gold investment schemes and attracted many customers who then end up not receiving what they have been promised (i.e. investment returns).
Public suspicion of anything looking like a “get-rich-quick” scheme is not without reason.
Last year, for example, Koperasi Langit Biru (KLB) made the news by defrauding its investors with investment packages that were no more than “robbing Paul to pay Peter” schemes — otherwise known as Ponzi schemes — that pay investors not from the return on their investments but from their own money and the money of subsequent investors.
Law review of this case: Article 378 of the penal code (KUHP) formulated as follow:
"Whoever with intent to benefit themselves or others unlawfully, by using a false name or false dignity, by cunning or by a series of lies move others to give something to her body, or that provide debt or eliminate debt, threatened for fraud with a maximum imprisonment of four years. "
Conclusion
Many scams on the 'Net aren't new at all. They're just variations on classic Ponzi schemes, pump and dump scams, and offshore investing scams. Bulletin boards are especially dangerous because you don't know the identity of who is posting. Take all posts with a grain of salt. Newsletters are often written by paid promoters. Always be skeptical: if things sound too good to be true, they probably are.
