Financemanila has compiled some Common denominators and guidelines for scams:

• using lofty and popular names like sm fund (to associate themselves with sm), royal manchester five (to sound Britishly foreign, like the soccer team), francswiss (to associate itself with foreign exchange)
• promising you high returns easily over 1% per month without offering you full transparency as to where and how money is reinvested.  Scams below 1% are rare, considering it is not worth it, and they must defraud a lot of people in a short time by offering attractively big interest rates.
• no SEC registration, or SEC registration is not for financial services or lending. Take note that with the 2002 case of Rose Baladjay's multitel, they were even legally registered at the SEC for lending to a maximum of 19 investors.  So even having an SEC license for lending does not clear a company from being a scam, but having no license should automatically ring a bell!
• flashy lifestyle of organization acquired in such short a time to lure you in sense of urgency
• company must at least have a website, preferably hosted in-house and not rented in one of those webhosting packages. Though, having a website does not guarantee a company is not a scam.  It merely establishes trackability.
• company must have at least an office front for customers to visit. Again, trackability.
• company must issue Official Receipt with valid TIN. So there's your clue. No SEC No BIR No OR. Again, trackability and paper trail.
• having politicians, clergymen, or kin endorse the so-called financial product does not guarantee its legality.

SEC warning last year:

BEWARE OF INTERNET-BASED PONZI INVESTMENT SCHEMES

The Securities and Exchange Commission (SEC) has received reports that the following entities are allegedly engaged in internet-based ponzi investment schemes: FRANCSWISS. SWISS CASH, UNIVERSAL FOREX SYSTEM, GLOBAL AMERICA, and PRIVATE FOREX TRADE, INC. These entities are NOT REGISTERED with the Commission, and have no permit DJ authority to solicit investments from the public Private Forex Trade, Inc. has in fact been found to be misleading the public by showing a fake SEC Certificate of Registration on its website.

The following are some of the features of an internet-based ponzi investment scheme:
• No SEC registration
• Investment in foreign currency, preferably in US Dollars
• Offers or guarantees a huge profit in a very short period
• Utilizes a binary network (i.e. upline and downline) to earn commissions
• No paper trail (i.e. contracts, receipts) – Promises little or no financial risk
• Provision for a lock-up period where an investor cannot touch the investment (i.e. 60 days) • Assures pay-off of investments in a short time
• Uses high-pressure methods to convince investors to reinvest their earnings
• Unknown principal office, address, founders, directors or officers
• Orientation seminars are conducted informally

This investment scheme ordinarily collapses as fast as they are created while leaving its investors behind and unable to recoup their investments.

The public is therefore urged to report any offer of investment made by persons who represent the above-mentioned entities or other entities using similar modus operandi to the undersigned in order that the appropriate enforcement action can be taken:

Director Hubert B. Guevara
Compliance and Enforcement Department
Securities and Exchange Commission
5/F SEC Building, EDSA, Greenhills, Mandaluyong City
(632) 727-3367
ced@sec.gov.ph

 A Ponzi scheme is an investment fraud that promises to pay an abnormally high return on one's invested capital. Money used to pay investors do not come from businesses or investments but, rather, from money put in by new investors. Ponzi programs usually reach a saturation point where new monies are not anymore enough to pay older investments. When that happens, payouts stop and newer investors do not receive any payment anymore.

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