Forex Scam Worth Millions Busted in Malaysia by Local Police

A classic Ponzi Scheme promised unrealistic guaranteed returns from a website offshore

Three individuals from Malaysia have executed a forex scam worth over $1.6 million. The perpetrators of a Ponzi scheme were arrested in Kuala Lumpur over the weekend, local police reports.

Discover credible partners and premium clients at China’s leading finance event!

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

The scheme has been running between 2013 and 2016, using a website that was registered overseas to onboard victims from Malaysia. The practice is widely used by fraudulent entities that pretend to handle investor funds, as well as some unregulated fraudulent brokers.

Ponzi Schemes and Fake Brokers

Aside from pretending to invest client funds, a number of perpetrators of forex fraud are also using clones of regulated companies to entice potential victims to deposit funds.

Suggested articles

ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>

The three people that Malaysian police detained are aged between 35 and 49. During the arrest, the police also confiscated jewelry, luxury cars and froze a house that is worth $2.6 million.

According to the police reports, a total of 116 people have filed complaints, with local authorities estimating that up to 70,000 (!!!) people might have been implicated. The number seems excessively high even by the standards of South-East Asia, but the police reports that the official complaints that have been filed so far net to about $1.6 million.

Considering that only 116 people have complained to the police, the magnitude of the fraudulent scheme is unknown.

Guaranteed Returns

In a typical Ponzi fashion, the perpetrators of the scheme have offered to their victims guaranteed returns. According to the police, investors were promised to receive 12 percent monthly. Local authorities are after a married couple that is suspected to have had a role in the execution of the scheme.

“The police is now closing in on the couple identified as M Pandeyan and FC Gouri, who are suspected to be the masterminds of the syndicate. The couple is believed to have fled to a neighboring country last Sunday. The police will seek help from the authorities of that country to arrest them,” a spokesperson for the local police was cited by local media.

Got a news tip? Let Us Know