The Zhong Kui 鍾馗 Scam / Con Expose Series (5) – High Yield/Get Rich Quick Investment Programmes

Posted on August 30th, 2014 in Zhong Kui Zhua Gui (鍾馗抓鬼)



“Why do the con artists succeed time and again? It is because they know they can exploit the ignorance, vulnerability or very often, the greed of their victims. Con artists often succeed because people hear the promise of easy money and they throw caution to the winds. They do not ask themselves questions, let alone do due diligence on the offer.”

Mr Tan Siong Thye, Director of Commercial Affairs Department, 2004


High Yield Investment Program


1) Several investment programmes touted over the Internet promise high returns for little or no risk. These investment programmes are also known as High Yield Investment Programs or HYIPs.


2) Many of these HYIPs offer attractive returns as high as 1-5% per trading day. When annualised, it is obvious that such returns far exceed the most generous yields offered by mainstream financial institutions operating in our financial markets. Operators of these HYIPs provide little substantial detail about themselves except shows of wealth (unverified) at their websites and photos of them posing with all sorts of better known celebrities, objects of wealth and lots of people. To attract investors, they require only a small amount of money to be invested with them.


3) The promoters/operators of HYIPs tend to be vague about underlying financial instruments used in their investment programmes and about how such high returns can be sustained. Some might claim that their investment programme invests in complex financial instruments like prime bank instruments or private placement programmes. However, they do not give adequate explanation of how these financial instruments work. Instead, they assert that such financial instruments are the “best kept secret” in the banking industry and only available to a privileged few. The potential investor is informed that banks and regulators would deny the existence of such financial instruments. The potential investor may also be told that he is extremely fortunate that the operators are willing to share this golden opportunity with a complete stranger like him.



The truth is that all these claims are bogus. Despite having credible-sounding names, such financial instruments exist only as figments of the fraudster’s imagination. A number of these HYIPs operate as Ponzi scams. In a Ponzi scam, funds are collected from new investors and these funds are used to pay the returns promised to existing investors. Often there is little or no investment made by the HYIP operators. So long as there are fresh funds from new investors, the HYIP scam can be sustained. Obviously, such a HYIP cannot be sustained indefinitely and it will eventually collapse.


Warning Signs of a HYIP being an Investment Scam


Graphic by Joel Becker/Dunn County News

1) High returns with guarantee of no risk or low risk

Be wary of HYIPs that promise extremely high returns. Remember, investment programmes that provide expectations of high returns are often also high risk in nature. A promise of unrealistic returns at little or no risk is a hallmark of a con / scam.

2) We would like you to invest with us, but we can’t tell you too much about ourselves

Exercise caution if the HYIP operator claims that its operations are based outside of

Singapore. Be aware that fraudsters may use business centres here or elsewhere as a virtual office to create the impression that they are operating in a particular location when they are not. Current technology allows these fraudsters to use mail services, faxes and telephone calls that can be easily routed to another country.


If the HYIP is a con operated from outside Singapore, it is most unlikely that your monies can be recovered. It will be difficult to bring the perpetrators to justice.


3) We promise high returns but do not ask us exactly what we do with your money

Understand what you are getting into. This is your money – do not be afraid to ask questions. A genuine financial professional will usually be happy to explain in detail the investment programme he is marketing. Alarm bells should sound if the promoter/operator of a HYIP tries to maintain an air of secrecy around the underlying financial instruments they offer. Do not make a hasty decision. Do research to find out more about the HYIP that is being offered to you. Seek professional advice if necessary. The underlying financial instruments in the HYIP offered to you may be fictitious.


4) We are backed by the International Monetary Fund, the World Bank, the U.S. Federal Reserve etc

There have been cases where the promoters/operators of the HYIP claimed that their investment programme is backed by established institutions like the US Federal Reserve, the World Bank or the International Monetary Fund.

These institutions have international stature, which is why a fraudster would want to claim their involvement in the investment programme. Verify any such claims by checking with these institutions. Their contact details are easily available on their websites.


Oh no, I think I’ve invested in a HYIP con / scam !!!


1) You may already have invested in a HYIP, and you recognise the warning signs listed above. However, you have been receiving returns on a regular basis or you may know friends who have invested and are happy with the returns they have received.

2) You may wonder whether we are being over-cautious, and causing you or your friends to lose out on a great investment opportunity.

3) The fact is that in many cases reported to police, the investors had initially believed that the HYIP was not a scam because they had received some returns. They realised that they had been defrauded only after the HYIP had collapsed. Payment of returns is a very persuasive tactic used to lure new investors and to induce existing investors to increase their stakes in the HYIP. If the HYIP is a Ponzi scam, the returns you receive are in fact funded by other investors.

4) If you recognize the warning signs listed above, or if you have any doubts about the legitimacy of your investment, do your own research into the investment now. Ask questions of the operators of the HYIP to clear any doubts you have. If you are still unsure about the HYIP, ask for the return of your capital. Unless your investment contract is for a specified time period, there is no reason why your investment cannot be refunded early, if the HYIP has no risk or low risk as claimed and it has been generating returns.

Exercise due care when considering any investment and refrain from promoting HYIP to others unless you have verified their legitimacy. It is often too late to recover any monies by the time a HYIP scam falls apart.


(*Materials adapted from Commercial Affairs Department, Singapore)


Our Best, Always

Empower Advisory Team

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