Lessons from the Aman Future Group scam

James Ryan Jonas

Aman Futures Group. For the 15,000-or-so Filipinos who are just beginning to accept the fact that they have lost their hard-earned money, these three words are now synonymous with “nightmare.” Indeed, their current plight is a frightening one they wish they have never gotten themselves into. But what can they do now?

Aman Futures Group: A Backgrounder

Until last week, Aman Futures Group was not yet the talk of the town in Metro Manila but had apparently been making a big buzz already in Visayas and Mindanao. Who wouldn’t be hooked by its seemingly heaven-sent proposition: “invest” money with them, wait a few weeks or months, and your money will double or even triple.

The interest rates they offered were so high such that returns of traditional investment programs paled in comparison. The Philippine stock market, for example, have generated a year-on-year (from November 2011 to November 2012) return of 26.8%. That’s already considered above average. Time deposits in banks usually offer a measly 1%-3% interest per year, while bonds and bond fund investments offer yields of around 3-6% in a year.

Compare these with the “investment offerings” of Aman Futures Group: one “investment product” yielded 62% return in just 20 days while another “investment” gave investors 70% interest in just one week.

Big bucks, quick money — who wouldn’t love that?

Unfortunately, that was the same aspiration exploited by the people behind Aman Futures Group.  Last week, the National Bureau of Investigation (NBI) reported that at least 15,000 people have been victimized by the scam. At least P12 billion of money was involved and would most likely be difficult to recover, according to the NBI.

Ponzi, Pyramid, Scam — They’re all the same

This was not the first large-scale scam in the Philippines. A quick look at the famous scams we tracked in the past would yield a handful of “online investment programs” — such as FrancSwiss, Phoenixsurf, and Performance Investments Products Corp. (PIPC) — and “offline double-your-money-schemes” — such as Mateo Management Group (MMG), Multinational Telecom Investors Corp. (Multitel), and Royal Manchester Five (RMF) — that proposed the same offering and had the same bitter ending. All of them promised investors very high return and, in a matter of months, collapsed and ran away with investors’ money.

In fact, this scheme is not so new the generic term for such scam programs was coined back in the 1920s. Charles Ponzi ran an investment program in the United States wherein he offered a 50% return on investment after just 45 days. Since there really was no genuine business, Ponzi had to get money from new investors in order to pay old investors back. Soon, it became a pyramid, so to speak. The people at the bottom had to be so many in order to pay everyone on top of the pyramid. Once new investments had been insufficient to pay for maturing investments, that’s when the pyramid collapsed.

Hence, the name Pyramid Scam or Ponzi Scheme to describe that type of fraudulent program.

Lessons from the Scams

We have had several experiences with similar scam programs, which actually is the reason why we put up the site www.pinoymoneytalk.com in the first place. Back in 2005, Pinoy Money Talk or PMT initially was a forum for Filipinos venturing into high-yield investment programs (HYIP) — similar pyramid schemes offering unsustainable high returns that would collapse in just a matter of months.

After a few years, we learned the lesson but not after losing hard-earned money in the process. We then decided to establish a community that would help people realize the risks of HYIP investing and prevent them from making the same mistakes we did.

Here are some lessons we learned after years of dabbling into this risky and scam-filled arena.

1. If it sounds unbelievable, it’s most likely not true.

No genuine investment program can sustain very high returns on investment. Yes, it’s possible to earn 50%, even 100%, in a week if you do stock or futures or forex trading, but this cannot be achieved week after week after week. The concept of “investment” itself carries with it “risk” and part of that risk is the possibility of losing invested capital.

With the exception of savings and time deposits that are backed by the Philippine Deposit Insurance Corporation (PDIC), genuine investment programs cannot and should not offer guaranteed returns, especially if they sound too good to be true. If you notice, banks and investment companies offering stocks, mutual funds and unit investment trust funds do not make promises of guaranteed returns. If you heard one that supposedly ensures an absurdly high return on investment, it’s most likely going to end up as scam.

2. Don’t let greed take you over.

For most people, the promise of high returns in a short span of time is truly irresistible. Thus they are lured to invest or to add more on top of what they have initially invested. Worse, they also invite other naive people to invest in the scheme. Soon, greed takes them over and they start thinking irrationally. At the back of their minds, they know outrageously high returns are not possible, but they continue to hang on to their dream of amassing great amounts of money without having to work hard.

They’d say: “I’ll stop after I have bought new clothes.” Weeks or months later, they’d be able to buy the clothes with the profits on their “investment” but greed would start creeping in. They would now think, “Perhaps it won’t hurt to invest some more. I’ll stop once I have bought a new phone.”

Weeks or months later, they’d get the phone but, by then, greed would have already taken over. In some cases, they would risk more than they could afford to lose and even involve the money of relatives and friends. “Seriously, I’d stop once I have bought a car,” they would tell themselves.

Unfortunately, the program would collapse before they could get out. The aftermath: shattered dreams, ruined relationships, and a sizable amount of money they could never get back.

3. Don’t get fooled again.

Aman Futures Group was not the first scam in history, and definitely won’t be the last. Just browse through our articles on Scams and Scam Updates and you can see dozens of programs that victimized people in the past. Similar programs will emerge in the future and will offer the same absurd promises. It now depends on you whether to believe them or not.

What we can only tell you is to conduct due diligence, do research, learn more about genuine investment programs, and never fully trust everything you see online or hear from your friends and acquaintances. The PMT Forum is an avenue to discuss various investment programs and also to meet like-minded individuals who can guide and teach you about making money online and offline.

Ignorance and greed have their consequence — and unfortunately,  those who lost money in Aman Futures Group had to learn this the hard way. Never make the same mistake again.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.