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By Sherryl Anne G. Quito, Senior Researcher,
Honey Madrilejos-Reyes, Senior Reporter and Meryl Mae S.
Marcon, Researcher
Conclusion
The pyramid collapsed because “investment”
firms couldn’t sustain the endless stream of recruits. Left in the
ruins were the hopes, dreams and lives of those who entrusted their
life earnings and finances to these phony companies. Some may have
invested their money out of greed, but most of the victims invested
their hard-earned money out of desperation and dire need.
What Aling Amelia thought as the answer to her
financial problem has become an additional burden. She is P600,000
in debt, which she borrowed and invested in the Maria Theresa Santos
Trading (MTST).
Aling Amelia is a ready-to-wear dealer in Quezon
City. It was her suki (regular customer) who persuaded her to invest
in MTST.
A mother of four, Aling Amelia is the family
breadwinner. She is thankful that her eldest, a government employee,
contributes to the household expenses.
“Tinutulungan niya akong pag-aralin ang mga
kapatid niya,” she says. “Wala naman akong aasahan sa ama nilang
manginginom.”
Tired of coping with the day-to-day struggles of
life, Aling Amelia finally decided to get into investing in
quick-money deals. But, with the measly sum she was getting from her
small business, she couldn’t afford MTST’s minimum initial
investment of P50,000.
Yet the 15-percent interest that MTST offered
was too good to pass up. So Aling Amelia took the plunge. She used a
savings account entrusted to her by her sister, Jamie, as collateral
for her loan of P600,000.
Everything was done without Jamie’s knowledge.
“Kasi ang plano ko, pag tumubo na, ’yung
pera, ibabayad ko na sa bangko,” Aling Amelia explains.
Jamie, who works overseas, entrusted the savings
account to Aling Amelia for emergency use of the family, especially
her sickly parents.
Aling Amelia made five successive loans of
P50,000, P210,000, P110,000, P50,000 and P50,000. She used her first
loan as initial investment in MTST. That was in June 2002.
“Akalain mo, may instant P7,500 ako
buwan-buwan,” she said.
She added the next four loans to her MTST
account in September and October last year.
For the first few months, everything went
smoothly for Aling Amelia.
“Tinamad na nga akong magtrabaho, kasi
kumikita ako,” she said.
Then the checks began to bounce. She found out
that the checks of the other investors had bounced too. That was in
November 2002.
Aling Amelia was shocked. She was so terrified
that she followed MTST’s instructions: keep the incident from the
media and authorities. She even joined a group of volunteers who did
all explaining to other investors to avoid anarchy.
“Sinabi kasi nila na kapag nag-ingay kami,
baka lalong maunsyame ang pagbawi namin sa pera namin. At saka kapag
nag-volunteer ka daw, mas maaga mong makukuha yung pera mo,” Aling
Amelia said.
But she again was deceived.
“Hanggang ngayon, nagkahulihan na, pero kahit
singko wala rin akong nakuha,” Aling Amelia said.
Now, she is deep in debt.
“Hindi na ako makapag-withdraw sa account ng
ate ko, kaya pag kailangan ng pera naglo-loan na naman ako. Hanggang
ngayon hindi pa niya alam ang nangyari. Hindi ko alam kung
magkakalakas pa ako ng loob na sabihin sa kanya ang totoo,” she
said.
In hindsight, Aling Amelia said she now
appreciates the life she used to lead. “Hirap man noon, at least
panatag ang loob ko,” she said ruefully.
Other unfortunate victims
Following is an interview with other victims of
the pyramid scheme:
Beth, housewife
My family was earning its keep through a small
catering business capitalized at only P20,000. Every day my husband
and I delivered food to customers nearby. From our catering, we
earned P500, enough for our children’s allowance and budget for
the day. After two days of doing the business, we were able to save.
Thinking of putting up a sari-sari store, we were advised by a
relative to consider investing in Glasgow: the interest was so high
and we could easily double our money. And since my husband agreed on
the suggestion, I asked my relative to go with me to the office of
Glasgow. After talking to a woman agent, I was so convinced that I
immediately signed the papers.
After five months, we got P5,000 as interest on
the P50,000 investment we put in. We were so happy that we looked
forward to the next interest payment. That’s when we experienced
the problem: the second payment we were expecting fell through. We
went back to the office, but the people there failed to give us an
answer. Later on, we found out that ours was not an isolated case.
We decided to file a complaint with the Securities and Exchange
Commission. Because we were always at the SEC to follow up our
complaint, my husband and I have stopped our catering business. Had
I known that our money would be wasted, we could have chosen to just
put it in the bank. Malaking kabawasan iyon sa puhunan naming
mag-asawa.
Mang Ige, businessman
When I heard of Multitel and how big the
interest it was giving to investors, I didn’t have second
thoughts. I invested P2 million in Multitel with high hopes that my
money would earn a 15-percent interest after a few months. Unlike
the other investors, I did not get a single penny from them. And
just like that, my money was gone. I only blame myself for not
thinking a million times before making a decision as big as that.
Hinding-hindi na ako uulit.
Aling Liwanag, retiree
I got some money from my retirement. After
spending some for the improvement of our house, I decided to set
aside P300,000 as investment in Multitel. My children were against
it because they’d already heard how these firms operate. Despite
their warning, I persisted. Ngayon, pinagsisisihan ko na. Kung
nakining lang sana ako sa aking mga anak walang nangyaring ganito.
Cecilia, single
I got some P2 million when I took early
retirement from the company I had worked for 14 years. A former
officemate of mine encouraged me to invest P300,000 in MMG Holdings.
I was impressed with my officemate’s stories that the investors
could buy cars and townhouse units just from the interest payments.
