1) I would like to share my experience yesterday as I accompanied a friend to a one to one sales pitch by a dodgy investment company. I went with him as I was concerned he would get duped. I had seen the materials he emailed me and knew it was an investment scam. But I had time and I wanted to check out how convincing these con-artistes can be.

2) We met at Big Mac Centre at Ang Mo Kio in mid-afternoon. Let’s call these 2 dodgy clowns A and B.

3) I had expected to meet the director of this company as arranged by my friend. Instead I found myself face to face with A and B. Both looked like they were in their 40s. A and B started their sales pitch to us by saying that they were not representing the company. The director who was supposed to come, was not available. In my mind, I went WTF. Why on earth are you even talking to me in the first place if you don’t represent the company? But I kept my cool and let them continue.

4) A allowed B to do the talking.

5) B showed me the BizFile profile of the company and pointed out that it has a business code related to fund management. It showed a paid up of $200,000. I was not impressed. I could also incorporate a company with the same business code and reflect a $2,000,000 paid up if I wanted to without putting a single cent in the company (You just have to know how to). I asked if it had a fund management license approved by MAS. He shook his head.

6) B showed me that the projected returns per month is 5 to 12% and that he had invested a small amount. I asked him to show me his so-called account and he declined, saying it’s so small it’s insignificant. I pointed out to him that what he showed me are just excel projections. Where is the evidence? He kept quiet. I mentioned Singliforex which closed shop (in Singapore) recently, leaving their misled flock in the lurch. I wanted to test their reaction. A suddenly looked perturbed. He distanced himself from Singliforex rightaway.

7) I next asked B what the company invested in to generate such attractive monthly returns so I can verify them independently. The cheesy looking brochure, with “SwissQuote” splashed across it just mentioned that the investment company invested in commodities, forex and stocks. I asked him for the details of the investments and he said he did not know. I asked him if he was comfortable investing in a black box and he mumbled an almost inaudible yes. He mentioned that “SwissQuote” paid the investment company a commission for using its trading platform and that the commission is passed on to clients. Doesn’t it sound ridiculous?  He showed me the forex rate spread should I cash out my investment and the spread was more than 10% to my disadvantage. He must have thought that I was very, very drunk or clouded from the haze.

8) Meanwhile A kept referring to the investment company’s originator, a Malaysian as per the BizFile profile of this investment company, as the Leader. Geez, this is what happens when a cult leader starts an investment company scam. He takes on the moniker as Leader. He might as well call himself the Creator.

9) He then showed me the DBS bank account number and swift code of the investment company. I smiled to myself. Am I supposed to be impressed?

10) B sensed I was clearly not convinced enough to invest in this nonsense and began to change tack. He showed me the incentive scheme of referring customers to this scheme. There was a whole lot of mumbo jumbo. Loyalty bonus. Retention bonus.

11) A sensed my restlessness and told B to cut short the presentation.

12) He then accused my friend of misleading me. “Over email and whatsapp, you said you and your friend (me) are interested. Why do you seem uninterested now and ask all these questions. You have wasted your friend’s time.”

13) It was too much. I replied. “My friend did not mislead me. He said you were bringing the director to meet us. Instead you brought B who’s a sales rep and obvious clueless. We need to understand more how it works.

14) We left. And went to Big Bern’s for a late lunch.

15) I’m glad my friend was not duped and even though I wasted half an hour of my life with these amateur con-artistes, I now know of yet another vile scheme.

16) Don’t be a victim.

My Best Always,

Douglas Chow (Principal Coach)

Formerly served at the Ministry of Trade and Industry

Empower Advisory

What’s keeping us awake at night (among other things)?

1) Crowdfunding, the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet is becoming popular in Singapore.

2) It’s not new of course. Way before the internet, people have pooled funds to carry out projects, too expensive or risky for one to bear. Then, they stuck mainly to trusted networks of responsible deal makers.

The risks of crowdfunding are very real

Risk of fraud –There is no assurance that the projects or proposals are legitimate, or that promised rewards or returns to the individual contributors would materialize.

Counterparty risk – By contributing funds through a crowd funding platform, individual contributors cannot be sure if funds collected are passed on to the project owners and originator.

Risks related to start-ups – if crowd funding is used to fund a start-up, individual contributors are subject to risks related to start-ups. There is no certainty that a start-up business will be able to generate the promised returns.

3) We’re very concerned because all a scammer needs these days on a crowdfunding platform like kickstarter and indiegogo is a snazzy powerpoint presentation, slick videos, promised returns and a “exciting” product to get folks to part with their money.

