Wednesday, June 29, 2011

Law enforcement agencies like the Metropolitan Police Service, Interpol and the FBI, as well as U.S. Embassies around the world are warning the public about the risk for investment fraud and scams.  Online relationships and especially those involving international investments are especially high risk.  Around the world, there are concentrations  of groups pertaining to various investments, and Malaysia seems to be leading that global race, with China and Ghana a very close second on the list for fraud. 

For reasons that are not entirely clear, Kuala Lumpur, Malaysia is the global capitol of investment scams, surpassing Chinese stock market scams and Ghana gold scams.  Law enforcement in Malaysia is not equipped to handle the threat, say outside observes, and the problem is getting worse.  Scam and criminal operations are now growing, and these days everyone in Malaysia knows about the once tiny problem.  Malaysia private investigators, driven by demand from clients, hope to shut them down.

We won’t speculate on why Malaysia has focused on investment scams and not romance scams like neighboring Philippines.   One simple reason may be that the Philippines is good at what they do, and in Malaysia, they just happened to be experts at investment scams.  No one can argue that conducting such investment scams and internet fraud can be highly lucrative.  Kuala Lumpur scammers can earn hundreds of thousands of dollars.  In fact, an expert scammer in Malaysia can earn over $1M USD a year if he scams the right victim.  And investigators say the victim can be a wealthy individual in the United States, Canada, Australia or the U.K., to a director of a large company or even a CEO.  Once the supposed business  deal is agreed upon, and the payment is made, the scam is complete and the money lost.

International private investigators say the modus operandi of the scammers and criminals conducting investment fraud via the internet is not so easy to classify.  “Creativity is keeping these guys alive,” according to one New York based private investigator.  Tactics being used are no longer straightforward, not in all cases.  Some Malaysia based criminals now understand the laws and regulations of the SEC (Securities and Exchange Commission) and talk the talk and walk the walk of a hedge fund manager.  Some of best in the business are now based in Kuala Lumpur.  Kuala Lumpur investigators are one industry that is doing quite well, as a result of the increase in demand to screen for fraud when investing in Malaysia.

There are now organized criminal cells operating in Kuala Lumpur, and their reach, thanks to the internet, is global.  Scammers may claim to be hedge fund managers from the U.K., they may offer private placement, inside information, precious metals and gold offerings, and share offerings on the next big Chinese company.  The criminals appear to be well established and honest corporations or individuals, defrauding investors and businesses around the world of billions of dollars each year.  “Most of these companies operate using proven techniques and are savvy in their area of specialization,” explains a London risk management firm.  “Their local headquarters are well set and their websites look professional, and they know the lingo to get the investor’s attention, so people fall easily.” Investors hoping to minimize this high risk are contracting Kuala Lumpur private investigators for international background checks, due diligence, and discreet private investigation services to verify businesses, contacts and investment offers.

Some investment scams are executed through bank transfers, deposits to fake companies, wire transfers, payment for shipping, etc.  Some scammers can partner with western companies, get contracts that have a tricky clause in which the Asian company is in no way obligated to pay earnings to the investor once the business is profitable.  Companies in the U.S. have lost billions of dollars in these types of scams, and won’t ever see their money back.  Such clauses are actually legitimate under Malaysian Commerce Law, according to legal offices in Kuala Lumpur.  Malaysia private investigators have their work cut out for them.  If they will have an impact remains to be seen, but in the meantime, clients can benefit from their services as an extra layer of protection against the growing threat.  In Malaysia, buyer beware!

Best of luck,

A. Hathaway
© 2011 A. Hathaway 

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