A POWERFUL combination of desperation at rising costs and promises of fast and easy money have proven to be the winning ingredients for get-rich-schemes over the decades.

Dubious investment schemes promising astounding profits have been in existence in the country for a long time, but the extent of how serious a problem these platforms pose to Malaysians have recently been brought to light with the Penang-based JJ Poor To Rich, or JJPTR, forex scheme.

Prior to the arrest of JJPTR founder 28-year-old Johnson Lee and two of his associates, many investors were still adamant that they would receive their promised returns even after Lee claimed to have lost RM1.7 billion because of a hacking attack.

Their loyalty and rock-solid belief in Lee and his company, which was classified by Bank Negara as an illegal investment company, begs the question of what makes the money game firm and others like it, so attractive to investors despite the obvious risks they pose.

Likeable ‘believable’ lead figure

Although JJPTR has more than 400,000 investors in and outside Malaysia, police said there were only 10 reports lodged against the company after its losses, and the firm’s illegal status, came to light.

One of the company’s branch representatives said Lee had an extremely likeable persona, and was seen as a hardworking and “nice” boss.

Lee was also adept at reaching out to investors personally, and delivered a strong, positive impression in all his seminars.

“Apart from the report lodged by the police themselves to investigate the case, I think those who reported JJPTR are new investors, who don’t know much about the company,” said the man, who only wanted to be known as Lim.

Many also believe Lee to be telling the truth about the hacking, citing the fact that he has not disappeared and instead met investors after the incident as proof that he can be trusted.

Testimonies from investors who had made money from the scheme have also helped the company greatly in pulling in new investors.

“When I was told about JJPTR and how high its monthly returns are, I found it very attractive. To me, making extra cash every month is a good thing,” said Raymond, an investor from Relau, Penang.

“My cousin, who recommended the scheme to me, had made his money. So, I decided to join the scheme myself,” he said.

The father of two, aged in his early 40s, put in US$500 (RM2,200) a few months ago. He got his monthly interest returns for the first few months until JJPTR ran into trouble in April.

“I didn’t invest very much. So, it is okay,” he told The Malaysian Insight.

Desperation overcomes caution

The JJPTR scheme allowed investors to put in investments of as low as US$25 to a maximum US$1,000 for a 20% monthly return. It is learnt that those who took part in the scheme at its early stages made a lot of money.

Raymond’s cousin Simon said he invested US$1,000 almost a year ago and made a profit from his investment in just six months.

“When someone tells you, there is a scheme that pays you a 20% monthly return, you will think about joining it. 

“You will think about it again when you know some of your friends have also invested and made money.

“Cost of living is going up. We know inflation increases faster than salaries. So why not invest a little?” said the man in his late 30s.

JJPTR branch leader Lim also said that many of the company’s investors were not out to become rich, but were desperately trying to stay afloat with the steady rise in cost of living.

The consumer price index (CPI) for April continued to be higher at 4.4% compared with a year ago.

“Not all are in it to become rich. Some are small investors, average people.

“A few hundred ringgit extra a month can mean a lot to their families. They can spend more for their households,” he said.

The law catching up

Another investor, who only wanted to be known as Tan, said JJPTR members were now worried that Bank Negara or the police would target them.

“People are afraid. There are some people speculating that Bank Negara will check and freeze investors’ accounts.

“There have been messages like that circulating among JJPTR members privately in their chat groups,” Tan told The Malaysian Insight.

Since the JJPTR story broke, other local companies with “questionable” investment schemes have also been put under the spotlight, such as forex schemes Change Your Life and Richway Global Venture, as well as bitcoin digital currency scheme BTC l-system.

Another investment company, MonSpace, has also been thrust in the limelight after it was reported that 19 Chinese nationals lodged police reports in Kuala Lumpur claiming to have lost hundreds of thousands of ringgit with the company.

The multi-level-marketing company claims to manage investments across Asia-Pacific in the technology, property, telecommunications, food and beverage and entertainment sectors.

On Tuesday, Bank Negara added two popular schemes by MBI Group International’s subsidiaries – MBI International Sdn Bhd and Mface International Sdn Bhd – on its financial consumer alert list, of which JJPTR is part.

MBI, which has overseas investors mainly from China, is engaged in electronic shares. Investors gain returns via a “split mechanism” and earn bonus points which allow them to purchase goods and services with affiliated businesses, such as restaurants, hotels and a mall.

The MBI scheme has been around for about eight years.

If it sounds too good to be true…

Cambridge-trained economist Dr Lim Kim Hwa said people needed to go back to the old adage of, “If it sounds too good to be true, it probably is”.

“All I can say is such high returns are unattainable. They cannot be sustained. 

“Even professionals, like hedge fund managers, cannot achieve it,” said the member of the Penang Institute board of directors.

C.F. Lieu, an independent financial adviser licensed by the Securities Commission of Malaysia, said investors needed to just ask themselves why huge funds like the Employees’ Provident Fund (EPF) could not offer such lucrative returns if it was indeed so simple to achieve.

“If there is such a system that can offer such high returns, of 30% to 35% a month, surely an entity with funds amounting to billions of ringgit like EPF can just buy it up and generate profit?

“If EPF cannot do it, don’t you think that it is most likely a scam?” the Penang-based financial investor told The Malaysian Insight recently.

Lieu said money game operators would generally target people without much awareness or knowledge in investments, and those in the lower-income group who wanted to see high returns fast.

He said those investing in such schemes, not only risked their own money but were inadvertently endangering other investors.

“People think it is just their own money at stake (but) it is more than their own. When you join, you are helping to sustain the alleged scam.

“That allows and encourages the operator to go out and cheat more people.” – May 24, 2017.