4) One of the most hilarious real life example was a project that raised money for a brand of Kobe beef-based jerky, made with 100% organic feed- and beer-fed Japanese cows. The company Magnus Fun, Inc got more than $120,000 from more than 3,000 people through crowdfunding platform, Kickstarter. Yet neither the company nor the product existed in reality.

5) The anonymity offered by the internet has attracted hordes of scammers, knowing that scamming small amounts of money from individual victims will hardly invoke any serious revenge.

6) When things go wrong and the originator of the project supported by crowdfunding disappears or the crowdfunding platform gets pulled down, it is very difficult to get recourse.  Scammers know it only too well that their victims eventually give up and just lick their wounds. Even if the scammer is successfully tracked down, charged and convicted, it may be a hollow victory if the money has all been siphoned away and there is nothing left to claw back.

7) Be alert at all times. See you at our 14 Mar Public Investment Outreach!

Our Best!

Empower Advisory Team

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How is Bitcoin created?  Well, you can create Bitcoin out of thin air through a process called mining.  Mining is the term used for running a series of calculations on a computer to verify the transactions that take place in the Bitcoin network. About every ten minutes, a new block of transaction data is created and the miners who created the block are awarded a few Bitcoin. Does this sound perplexing? Like a blackbox?  Apparently, only 21 million total Bitcoin will ever be allowed to exist, with approximately 12 million of Bitcoin already mined and in current circulation.

You can buy Bitcoin using REAL money.  Or accept Bitcoin as payment for your goods and services.

According to sources, just 47 people own 29% of all outstanding Bitcoin; 930 own 50%. Another 10,000 folks bring the total owned by the largest coin holders to roughly 75%, leaving 25% to be split among about 1 million small-change Bitcoiners.

Mt. Gox, once the world’s largest Bitcoin exchange, shut down and filed for bankruptcy in Japan on 28 Feb 2014, claiming that  about USD480 million in Bitcoins belonging to its customers and the firm were missing.  Since Bitcoins exist as bits of software, they can be stolen from computers and servers used to run online exchanges, where Bitcoin can be traded for dollars, euros and other currencies

We are worried because there are already Bitcoin ATM machines in Singapore which allows you to exchange real money for Bitcoin.  We fear that unsavvy Singaporeans will be persuaded to part with real money for Bitcoin on the promise that Bitcoin will rise exponentially in value.

MAS does not recognize Bitcoin as legal tender and has already cautioned about the use of virtual currencies.  You have been warned.  Because we care.

Our Best, Always

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Do you know that Singapore regulates Multi Level Marketing (MLM) and Pyramid Selling?

MLM activities in Singapore are governed by the Multi-level Marketing and Pyramid Selling(Prohibition) Act. The Ministry of Trade and Industry administers the Act.

In general, under the Act, all persons who participate in multi-level marketing or pyramid selling would commit an offence. This is because the participants would have played an active but destructive role of attracting others into the scheme.

We are heartened that our Government takes such a strong stand in the interest of the public.

Let’s us explain why MLM/Pyramid selling is against the public interest.  The piece below is adapted, edited and abridged from a piece by www.vandruff.com titled “What’s Wrong with Multi-Level Marketing”.  A great piece worth sharing.  The original article runs into 7,000 + words but we’ve summarised it to less than 1,500 words.

1)     Designed to Fail

MLM is set up by design to blindly go past the saturation point and keep on going. It will grow till it collapses under its own weight.  Every product and service has a finite market saturation point.  Let’s just call it “X”.

Suppose that “X” has been reached today for a particular MLM product.  Unfortunately you happen to be a naive prospect sitting in an MLM meeting listening to the pitch.

Does the MLM promoter know about “X”? Does he even care?  Assuming that the market saturation number “X” has been reached, everyone joining the MLM from henceafter is buying into a false hope.

Of course the MLM promoter will be telling you something different, “Get in now! Get in early and start selling and recruiting.  You’ll be in our incentive trip 6 months from NOW! ”

Yet, the total available market “X” has been reached and nobody noticed. All the distributors will lose from here on out. Could this be you?

2)     Does an MLM system take care of you?

When will the MLM promoter say, “Enough.  We have enough sales people recruited. We have to take care of them and let them have the chance to close some sales first…”?

The answer is NEVER.  An MLM is a human “churning” machine that does not switch off.  Eventually it will grind up the money, time, credibility, and entrepreneurial energy of well-meaning people who joined (usually the late joiners) merely to supplement their income.

If a company chooses to market this way like a MLM, it will eventually “hire” (with no base pay and “charging” to join) far too many untrained sales people.  If there is a product, the product is usually a mere diversion from the real profit-making recruitment dynamic.

