A guide to ponzi schemes in Thailand
By Jon Fernquest
Award-winning
Bangkok Post journalist
Parista Yuthamanopp investigates ponzi
schemes
in Thailand this week.An infographic on the right provides a summary.
Also read the companion piece on fraudulent direct sales (Read article).
ponzi scheme - "a
fraudulent investment operation that pays returns to investors from
their own money or money paid by subsequent investors rather than from
any actual profit earned." (See Wikipedia)
companion - goes together with as a pair
fraud (noun) - the crime of gaining money from people by cheating, tricking or lieing
fraudulent (adjective)
direct sales - when a company sells products directly to customers at their home or workplace instead of through stores (See Wikipedia)
companion - goes together with as a pair
fraud (noun) - the crime of gaining money from people by cheating, tricking or lieing
fraudulent (adjective)
direct sales - when a company sells products directly to customers at their home or workplace instead of through stores (See Wikipedia)
Economics
Don't get caught at the bottom of pyramid
8/02/2010PARISTA YUTHAMANOP
True to its slogan - "Get Rich Quick, Truly Comfortable" - Poodang fertiliser generated income to the tune of 10,000 baht a month for some of its rural customers since it began operations two years ago.
But the money stopped flowing last December when the police stopped the operation, alleging it was a shady business in which payouts to existing members were generated from investments by new members rather than profits on real sales.
pyramid
- anything looking like an Egyptian pyramid with a point
small top and a large base at bottom
pyramid scheme - a business model where a lot of money is made by getting other people to join, often without any product or service being delivered, in the end people can't be found to join and a lot of people who recently joined lose money (See Wikipedia)
slogan - a short easily remembered phrase, especially one used to advertise an idea or a product สโลแกน
fertiliser - a natural or chemical substance which is spread on the land or given to plants, to make plants grow well ปุ๋ย
to the tune of... - equal to the large amount of...
rural - connected with the countryside outside big towns and cities ในชนบท, บ้านนอก
alleging - claiming that something is true (but not proving yet)
shady business - a business making money in an illegal or dishonest way
payouts - money paid to people by a company or organisation
pyramid scheme - a business model where a lot of money is made by getting other people to join, often without any product or service being delivered, in the end people can't be found to join and a lot of people who recently joined lose money (See Wikipedia)
slogan - a short easily remembered phrase, especially one used to advertise an idea or a product สโลแกน
fertiliser - a natural or chemical substance which is spread on the land or given to plants, to make plants grow well ปุ๋ย
to the tune of... - equal to the large amount of...
rural - connected with the countryside outside big towns and cities ในชนบท, บ้านนอก
alleging - claiming that something is true (but not proving yet)
shady business - a business making money in an illegal or dishonest way
payouts - money paid to people by a company or organisation
The police intervention in the fertiliser firm caused an outcry among some of the 300,000 members, who were under the illusion that their returns came from a thriving business.
Such business models are illegal if the returns are based on member base expansion rather than concrete sales
intervention
- a situation in which someone becomes involved in
a particular issue, problem, etc., in order to influence what happens
การแทรกแซง
firm - a business or company บริษัม
outcry - a strong expression of anger and disapproval about something, made by a group of people or by the public การคัดค้านอย่างรุนแรง
returns - the money they made from an activity
thriving - very successful ประสบความสำเร็จอย่างสูง
business model - an idea for creating a sucessful business (See Wikipedia)
illegal - against the law ผิดกฎหมาย
member base - the members of the organisation
expansion - when something increases in size, number or importance การขยายออก
concrete - based on facts, not on ideas or guesses
firm - a business or company บริษัม
outcry - a strong expression of anger and disapproval about something, made by a group of people or by the public การคัดค้านอย่างรุนแรง
returns - the money they made from an activity
thriving - very successful ประสบความสำเร็จอย่างสูง
business model - an idea for creating a sucessful business (See Wikipedia)
illegal - against the law ผิดกฎหมาย
member base - the members of the organisation
expansion - when something increases in size, number or importance การขยายออก
concrete - based on facts, not on ideas or guesses
Under such business models, people at the top of the customer pyramid receive the highest return for the investment, and the newcomers the least. The scheme collapses as promoters vanishes or confidence falls when it fails to solicit enough members to fulfill the payment liabilities.
