Do you want a return of 5 per cent every week on your money? Why not turn $10,000 into $124,600 in a single year by trading currency and US Treasury bonds, with your capital guaranteed by the 'International Investment and Securities Commission'?
Alternatively, for a handling fee (and other charges to be revealed later) you can collect your winnings from a lottery supposedly set up under the will of the late Princess Diana.
Perhaps you’d prefer to invest your money in a hot share market tip emailed to your PC? 'This stock's ready to explode. It can easily go up to $2.25 very fast here.' You'd make 280 per cent return when the target price was reached. Sadly, the stock never got there, and closed the year at a paltry US $0.39.
If only these offers came true. But generally they don't. That's why they've made the 2006 ASIC 'Pie In The Sky' awards (The PITS).
‘ASIC announces the Pie In The Sky awards once a year for the most outrageous financial scheme that's too good to be true,’ Acting ASIC Executive Director of Consumer Protection, Ms Delia Rickard, said.
ASIC’s award for 2006 goes to an illegal investment scheme promoted through wealth seminars throughout Australia. Operated by Mr Craig McKim, Pegasus Leveraged Options Group (Pegasus) lured approximately 90 unsuspecting investors and raised $3.7 million. Over $2.1 million of the funds raised were lost in personal gambling and other personal expenses by Mr McKim.
In the case of the Pegasus scheme, the NSW Supreme Court found investors were promised returns of up to 8 per cent a week - figures described by the Court as "astronomical". Investors were even issued with a Certificate of Guarantee by a fictitious ‘International Investment and Securities Commission’.
Mr McKim was jailed in October 2005.
According to ANZ's 2005 Australian financial literacy research, 85 per cent of Australians know that high returns mean high risk, but some 47 per cent would still be willing to invest their money in something offering well above market rates of return.
‘The higher the return, the higher the risk. Get rich quick schemes promise the world, but usually end in tears,’ Ms Rickard said.
‘The serious purpose behind these awards is to warn the public. Pie-in-the-sky financial schemes still devastate far too many people. They frequently use sophisticated props and hard sell techniques that lure even financially experienced people,’ she warned.
‘Deal with licensed Australian businesses, because that way your rights are better protected if something goes wrong. Businesses can be checked by visiting ASIC’s investor and consumer website, FIDO, at www.fido.asic.gov.au or calling 1300 300 630.’
Nominations for ASIC’s annual ‘Pie In The Sky Awards’ can be made via the FIDO website. A prize of $100 will be given to the winning entry.
For further information regarding illegal schemes where ASIC has taken action in the courts, obtained court orders, or identified those involved in court, please visit FIDO.
2006 'Pie in the Sky' runners up
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Pie in the Sky scheme |
How to get it |
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A firm of London solicitors is administering Princess Diana's estate which includes a lottery promotion. You've won a slice of her inheritance. |
Collect your winnings by contacting the writer. This is, of course, 'advance fee' fraud having nothing to do with Princess Diana or her estate. You'll be asked to pay various 'handling' and 'administration' fees until your patience or your money runs out. |
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Get into the action on the overseas share markets 'This stock's ready to explode. It's our hot pick this week. It can easily go up to $2.25 very fast here', says the email offering 'unparalleled investment research'. Recommended on 10 September 2005 at a price of US $0.80, the stock topped out at US $1.30 on 14 September, and then sank to a paltry US $0.39 by the end of 2005. |
Buy shares recommended by unlicensed advisers. Without a shred of protection, you could easily be taken to the cleaners. A time-honoured scam, these emails pump up interest in little-known offshore companies traded through international bulletin boards, so the promoters can dump their own shares quickly before the share price drops. |
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Surprise! You own some valuable overseas shares. If you want to double check, just contact the International Asset and Compliance Centre. |
Just pay the fee to have these shares transferred to your name. Currently various restrictions prevent this. No genuine investor protection agency exists. It's just another front set up to persuade you to pay the fees. |