The product or service may well be good, but most of the time, it is not the incentive to lure you to join an MLM.  The product is usually the excuse to attempt to legitimate the real money-making engine. It’s “the cover.”

3)     The usual pitch (Yes, I’ve sat through a few, trying to keep a straight face)

“You see, if you can convince ten people that everyone needs this product or service,  and they can convince ten people, and so on, that’s how you make the real money. And as long as you sell to a few people along the way, it is all legal.”

So the way to make money in all this is clearly not by only selling product, but also through selling “the dream.”

MLMs work by geometric expansion, where you get ten to sponsor ten to sponsor ten, and so on. This is usually shown as an expanding matrix with corresponding kick-backs at various levels.

So which is it? Is an MLM recruiting “winners” to build a real business, or planning by design to profit off “losers” who buy into the success dream?

During “the pitch,” you will hear things like “Anyone can make it work…It’s the opportunity of a lifetime….Just look at the math (making reference to the pyramid matrix)!”

If you are a starry-eyed recruit, you will buy into the pitch.  If you try to object and point out flaws in the MLM, the experienced MLM recruiter will tell you, “No, it will be sustainable…You are a winner…I see the energy in you…You will surely succeed.” Then when you resist further, you get loaded with personal anecdotes of successful recruits and get pointed once again to their brochures of numerous pictures of happy smiling people who have joined the MLM and boast of how they have made.

The claim then that an MLM is merely a “friend of friend referrals” implementation of a normal real-world distribution channel through retail stores sounds pretty absurd. Imagine buying a product or service in the real world and having to pay overrides and royalties to five or ten uninvolved “distributor” layers. Would this be efficient? What value do these layers of “distributors” provide to the consumer? Is this rational?

4)     Another Lucrative Side Income for the MLM

When you join and are all primed up, you get introduced to a parallel or “shadow” pyramid of motivational tapes, seminars, and videos emerges. These are a “must for success,” and recruits are strong-armed into attending, buying, buying, and buying all the more. This motivational “shadow pyramid” further exploits the flagging recruits as they spiral inexorably into oversaturation and failure. The more they fail, the more “help” they need from those who are “successful” above them.

So, MLMs profit by getting in recruits up-front with a “distributorship fee,” and then make further money by “confidencing” these hapless victims as they fail via the “sale” of collateral material.

What do you think? Is this a good “opportunity” or a recipe for collective disaster?  Where is the money coming from for those at the top? From those at the bottom… as in every pyramid scheme. The product could be, and lately has been, anything.

Pick up any brochure or DVD for an MLM and you are more than likely to see a cheesy, obvious, and blatant appeal to greed and materialism.  Usually there will be a mood shot of a large new home, a luxury car, a boat, perhaps a beautiful couple boarding a Lear jet, and so on.  While this need not necessarily be part of the MLM approach, it usually is.

Such a transparent appeal should make you suspicious. “Why the bait?” “Are they trying to ‘get my juices going’ so that my brain turns off? If this is really a legitimate opportunity, why not focus on the market, product, or service instead of people reveling in lavish materialism?”

But you know as you are reading this, sober and alert why the distraction is needed. Unbridled greed suspends good judgment. When the eyes gloss over in a materialistic glaze, common sense disappears.

5)     Once you are in…

Do you want to be involved in the blatant promotion of values contrary to your basic belief system?  In most MLMs you have no choice. You are going to have to sit through meeting after meeting after meeting after meeting. You are going to be “motivated” to coerce your friends and family to hear “the pitch.” This is the way the “dream” is planted and fertilized. Get used to it.

Hyperbole is a given in an MLM. When inexperienced salespeople are turned loose to sell on full commission without supervision or accountability, what else could happen?

Perhaps you would wonder why a company would choose to market its products and service via an MLM?  Perhaps it’s to promote sales using word-of-mouth testimonials, supposed “studies” done by scientists, fabricated endorsements, rumors and other misrepresentations that would never be allowed to see the light of day in a regulated environment?

MLMs can be used to sell products that could not be sold any other way. An MLM is a way to gain credibility by using people’s personal friendships and relationships via “networking.” This is an intrinsic moral difficulty with MLMs.

Pyramid schemes are illegal. They are illegal because they are exploitative and dishonest. They exploit the most vulnerable of people: the desperate, the out-of-work, the ignorant. Those who start and practice such fraud, should, and increasingly are, being punished for their crimes.

But add a product for cover, and call it an MLM, and people are willing to swallow its legality. Really? No. Not even the Ministry of Trade and Industry is fooled.

6)     But I see some large MLM companies still operating?  

A few large MLMs have survived against the best efforts of law enforcement officials, spending millions of dollars to protect, lobby, and insulate themselves.