Col Piyawat Kingkate, director of Bureau of Special Crime of the Department of Special Investigation (DSI), said it has been arresting numerous "pyramid scheme" operators over the past two years. They worked in various mediums ranging from money to paddy, petrol, satellite dishes and noodle franchises. The victims were both at the lower end and high end of the income spectrum.
newcomers - people
who just newly joined an organization
scheme - a plan for achieving something, especially something illegal or dishonest แผนการ (ที่มีท่าว่าจะผิดกฎหมาย)
scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
promoters - the people who are organizing and running a business, event or scheme
confidence - the quality of being certain ความมั่นใจ
solicit - to ask someone for something like money, information or help เรียกร้อง
fulfill - do what you promised or said you were going to do
liabilities - debts, the amount of money that a company owes หนี้สิน
numerous - many มากมาย
mediums - ways or means of doing something (usually a way of expressing ideas)
franchises - the right do a pre-tested business idea in a certain area, together with training and special supplies (See Wikipedia)
operators - people who run a business
victims - people who are killed injured or harmed in some way from an accident, natural disaster, crime, etc.
spectrum - a range of things, things spread out over many values, some high, some low
scheme - a plan for achieving something, especially something illegal or dishonest แผนการ (ที่มีท่าว่าจะผิดกฎหมาย)
scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
promoters - the people who are organizing and running a business, event or scheme
confidence - the quality of being certain ความมั่นใจ
solicit - to ask someone for something like money, information or help เรียกร้อง
fulfill - do what you promised or said you were going to do
liabilities - debts, the amount of money that a company owes หนี้สิน
numerous - many มากมาย
mediums - ways or means of doing something (usually a way of expressing ideas)
franchises - the right do a pre-tested business idea in a certain area, together with training and special supplies (See Wikipedia)
operators - people who run a business
victims - people who are killed injured or harmed in some way from an accident, natural disaster, crime, etc.
spectrum - a range of things, things spread out over many values, some high, some low
For example, the Bangkok Noodle franchise drew 1,000 members who paid 35,000 to 55,000 baht each for a noodle cart and cooking utensils. They were promised 100,000 baht in cash in return over 10 months. The promoters said there were 300 members, but the DSI found only 100.
The DSI has recently cracked down on an e-money games website that solicited members online with a promise of high-yield investments. It promised an investment return of between 2.5% and 3% - per day. Members of the funds get a 10-15% bonus if they can solicit more members within 100 days. The company allowed members to deposit their returns for extra bonuses and sell reward points to other members. But then it defaulted on customers' redemptions. The cheated customers then sold their reward points to other members, thus spreading the risks.