So I thought it must really be that big. After consulting with my
family, I asked my officemate to help me process the documents.
Months after I put my money in MMG, I heard the news that it was
operating without a license. I tried to get back my money, but the
management went into hiding and my officemate could not give me an
explanation. I am now one of the many victims who frequent the SEC
hoping to get their money back. Napalaking perwisyo talaga para sa
akin. Had I known, I could have just bought shares on the Philippine
stock market. Kahit maliit ang kita, sigurado naman.
No exemptions
Besides the war in Iraq and rising criminality
in the country, our men in uniform are also concerned about another
development. Morale within the elite units of the Philippine
National Police (PNP) and the Armed Forces of the Philippines (AFP)
has hit a new low, as a result of get-rich-quick deals hatched by
pseudo-investment firms.
This only shows that no one is exempt from the
pyramid scheme—even our men in uniform have fallen victim to it.
PNP units affected include the Special Action Task Force,
PNP-Aviation Security Group, Criminal Investigation and Detection
Group (CIDG), National Capital Regional Police Office and the Police
Anti-Crime Emergency Response. Also feeling the effects of the scam
are elite troops of the Philippine Army-Special Forces and the Army
Scout Rangers.
According to PNP-CIDG Chief Supt. Eduardo
Matillano, Maria Theresa Santos of MTST had “gypped over 12,000
policemen, military policemen, National Bureau of Investigation
agents and civilians to the tune of more than P30 million.”
As this developed, senior military and police
officials called an emergency meeting two weeks ago to resolve the
morale issues involving their men. Officials say they have observed
unusual behavior among men victimized by the pyramid scheme.
“The situation is explosive. The morale of
troops is very low because most of our men are preoccupied with
recovering their lost investment,” said one senior police
official. “This problem, if not solved, will affect the
operational aspects of our command’s functions and
responsibilities,” said an Army official. Another noticed unusual
behavior among his men following the “secret” abduction of
Santos by CIDG agents.
“This triggered animosity among the victims
who later found out that those who took Santos into custody were
able to recover their investments,” the official said.
“Nagkaroon ng iwanan, kaya sila-sila ngayon ang nag-aaway. Most of
the victims have no more take-home pay to speak of, because they are
still paying for the loans they made. Tinatamad na lahat magtrabaho,”
the head of an elite PNP unit said.
Task force formed
The result of all these schemes is inevitable:
at best, a few people walk away with a lot of money, while most
recruits lose whatever money they put into the scheme. In fact, the
only way anybody can make money through a pyramid scheme is if other
people are defrauded into giving money on a promise of getting
something in return when it will be impossible for them to get
anything at all in return. The scammers use deception to get money;
that is why they are illegal. They are not illegal, because they
recruit people to recruit other people. That is legal and is done to
some degree in many legitimate businesses. They are not illegal,
because they give money to people. They are illegal, because they
deceive people to get money from them.
Alarmed at the proliferation of
pseudo-investment firms, the House Committee on Trade and Industry,
headed by Rep. Harry Angping of Manila, and the Committee on
Economic Affairs, headed by Rep. Oscar Moreno of Misamis Oriental,
have formed a task force to curb pyramid schemes in the country.
The task force, headed by the Department of
Justice, is composed of the SEC, the Department of Trade and
Industry, the Bangko Sentral ng Pilipinas, the National Bureau of
Investigation, the Bureau of Immigration and the Anti-Money
Laundering Council. Its creation was spurred by reports of Pyramid
and Ponzi schemes perpetrated by companies and persons that have
defrauded at least 2 million people.
The task force is expected to speed up the cases
against the fraudulent firms and the recovery of the investments of
victims. The joint committee has asked the task force to come up
with recommendations on how the government can effectively clamp
down on pyramid schemes.
Pyramid scheme vs. multilevel marketing
Multilevel marketing has become more prevalent
in recent years. Many companies have used this marketing practice
and have been very successful in attracting investors. As more and
more investors are getting involved in multilevel marketing, the
differences between a legitimate multilevel marketing company and a
pyramid scheme need to be dealt with.
Multilevel marketing is a way of selling
products directly to consumers without intermediary retail stores.
Products are sold through a network of distributors or salespersons
set up to resemble a pyramid. Because of their pyramidal structure,
multilevel companies can sometimes be mistaken for pyramid schemes.
One factor separates a legitimate multilevel
marketing company from a pyramid scheme—the former emphasizes
reliable products or services; the latter uses products or services
to disguise its search for collecting money from the investors on
the bottom levels to pay other investors further up the pyramid.
Success in multilevel marketing is based on two
factors: 1) product and service quality and 2) hard work in selling
products or services. Recruitment of new members is secondary.
How can you avoid being defrauded? The easiest
way is obviously not to partake in any promotion that appears to be
a pyramid scheme. The following are additional tips to help you
steer clear of pyramid schemes:
•Gather all information about the company, its
officers, products or services. Get written copies of the
company’s marketing plan, sales literature and contracts. Avoid
promoters who fail to explain their plans clearly and in detail.
•Find out if there is a demand for the product
or service. If the promoters seem to be selling distributorships or
large start-up inventories to new recruits, stay away.
•Ask if you must buy a product to become a
distributor. Find out if the company will buy back your
inventory—you could get stuck with unsold products. Legitimate
companies will buy back inventory for at least 80 to 90 percent of
what you paid for.
•Beware if the start-up cost is substantial.
Some pyramid schemes pressure you into paying a large sum to become
a “distributor.”
•Resist the temptation to invest just because
the people selling you the program are friends or part of your
social organization. They may have been misled into believing that
they could make large sums of money in a short time.
Part 1
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