NBI arrests exec in Internet scam; other suspects named

NBI arrests exec in Internet scam; other suspects named
By Tina Santos, Michelle Remo
Inquirer
Last updated 03:12am (Mla time) 07/07/2007

MANILA, Philippines—Operatives of the National Bureau of Investigation arrested on Wednesday an alleged top official of Francswiss Investment which operates the “Francswiss” online, one of the Internet-based “Ponzi” investment schemes believed to have duped unsuspecting investors in the Philippines of P1 billion.

 

Eleazard Castillo, 26, a native of Cabuyao, Ilocos Sur, and allegedly the chief financial adviser of FS Investment, was arrested by agents of the NBI National Capital Region in an entrapment operation in Baguio City.

 

Castillo, who by himself has allegedly defrauded investors of about P200 to P300 million, was charged with syndicated estafa at the Department of Justice.

 

The NBI has launched a manhunt for the other suspects who remain at large. They were identified as Jaime “Jimpol” Poliquit, of Davao City; Edwin Sendana, of Pasig City; Edwin Ricalde, of Pampanga; Chris Erabon, of Baguio City; Garry Espiritu and one alias Jomarc.

 

Foreign suspects

 

The NBI said they are also coordinating with their counterparts in other countries for the arrest of suspects Roger Smith, a US national, who heads FS Investment in the Asia-Pacific region; and Raymond Chua and Bensy Fong, both Singaporean nationals.

 

Investigation showed that Castillo was arrested following complaints filed by Frederico Olarte, Glen Manuel Sunga and Philip Fernando, who all claimed they fell victims to the scam.

 

The NBI urged other victims of the “Francswiss” scam to come out and lodge a complaint against the suspects.

 

Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.

 

The scheme, which lures investors with abnormally high rates of return in just a short period of time, works on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.

 

The new scam lures unsuspecting victims over the Internet using the website http://www.francswiss.biz and http://deutchfrancs.com.

 

Double your money

 

Prospective investors are asked to invest $1,000 in francswiss.biz and $10,000 in deutchfrancs.com with a promise to double their money in 22 days.

 

“This group promises interests bigger than those offered by banks,” said NBI-NCR director Ruel Lasala. “This type of investment scheme usually collapses as fast as they are created while investors are left unable to recover their investments.”

 

The victims told the NBI that they were surfing through the Internet when they read the advertisement of FS Investment that a $1,000 investment would earn a daily interest of 4.5 percent or $45 which could be encashed through Internet-to-bank transactions.

 

‘E-points’

 

The FS Investment website also promised that their investments would also earn 10 percent, also called “e-points,” if they would recruit other investors, they added.

 

The victims said they called up the number posted on the website. They were subsequently invited to a meeting by Castillo who introduced them to the other “financial advisers.”

 

Each of them invested $1,000 but claimed that they received no receipt or acknowledgement from Castillo.

 

Of the three, only Olarte received a “trading account” online, an indication that he was already a registered Francswiss investor.

 

When Sunga and Fernando failed to receive the online confirmation of their registration, they tried to refund their investments but the suspect allegedly gave them excuses and even denied receiving money from them.

 

This prompted them to file a complaint with the NBI.

 

‘Downlines’

 

Olarte, on the other hand, said he checked his investment portfolio at FS Investment website everyday and was initially happy that he was earning interest daily. However, he failed to encash the interests earned when he went to the bank as these were not reflected in his bank account.

 

When he confronted Castillo about it, Olarte was told that he could only withdraw his interest if he would recruit a minimum of two investors or the “downlines” required or if he would invest an additional $1,000.

 

Olarte said he tried to borrow money from his relatives who informed him that FS Investment was a pyramiding syndicate after news about the scam was flashed on television.

 

The victim then sought the help of the NBI which immediately formed a team for an entrapment operation.

 

Castillo was arrested as soon as the suspect received the marked money from the victim. The suspect is now detained at the NBI jail.

 

BSP warning

 

BSP Governor Amando Tetangco Jr. yesterday warned the public to be careful in choosing where to invest their money.

 

“Those who market financial investments under the Ponzi scheme are offering fantastic returns, so we are warning the public,” he said.

 

The Bangko Sentral ng Pilipinas advised the Anti-Money Laundering Council to include in its watchlist financial transactions that are suspected to fall under the so-called “Ponzi scheme.”

 

Tetangco said the AMLC had been alerted of this investment fraud following reports received by the BSP that people involved in the Ponzi scheme were trying to stretch its reach among potential Filipino clients.

 

The AMLC is the body tasked to track down money-laundering activities, and does so partly by requiring banks and other financial institutions to report financial transactions involving huge sums of money, which are suspected to have come from illegal activities.

 

Under the Anti-Money Laundering Act of 2001, which was also the basis for the establishment of the AMLC, any transaction involving a movement of funds of over P500,000 within one banking day should automatically be reported to the AMLC for monitoring.

 

Blacklist

 

The BSP chief said any individual invited to make an investment should be cautious if the offer promises returns that are much higher than what usual investment activities provide.

 

Earlier the Securities and Exchange Commission made a similar warning to the public against five Internet-based firms allegedly engaged in Ponzi schemes. The SEC said these firms usually invite possible clients to invest in foreign currencies, and then disappear once they get the money.

 

These firms include Francswiss, Swiss Cash, Universal Forex System, Global America and Private Forex Trade Inc.

 

The SEC said these firms have no permit nor authority to solicit investments and are therefore operating illegally.

 

The SEC urged the public to report to the SEC any investment offer made by representatives of these firms or other firms suspected to be operating a Ponzi scheme.

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