7)     A Sour Taste

MLMs grow by using people’s relationships. If you are going to be in an MLM, you swallow hard and accept this as part of “building your business.” This is “networking.” But to those not “in” the MLM, it seems as if friendship is merely a pretext for phoniness, friendliness is suspected as prospecting, and so on. There is no middle ground here, try as you might.

==== A Summary of What’s been discussed about Multi-Level Marketing ====
a) MLMs are “doomed by design” to recruit too many salespeople, who in turn will then attempt to recruit even more salespeople, ad infinitum.

b) For many, the real attraction of involvement in multi-level marketing is the thinly veiled pyramid con-scheme made quasi-legal by the presence of a product or service.

c) The ethical concessions necessary to be “successful” in many MLM companies are stark and difficult to deal with for most people.

d) Friends and family should be treated as such, and not as “sales targets” for a product that you yourself will never touch with a 10 feet pole.

Our Best, Always!

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Read this from Fairfax New Zealand News and think it’s worth sharing.

A client of a so-called life coach who defrauded a woman of $200,000 is warning others not to be as “crazy” as she was.

Sophie (not her real name) had paid Dianne Wood, 53, every week for five years to make decisions about every move in her life.  Dianne Wood, was finally convicted in August 2013 of fraudulently receiving $200,000 from another of her vulnerable clients.

Detective Brendan Ngata who was involved in the investigation said “”She was unconscionable in the way she went about getting the money…People went to her in a vulnerable state and she claimed to have ability and expertise in every aspect of someone’s life – financial, property or employment, he said. “She doesn’t accept she’s done anything wrong.”

Another woman told the Daily News that she had paid Wood for seven years as her life coach. She said Wood “caught me out” when she was at her lowest.

Wood appeared in the New Plymouth District Court and was found guilty of fraud.

= What is Life Coaching? =

In layman speak, it’s to help you become better in what you perceive as your weakness.  If a coach cannot help in that specific problem, he should have the integrity to say so.  Be wary of those who profess to be able to solve all your problems.

Unfortunately, what should have been a positive life-enhancing transformation for the client has become something of a circus.  Suddenly, in 2 to 3 days, in large congregation numbering hundreds and thousands, a feel good rah rah motivation session drenched in Neuro-linguistic programming where people pay many thousands to attend,  is supposed to be able to change your life without even addressing your issue specifically.  Gimmicks, like walking on fake crushed glass and fire puts courage into you, which disappears in a few days’ time as quickly as it came.

You know what we mean.

How does our Coaching differ?

1) At Empower Advisory, true to real coaching, we do not do seminar style coaching akin to a charismatic congregation. We believe in personalized coaching.  Every individual has unique challenges and issues to overcome.  Small groups coaching are done only if there is realizable benefit of individuals, usually friends buddying each other to encourage each other to see through the coaching journey.

2) At Empower Advisory, we don’t drag you along.  We don’t believe in a rah rah 2 day session.  Neither do we believe in an unhealthy lifelong reliance.

3) Just a maximum of 8 sessions, long enough to witness the improvement plans laid out and put into action by you.  Once your engines are chugging and you have internalized the action plans, you are good to go.  In fact, if you are good to go after the first session, one session is all you need.

4) At Empower Advisory, if we assess that coaching is not suitable for you, we have the integrity to inform you as such.  At Empower Advisory, your interest comes first.

Our Best, Always

“At Empower Coaching, we believe that our Clients are unique, and responsible people who delight in moving their lives forward. Together, we can!”

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Are “No Money Down” property investment schemes for real?  Too good to be true?

“No money down” schemes can be bogus below-market-value deals or in the worse case, scams.  There are several variations and below are common scenarios how they are played out:

= Scenario 1 =

1) The property investor club claims it has found a “good” property at below market value and ask you, the investor to buy it as the deal structure is also a “no money down” scheme.

2) You are then invited to place a down-payment to buy the property and take up a mortgage via the club’s own lawyers and middle-man.

3) The property is mortgaged or re-mortgaged at a higher value than your buying price with the cash difference going back to you. Hence you get back your down-payment, full or partial, meaning “no money down”.

4) The “misled” lender who granted you the mortgage based on a higher valuation is not told about your lower buying price, meaning you have purchased the property with a “fraudulent” mortgage application.

= Scenario 2 =

1)  You could be simply paying ABOVE the true valuation and selling price, getting the illusion of “no money down,” since the excess you have paid is refunded to you while the outstanding is funded by a mortgage.

At Empower Advisory, we have the public interest in mind and are educators at heart. No Scams. No Nonsense.

Our Best, Always

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