By Ubaidillah Masli
"If it's too good to be true, then it probably is."
This is a guiding principle applicable in many aspects of life, such as the recent incident of more than 250 jobseekers defrauded into thinking they would be promised a government job by paying cash sums in advance.
People often become too eager to part with their hard-earned income when they believe or made to believe that they will double or triple their money in a short amount of time, said a private sector contractor in the construction industry.
Hj Md Badal, who is in his early forties, said that the recent scamming incident showed how people were willing to go through any means to secure a job, and this same willingness is the same thing that can make an individual give up their life savings in "suspicious" investment schemes.
Not a stranger to fraudulent financial schemes such as Ponzi and pyramid schemes, Hj Md Badal said that a "family member" of his had been among the 269 people known to have invested in Pan Phoenix Dina (B) Sdn Bhd, which was the subject of a two-year court case that concluded in early 2011.
Such schemes build up capital through the continuous recruitment of depositors or investors that participate in the scheme.
In August the previous year, the company's three directors were convicted of illegal deposit-taking amounting to $5 million and were sentenced to serve prison sentences ranging from three to six years. The company itself was also fined $10,000.
When Pan Phoenix Dina's account was frozen in 2007, it only contained $4,454, despite records showing that the 269 people made deposits amounting to $5.775 million between March and September of 2007.
The case was reportedly the first major financial fraud case to be prosecuted under Brunei's banking legislation.
"My relative and these people had no idea what they were getting themselves into," the contractor said, pointing out that many of the would-be investors were not compensated.
Court documents on the case showed that the company had been promising an eight per cent monthly return on deposits between $5,000 and $1 million, provided investors paid in cash. In what later was discovered to be a Ponzi scheme, the company's activities and profit return rates were described by the court as "ambitious and wholly unrealistic".
Personal finance magazine, MoneyLife said that investors should determine if an investment scheme was genuine or not by comparing the interest rates to that offered by banks and financial institutions.
"The interest rates offered by banks and EPFO (Employees' Provident Fund Organisation) are an indication of the viable minimum and maximum expected returns on investments," the magazine said in an online article on avoiding "get-rich-quick schemes".