The high yield investment program or HYIP
A high yield investment program (HYIP) is a type of investment program that promises investors very high returns. It is observed that a majority of the HYIP are usually Ponzi schemes, which are investment scams. For these Ponzi schemes, the investors are generally promised extremely high returns, usually paying the initial investors with the money invested by the later investors. While the initial investors will be paid to attract new investors, after some time, it will not be possible to pay all the investors. If the initial investor exit, they may not make a loss. However, the later investors are likely to lose all their money.
The high yield investment programs are usually Ponzi schemes or investment scams. In Vietnam scammers usually combine HYIP scam with MLM (multilevel marketing) or bitcoin/digital currency scams.
How these HYIP function
Most of these HYIPs will have a website that promises the investor extremely high returns typically 1% daily, which may be compounded. However, they usually provide very little information on how the business will make a profit to pay the investor very high returns, much higher than the market rate. It is usually challenging to find companies that will pay a very high-interest rate when many lenders may offer lower rates. There is also very little information about the management and location of the company. The United States Securities & Exchange Commission(SEC) has noted that the fraudulent HYIP will usually mention prime banks, European banks, financial instruments from the world bank and other well known financial institutions.
Other regulators have mentioned that the scammers usually starting these HYIPs are experts in using social media like Facebook, Twitter, Youtube to lure investors and create the impression that the business is legal, using fake reviews. While Ponzi schemes have existed for more than a century, with the increasing popularity of digital payment methods, there has been an increase in Ponzi schemes, since they can accept payment from investors worldwide. Electronic payment methods are usually more popular with HYIP companies because it is easier to open an account compared to merchant accounts, which require more documentation.
Though some HYIP companies started their own digital currencies, they were forced to close. Some of these companies are OSgold, Evocash, INTgold, Standard reserve, and V-money. Though the HYIP it was initially associated with closed, Stormpay remains in existence. Some of HYIPs are incorporated in countries that do not have strict fraud laws so that investors in other countries cannot initiate legal action. The websites are hosted with web hosting companies that offer anonymous Webhosting. This website is then used for accepting payments from investors who are promised high returns
Some experienced investors who are aware of how HYIPs are making a profit will try to invest in them initially, soon after they are announced, hoping to make a profit. They hope to exit quickly before the HYIP collapses, making a profit at the expense of those who invest later. This is like gambling because if the timing is wrong, all the money invested will be lost. To reduce the risk, some investors are using tracker websites, monitoring the various HYIPs, and the program’s current status. Some experts claim that the tracker sites, may not be helping the investors make money.
Ponzi Scheme Targeting Vietnamese Investors – HYIP Review in Vietnam
Have you heard about the Ponzi scheme targeting Vietnamese investors? Well, there had been a recent case where SEC or The Securities and Exchange Commission announced an asset freeze and fraud charges against the unscrupulous operators who were involved in this Ponzi scheme. The operators were not only promising high annual returns but also they even assured minimal to no risks to the investors of the Vietnamese community in Orange County, California.
According to details obtained by SEC, Kent R.E. Whitney founded a fraud project to deceive the investors. Kent R.E. Whitney had a previous history of launching investment scam schemes. For example, Kent R.E. Whitney earlier invented an investment scheme (The Church for the Healthy Self) which involves commodities of all kinds.
The Church for the Healthy Self soon came up with another fraud and a faulty scheme that promised various benefits like guaranteed, insured, and tax-deductible return of at least 12% and even more. The investment program was based on options trading and reinsurance investment techniques. Kent R.E. Whitney was not only the mastermind behind this scam investment project, but his project was also co-partnered by David Lee Parrish. Note, David Lee Parrish was earlier involved with Kent R.E. Whitney behind his previous scam project.
Both Kent R.E. Whitney and David Lee Parrish had collectively joined their hands in order to target Vietnamese investors. They had used extensive radio and television-based advertisement programs to broadcast notifications about their new investment project i.e. CHS Trust. Although this scheme had claimed many benefits in its advertisement programs, the founders of this scheme ended up stealing millions of dollars of the investor funds. And, irrespective of offering the right amount of returns, the scheme started offering Ponzi payments to the investors. When the FBI obtained complaints against this fraudulent investment scheme, they quickly issued a federal wire fraud & money laundering statement against those two co-founders.