franchise
- a formal agreement for someone to sell a company's
products or services in a particular place การขายระบบแฟรนไชนส์
คือมีสาขาของร้านค้า เช่น 7
cart - a small vehicle with two or four wheels that you push or pull to transport large or heavy objects on รถเข็นหรือรถลาก
cash - money in the form of notes or coins เงินสด
cracked down - when the police start enforcing a law and catching people who break the law (unfortunately crackdowns are often only for a short time)
solicited - asked someone for something such as support or money วิงวอนขอความช่วยเหลือ
yield - the amount of money made in an investment
high-yield investments - investments that make a lot of money
funds - money needed or available to spend on something เงินทุน
deposit - a sum of money which is given in advance as part of a total payment for something เงินมัดจำ
reward - something given in exchange for good behaviour or good work, etc รางวัล
defaulted - fail to do what you promised to do
redeem (verb) - pay money that you promised to pay someone
redemptions (noun) - the act or process of paying money promised to someone
cart - a small vehicle with two or four wheels that you push or pull to transport large or heavy objects on รถเข็นหรือรถลาก
cash - money in the form of notes or coins เงินสด
cracked down - when the police start enforcing a law and catching people who break the law (unfortunately crackdowns are often only for a short time)
solicited - asked someone for something such as support or money วิงวอนขอความช่วยเหลือ
yield - the amount of money made in an investment
high-yield investments - investments that make a lot of money
funds - money needed or available to spend on something เงินทุน
deposit - a sum of money which is given in advance as part of a total payment for something เงินมัดจำ
reward - something given in exchange for good behaviour or good work, etc รางวัล
defaulted - fail to do what you promised to do
redeem (verb) - pay money that you promised to pay someone
redemptions (noun) - the act or process of paying money promised to someone
Another fund fooled well-heeled investors into depositing funds for an investment in crude oil futures with 300,000 baht required as the initial sum with a promise of a 30% return. A customer received a call one day after and was told of a 50,000-baht profit. But she received a call five days later saying she should place another 300,000 baht because the initial 300,000-baht sum was lost. After that the promoter called her to say that she should place another 300,000 baht to offset the losses. She grew suspicious and called the police. It turned out that many people have fallen victim to this swindler.
fund
- an amount of money saved or collected for a special purpose
X fooled Y - X cheats Y, X deceives Y
well-heeled - rich, have a lot of money
crude oil - oil in its natural state from the ground before treatment with chemicals
crude oil futures - a contract to give or receive an amount of oil at a date in the future (See Wikipedia on futures contracts)
initial - early; first ในเบื้องต้น
sum - an amount of something, especially money จำนวนเงิน
profit - money that you make from selling goods and services after all your costs have been paid กำไร
offset the losses - replace lost money
suspicious - making you believe that something is wrong, dangerous or illegal น่าสงสัย
It turned out that... - After a series of events the end result was...
victim - someone who has been harmed, injured or killed as the result of a crime เหยื่อผู้เคราะห์ร้าย
swindler - a person who makes money by cheating, lieing to and deceiving other people
X fooled Y - X cheats Y, X deceives Y
well-heeled - rich, have a lot of money
crude oil - oil in its natural state from the ground before treatment with chemicals
crude oil futures - a contract to give or receive an amount of oil at a date in the future (See Wikipedia on futures contracts)
initial - early; first ในเบื้องต้น
sum - an amount of something, especially money จำนวนเงิน
profit - money that you make from selling goods and services after all your costs have been paid กำไร
offset the losses - replace lost money
suspicious - making you believe that something is wrong, dangerous or illegal น่าสงสัย
It turned out that... - After a series of events the end result was...
victim - someone who has been harmed, injured or killed as the result of a crime เหยื่อผู้เคราะห์ร้าย
swindler - a person who makes money by cheating, lieing to and deceiving other people
A paddy chit fund asked investors to invest a certain sum with an option to receive a sack of paddy rice and get the investment deducted. The investors were promised attractive dividends and membership commissions.
Col Piyawat said we may distinguish ordinary direct-sales activities from illegal chit funds by considering if the income sources and profitability of the entities come mainly from sales of goods or membership solicitation.
