Posted on November 8, 2009 - by musicwhiz

Personal Finance Part 14 – Scams, Trickery and Dodgy Behaviour

Photo by peasaphttp

Recent news on the trial of the founders of the dodgy Sunshine Empire had highlighted to me the dangers of falling prey to scams and trickery, and also left me surprised as to how many people got caught in this web of deceit; with some experiencing an almost total wipe-out of their retirement savings. It is a sad fact but a reality that a lot of people out there are simply out to con your money, and hardly are interested in helping you to grow it (in fact, they are more concerned with growing their own pot of gold).

This mantra also applies to salespeople, brokers, remisiers and all those who seek to earn commissions through selling you financial advice. The term “caveat emptor” or “buyer beware” has never rung more true, and recent cases such as the Madoff and Satyam scandal only serve to highlight this problem which retail investors face. In the case of Sunshine Empire, it is my opinion that it was obvious that it was a scam, though the people who got swindled obviously could not see it as such.

One classic characteristic of scams is their ability to prey on one’s greed and desire for quick wealth. The Sunshine Empire office was beautifully decorated with expensive furnishings and the staff there were impeccably dressed and very polished in speaking (but obviously, not in delivering). The staff are trained to feed gullible investors with grandiose claims of spectacular returns and impressive-sounding projects (e.g. underwater hotel in Malaysia), in the name of conjuring up images of being vested in something lucrative and successful. Many of the victims had admitted that they were seduced by the Dark Side and gave in to greed, neglecting to do their due diligence and to check if the claims were for real.

It is strange that educated people can fall prey to scams which offer a return of more than 300% per annum consistently, but I have realized that when it comes to greed and the lure of quick money, almost anyone is inclined to believe anything! Read more…

Related posts:

1. Personal Finance Part 15 – The Evils of Gambling
2. Personal Finance Part 13 – Differentiating Between Needs and Wants
3. Personal Finance Part 12 – Indebtedness