PIPC was a Ponzi scheme, says Ferrier Hodgson

In the September 2008 update made to investors of scam investment program Performance Investment Products Corporation (PIPC), fraud investigation firm Ferrier Hodgson disclosed that the results of preliminary analysis support its belief that PIPC operated as a Ponzi scheme.

A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from revenues generated by a real business.

PIPC was a multimillion-dollar scam investment program that was exposed in 2007 after the owner of the company, Singaporean Michael H.K. Liew, fled the Philippines and disappeared, supposedly taking with him between US$140 million and US$250 million of investors’ funds.

The assertion that PIPC was a scam was reached by Ferrier while progressing on three key areas of investigation, namely:

1. Analysis of PIPC funds transferred to Cristina Tuason;
2. ABN-Amro examination; and
3. Possible legal proceedings against Metro Capital Venture Pty Ltd.

Below are brief updates on each of the key issues.

Transfers to Cristina Tuason

In the course of its investigation, Ferrier Hodgson identified substantial amounts of money being transferred from the ABN-Amro and Standard Chartered Bank accounts of PIPC-Hong Kong to bearer accounts in the name of “Cristina Tuason,” PIPC incorporator and executive in the Philippines.

Audit of the money trail, however, showed that more than US$33 million of the US$38 million transferred were for profit payments to investors. The remaining amount is still unaccounted for and, according to Ferrier, may have been used to pay for bank charges, as profit payments to investors which were not recorded in the books, or as transfers to other bearer accounts for an unknown purpose.

Ferrier Hodgson explained that the said analysis “supports our belief that [PIPC] merely operated as a Ponzi scheme and that investor funds were cycled back to investors.” Basically, this means the “return” given to old investors of PIPC were paid out from incoming investment money of new investors and not from real profits generated from any business. A Ponzi scam, that is.

ABN-Amro Examination

Ferrier Hodgson was able to secure a Court Order against ABN-Amro Hong Kong providing for the turnover and analysis of all documentation related to PIPC-Hong Kong’s accounts. They are currently reviewing the documents received and will issue an update upon completion of the said investigation.

Possible legal action vs. Metro Capital Venture Pty Ltd.

Ferrier’s investigation also led to the identification of a series of payments totaling US$461,088 made by PIPC to Metro Capital Venture Pty Limited. Metro Capital is an Australian company related to PIPC executives Albert Chua and Eric Lee. Demand letters for repayment were submitted to the company but until now, there was no response. Ferrier is said to be in the process of instituting legal recovery proceedings against Metro.

More than a year and still counting

It’s been more than a year since PIPC officially became a scam but the resolution of the case is nowhere in sight. Thousands of investors who were duped by the PIPC scam have nothing to do right now but wait. But wait for what, no one knows.

Related readings:

• Discussion forum: PIPC scam
• Discussion forum: PFEC scam
• More PIPC and PFEC news and updates