paddy - rice
chit fund - an informal arrangement where people put their money together and lend it out to one of the members, usually the highest bidder, this arrangement illegally avoids the payment of taxes, sometimes it turns into a ponzi scheme or the organizer runs away with the money (See Wikipedia)
deducted - subtracted from, reduced from (example: 2 deducted from 5 leaves 3)
option - a choice; something that you can choose in a particular situation ทางเลือก
option - choice ตัวเลือก
option - choice ทางเลือก
sack - to remove someone from a job ปลดออกจากตำแหน่ง
attractive - pleasant to look at น่าสนใจ
dividends - benefits; good results ได้เปรียบ
member (noun) - a person belonging to a group
membership (noun) - the condition or state of belonging to a group
solicit - asking people for something (example: money, help, an idea, their opinion)
membership solicitation - asking people to become a member of a group
commissions - money that people get for doing something successfully for the business (like making a sale which brings revenue and income into the business)
distinguish X from Y - treating X and Y as different
direct-sales - (See Wikipedia)
income sources - places or ways that a person or company makes money
entities - businesses, companies
chit fund - an informal arrangement where people put their money together and lend it out to one of the members, usually the highest bidder, this arrangement illegally avoids the payment of taxes, sometimes it turns into a ponzi scheme or the organizer runs away with the money (See Wikipedia)
deducted - subtracted from, reduced from (example: 2 deducted from 5 leaves 3)
option - a choice; something that you can choose in a particular situation ทางเลือก
option - choice ตัวเลือก
option - choice ทางเลือก
sack - to remove someone from a job ปลดออกจากตำแหน่ง
attractive - pleasant to look at น่าสนใจ
dividends - benefits; good results ได้เปรียบ
member (noun) - a person belonging to a group
membership (noun) - the condition or state of belonging to a group
solicit - asking people for something (example: money, help, an idea, their opinion)
membership solicitation - asking people to become a member of a group
commissions - money that people get for doing something successfully for the business (like making a sale which brings revenue and income into the business)
distinguish X from Y - treating X and Y as different
direct-sales - (See Wikipedia)
income sources - places or ways that a person or company makes money
entities - businesses, companies
Legitimate direct-sales companies also rely on strategies to expand membership, but the primary income source is sales of goods and services. They also offer only the products granted permission from the Consumer Production Board for direct sales.
If the main source of profit is generated by memberships rather than sales, then there is a good reason to suspect that the business may operate as pyramid fund. There shouldn't be any trade that generates spectacular income in a short period of time," Col Piyawat said.
expand
- to become larger ขายตัวออกไป
source - someone who gives information แหล่งข่าว
source - the starts or cause of something ต้นกำเนิด, แหล่งกำเนิด
primary income source - most important way of making money
permission - allowing someone to do something การอนุญาต,การอนุมัติ,การยินยอม
granted permission - given permission
suspect - to believe that something is true, especially something bad สงสัย
trade - doing business, buying and selling things
spectacular - extremely impressive ที่ตระการตา
source - someone who gives information แหล่งข่าว
source - the starts or cause of something ต้นกำเนิด, แหล่งกำเนิด
primary income source - most important way of making money
permission - allowing someone to do something การอนุญาต,การอนุมัติ,การยินยอม
granted permission - given permission
suspect - to believe that something is true, especially something bad สงสัย
trade - doing business, buying and selling things
spectacular - extremely impressive ที่ตระการตา
The DSI is responsible for investigating cases involving pyramid funds. After a victim or an organisation files a complaint, it will submit evidence to the prosecutor-general. Fraud cases can result in criminal or civil charges.
According to the DSI, only 6,400 persons have filed complaints with the police, 20% of the total estimated victims. The amount of damages claimed totalled 1.4 billion baht.