Despite issuing the statement, both of these founders of CHS Trust still continued to solicit, mislead, and deceive the innocent Vietnamese investors. After that, the SEC announced that CHS Trust and its founders had violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Section 17(a) of the Securities Act of 1933. The respected and honorable Judge then approved the SEC’s plea to temporarily freeze this company and their all assets. The entire investigation and litigation procedure was performed and supervised by a team of qualified experts, such as Ty Martinez, Jason Rose, David Reece, Jennifer Reece, and B. David Fraser.
How 32,000 Vietnam Investors Got Caught By HYIP Ponzi Scheme
In April 2020, the media in Vietnam reported what is widely considered to be the largest Initial Coin Offering(ICO) scam ever. The media claimed that investors had lost approximately $660 million, in two separate ICO’s. However, both these ICO’s were promoted by the same parent company based in Hoshi Minh, Vietnam. Based on the information provided by a local Vietnamese news outlet, Tuoi Tre News, a company named Modern Tech had set up and run the ICOs for iFan and Pincoin. About 32000 investors lost their money in this scam.
Though the investors who were duped gathered outside the office address of Modern Tech, the owners had closed the company and vacated the office more than 30 days ago. Investors claim that the ICOs were Ponzi schemes with multilevel marketing (MLM). Though the victims of the ICO fraud claim that they were duped of VND 15 trillion ($660 million), they are unable to provide any detailed proof for verification. They claim that each investor has lost $20500, yet it is not clear whether it is the initial amount of investor or the value of the tokens after considering the returns promised.ICO
iFan was marketed as a social marketing platform that allowed celebrities from different fields to promote their content to fans worldwide.
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Pincoin was a PIN project powered with an ERC token. On the front page of the website, it promised 40% monthly returns for investors. It promised to build an online platform using Blockchain and cryptocurrency. The platform would include a peer-to-peer marketplace, ad network, investment portal, auction website, and also include other features. The websites for both the ICOs are still online. However, the chief director of the company Ho Xuan Van has switched off his mobile phone on April 11.
Tuoi Tre news claimed that Modern Tech was promising investors in Vietnam 48% monthly returns for investing in iFan tokens, if they invested at least $1000 initially. They were also given a commission of eight percent if they referred to new investors. Investors started facing problems, when Modern Tech stopped paying the investors in cash, offering iFan tokens instead. Though the market value of these tokens dropped to one cent, Modern Tech continued to claim that the tokens were worth $5 on its own investment system. However, investors were unable to withdraw the amount they invested initially in cash.Regulation
In Vietnam, the central bank of the country has outlawed the use of cryptocurrencies in the country in October 2017. However, this did not stop companies like Modern Tech from aggressively promoting their MLM investment scheme and attracting investors. Fortune magazine has claimed that the deputy prime minister of Vietnam Vuong Dinh Hue, has ordered a swift investigation into the scam. The police in Ho Chi Minh will be now investigating the activities of Modern Tech. The Vietnamese prime minister Nguyen Xuan Phuc has asked the State Bank of the country to ensure that no banks process any transactions in cryptocurrencies. It appears that now financial fraudsters are targeting countries like Vietnam where the financial literacy levels are low.
HYIP Examples outside Vietnam
Zeek Rewards is considered the largest HYIP Ponzi scheme, and approximately one million investors had invested about $600 million. The returns promised was 1% or more depended mainly on the initial amount invested, and a monthly subscription fee was paid. The SEC filed a complaint against this scheme in 2012 and founders were found guilty. OSGold was another US-based HYIP that had more than sixty thousand investors who were promised monthly returns of 30-45%. Approximately US$250 million was invested in the scheme which closed in 2002. Legal action was initiated in 2005.
People in Profit System (PIPS) was founded in 2004 and had investors in over twenty countries. In 2005, PIPS was investigated by the Malaysian Bank Negara and faced money laundering charges. Colonyinvest was a Thailand based HYIP that allegedly cheated more than fifty thousand investors of approximately US$ 150 million. Sunshine empire and Ginsystem Inc are some of HYIPs in Singapore which shut down. City Limousine and Future-Maker Pvt. Ltd is the most notorious HYIP in India. Other famous HYIPs with a large number of investors are Emirates Gold Exchange (EMGOLDEX), and the South African HYIP, WorldWide Solutionz.