Malcolm SurryPonzi's heirs are alive well. They have shifted onto the Internet. Moth-eaten letters from Nigeria ... are now clogging up e-mail inboxes.
If it sounds too good to be true, it usually is
When 38-year old New Zealander Michael Bastion plunged to his death from the sixth floor of his Hong Kong apartment recently, he left behind several hundred investors in his financial schemes who may be poorer to the tune of over US$20 million. Bastion was deeply enmeshed in the high-octane combination of the racecourse and playing the stock and currency markets - although, as yet, nobody seems to know where and how. Investigators in Hong Kong are examining what appears to be scant documentation on the affair. The Australian courts have appointed a provisional liquidator of Bastion's company in Sydney, which bears the biblical Old Testament name of Gideon Investments. Corporate watchdogs have been called in.
AMONG THOSE WHO MAY NOT SEE THEIR MONEY again are close friend and Hong Kong's leading horse trainer David Hayes, a brace of jockeys, former Australian test cricketer Simon O'Donell, and a host of racing names in Hong Kong and the neighbouring territory of Macau, as well as in Australia. Evidently they were all tempted with promised returns of 60% a year, on which Bastion would charge 15% management fees. By all accounts, most of those who parted with their money did not have any clear idea of where it was to be invested. Some had no documentation to show that a transaction had occurred at all, and nobody seems to have asked if he was registered as a financial adviser with the local regulatory authorities.
Bastion reportedly lived high on the hog. He owned a string of racehorses, and was a fearless gambler. He favoured the finest champagne and patronised many of the best restaurants in Hong Kong during the six years he was based there. He was a popular free-spending fixture on the charity-event circuit. Some of Bastion's friends, shaken by his death, refuse to believe that he deliberately set out to defraud investors.
If Gideon Investments was no more than a scam, it is only one of a parade of them over the years. Hong Kong is a favoured destination for visiting entrepreneurs offering "get richer quicker" schemes - after all, Hong Kong is where the money is. The snake-oil salesmen are no respecters of persons. A few years ago, members of the establishment Hong Kong Club, including accountants, lawyers and captains of industry, were duped out of millions of dollars in an artifice that involved betting on "strangles" in the money markets. The contracts were signed in Hong Kong, run through the Jersey associate of a London company, with the funds directed to a New York bank, and the purported dealings done on the unregulated interbank market in Bermuda. The prospects of investigators tracking down the funds was nil.
The common denominators in this sort of fraud are slick and evidently wealthy promoters and the prospect of fabulous short-term gains. Furthermore, and this is important, early participants in the ventures tend to get paid. When more sceptical targets see their friends waving fat cheques, human nature and greed kick in. All the latecomers get fleeced.
Students of corporate criminology call the many versions of these scams "Ponzi schemes". Modern-day confidence men doff their hats to the memory of a dapper five-foot-two-inch Italian immigrant, Charles Ponzi, who in 1920 relieved 10,000 investors around the Boston area of their cash with a simple idea. Ponzi promised investors "50% profit in 45 days" if they would join him trading in international postal-reply coupons, where he had found a loophole yielding him 400% gains. It was a good story. So good that Ponzi was able to rake in US$15 million (in 1920 dollars) in eight months and open offices from Maine to New Jersey. Investors who bought early Ponzi promissory notes were paid on maturity from the proceeds of later ones - until one day he was no longer there. Ponzi served several jail terms before being deported to Italy. He died in a Rio de Janeiro hospital - leaving the world with a smile on his face, and a blueprint of how to gull the gullible.
PONZI'S HEIRS ARE ALIVE AND WELL. THEY HAVE shifted onto the Internet. The moth-eaten letters from Nigeria that have been around for years, offering great wealth in return for your bank-account number, are now clogging up e-mail inboxes. Among the tangled Websites so far reported to the Australian securities regulators is one carrying invitations from "Prince Lazarus" to invest in a tax-free haven called New Utopia, built on concrete platforms in the West Indies. Do not respond to e-mail and voice messages asking you to urgently dial a number with an 809 prefix - that is a fraud located in the Caribbean that rips callers off at the rate of US$25 a minute. Other schemes that have found a few eager takers include share offerings in nonexistent eel farms, coconut plantations and, the absolute dilly, a near-earth asteroid. It seems a shame to take suckers' money. But somebody has to.