complaint
- when someone says that something is wrong or not satisfactory
การร้องเรียน
submit - to formally give something to someone so that they can make a decision about it ยื่น เสนอ ยื่นเอกสาร ให้พิจารณา
evidence - facts statements or objects that help to prove whether or not someone has committed a crime หลักฐาน
prosecutor - a lawyer whose job is to prove in court that someone accused of a crime is guilty อัยการ
civil - of a case filed a court that deals with non
charges - when the police and other legal authorities formally accuse someone of breaking the law
accuse - to say that someone has done something wrong
filed - to take official action, e.g., to make a formal complaint ยื่นฟ้องร้อง
filed complaints with the police - ask the police to investigate an illegal acticity and take action
damages claimed - in a legal case, the amount to be received for damage done
submit - to formally give something to someone so that they can make a decision about it ยื่น เสนอ ยื่นเอกสาร ให้พิจารณา
evidence - facts statements or objects that help to prove whether or not someone has committed a crime หลักฐาน
prosecutor - a lawyer whose job is to prove in court that someone accused of a crime is guilty อัยการ
civil - of a case filed a court that deals with non
charges - when the police and other legal authorities formally accuse someone of breaking the law
accuse - to say that someone has done something wrong
filed - to take official action, e.g., to make a formal complaint ยื่นฟ้องร้อง
filed complaints with the police - ask the police to investigate an illegal acticity and take action
damages claimed - in a legal case, the amount to be received for damage done
A common myth is that the chit funds that many people join in hopes of high yields are illegal. According to the Chit Fund 1991 Act, people can form a chit fund as a means of savings. The restriction is that a person must not be a promoter for more than three chit funds and more than 30 members a total. The size of the fund must be no larger than 300,000 baht for the three chit funds combined.
Veerapong Boonyopas, head of the business crime and money-laundering unit at Chulalongkorn University's Faculty of Law, said legal enforcement against pyramid funds has been ineffective because of inadequate manpower in protecting consumers.
myth - something
believed by many people that is actually not true
common - occuring often
high yields - making a lot of money, high profits
Chit Fund 1991 Act - a Thai law passed in 1991 to deal with illegal informal chit fund schemes that avoided taxes
means - methods; ways วิธี, วิธีการ
restriction - a rule, action or situation that limits or controls someone or something การจำกัด, การควบคุม
money-laundering - moving illegal money into foreign bank accounts or legal businesses to make it difficult for people to see where the money came from (See Wikipedia)
enforcement - the process of making sure that something happens, especially that people obey a law or rule การบังคับใช้กฎหมาย
inadequate - not enough, or not good enough for a particular purpose อย่างไม่เพียงพอ
manpower - the supply of people who are able to work กำลังคน
common - occuring often
high yields - making a lot of money, high profits
Chit Fund 1991 Act - a Thai law passed in 1991 to deal with illegal informal chit fund schemes that avoided taxes
means - methods; ways วิธี, วิธีการ
restriction - a rule, action or situation that limits or controls someone or something การจำกัด, การควบคุม
money-laundering - moving illegal money into foreign bank accounts or legal businesses to make it difficult for people to see where the money came from (See Wikipedia)
enforcement - the process of making sure that something happens, especially that people obey a law or rule การบังคับใช้กฎหมาย
inadequate - not enough, or not good enough for a particular purpose อย่างไม่เพียงพอ
manpower - the supply of people who are able to work กำลังคน
The police, the Consumer Protection Board, the Finance Ministry and the Anti-Money Laundering Office recently agreed to beef up co-operation to eliminate pyramid funds, which thrive in a lacklustre economy.
A worrisome trend is that people know that it is a pyramid fund but join because they think they can pull out before it collapses. They back the promoter of the funds as if she was a hero," Assoc Prof Veerapong said.
beef up - increase
the strength of
co-operation - working together to achieve shared goals
eliminate - to get rid of completely กำจัดหรือขจัดให้หมดไป
thrive - do very well and be very successful (example: when a business makes a lot of money)
lacklustre - not very exciting ior energetic
worrisome - worrying; causing worry or anxiety ซึ่งน่าวิตก
trend - a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
back - to support สนับสนุน
co-operation - working together to achieve shared goals
eliminate - to get rid of completely กำจัดหรือขจัดให้หมดไป
thrive - do very well and be very successful (example: when a business makes a lot of money)
lacklustre - not very exciting ior energetic
worrisome - worrying; causing worry or anxiety ซึ่งน่าวิตก
trend - a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
back - to support สนับสนุน
(Source: Don't get caught at the bottom of pyramid, 8/02/2010, PARISTA YUTHAMANOP, link)
