Cambodia - Crypto and new-age 'pig butchering'

July 18, 2022 Edward Dever

‘A fool and his money are lucky enough to get together in the first place.’
Gordon Gekko, Wall Street

In something reminiscent of a Hollywood movie, Cambodia appears to be fast becoming the new centre for online scams.

It does not seem that long ago when the main scam in Cambodia seemed to be trademark infringement. The fake ‘Sheraton Hotel’ in Phnom Penh (subsequently changed to ‘Sharaton’). Or the ‘McSam Burger Restaurant’, complete with its own Golden Arches. Or the ability of certain businessmen to magically remove trademark applications from the Ministry of Commerce’s Trademark Register and substitute their own applications.

Fast forward to 2022 and the latest game seems to be online scams. Once centered in Nigeria, this new style ‘419’ scam involves large scale operations in Sihanoukville and other centres using the full gambit of online communication channels to scam people, including WhatsApp, Facebook and Instagram.

Sihanoukville, transformed from a sleepy town into a Macau-style gambling haven, before a Cambodian-government crackdown outlawed online gambling and decimated the related property sector, has apparently become a centre for these scams utilising former casinos as bases for their operations.

In the past, boiler room operations were sometimes staffed by backpackers. At one point in Bangkok, they were operating out of the prestigious PwC building on South Sathorn Road. The workers were easy to spot among the suited-up accountants and lawyers that inhabited the surrounding buildings. Their uniform of cheap Khao San Road purchased shirts, pants and ties stood out among the tailored suits wandering the foyers at lunchtime.

Based on the Vice article, it seems the current crop of operations are staffed by a mix of people who are either conned into the work or voluntarily offering their skills. The impact of Covid-19 on employment in South East Asia has resulted in the unemployed across the region being lured by promises of well-paid employment in Cambodia. The operations no doubt operate under an umbrella of local officials and law enforcement protection.

One scammer’s playbook apparently includes the quote - ‘There is no un-scammable person. Only scripts that don’t fit.’

That may well be the case. I remember working with a senior foreign lawyer who had flown into Bangkok for several days. The lawyer was out of my sight for only a few hours at the end of days of meetings and was scammed by the well-known ‘Grand Palace is closed today jewellry scam’ in Bangkok.

As highlighted in the Vice article, awareness is perhaps the best form of defense against the scammers. Shutting down operations in Cambodia and neighboring countries is likely to merely force them elsewhere.

From Industrial-Scale Scam Centers, Trafficking Victims Are Being Forced to Steal Billions

July 2022

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A Fool and His Money Are Soon Parted

November 16, 2021 Edward Dever

As the Australian Government's Scams Awareness Week closes, it is worth highlighting perhaps one of the oddest scams of recent times.

In Texas last month, the self-proclaimed ‘Money Doctor’, the 80 year-old William Gallagher was sentenced to three life prison terms in Tarrant County for defrauding investors. This is in addition to a 25 year term for similar offences in Dallas County.

The Money Doctor bought time on a Christian radio station where he gave financial advice with a Christian theme, signing off his broadcasts with ‘see you in Church on Sunday’.

One of the most bizarre investments he promoted through his Ponzi scheme was a plan to use a satellite via a company called Hoverlink to shine holographic advertising down to Earth. Over time, Hoverlink morphed from a hoverboard rink to a cancer-curing pharmaceutical to law enforcement body armour before going galactic with its satellite plans.

It was all a scam. Yet people piled into the schemes, all neatly packaged in religious wrapping.

It reminds me of the time I gently nudged ASIC to force a Qld company to issue a supplementary prospectus to protect investors' interests.

A former sportsman who moved into property development was looking to swap his high levels of bank debt for income securities, issued mainly to retirees.

Investor presentations were organised in regional areas, including in church halls, offering returns around 12% p.a.

In my view, this was an attempt to replace sophisticated Big 4-type lenders with unsophisticated investors. A couple of phone calls to real estate agents quickly uncovered that the sales data in the prospectus was somewhat misleading.

The ex-sportsman was on a generous salary and car package and the company had licensed the use of his name at significant annual cost. Given how the company had performed to that time, it was arguable that killing off all these costs and installing a new CEO may have been a better option.

In the end, ASIC forced the issue of a supplementary prospectus and, given the delay, only a paltry sum was raised.

Unfortunately, the company collapsed a number of years later leaving over 150 small creditors out of pocket to the tune of $17 million. It seems the fund raising hadn't ended with the supplementary prospectus. His company was apparently subsequently offering returns as high as 20% p.a. paid monthly to lure investors.

In the end, slow property sales, poor land purchase decisions and mountains of lender debt (some at 30% p.a.) and investor debt brought the company down. Ex-sports personalities don't necessarily make good business people. Cold comfort to those who lost money.

A Christian talk show host promised to enrich clients. His Ponzi scheme bilked them out of millions.

November 2021

Avoiding BEC And Other Scams

November 24, 2020 Edward Dever

One of the more recent scams being perpetrated is the BEC or business email compromise scam where scammers intercept an email and change the banking details on the attached invoice. Their work is becoming more and more sophisticated.

It pays to check any new banking details with the supplier.

I double checked on two recent occasions and, fortunately, each one was ok. One was a law firm invoice where I was using the firm for the first time. The other was a series of strata levies with new banking details where the new font used on the notices made them look rather amateurish and was an immediate red flag.

It doesn't take long to check the banking details. Getting funds back is proving next to impossible and banks are denying liability.

In the article’s example, CBA and Bendigo washed their hands of the issue. AFCA and ASIC played ping pong, referring the complainant back to each other.

At some point, someone in government may suggest a form of deposit levy on the banks to establish a fidelity guarantee fund to deal with claims arising from BEC and other similar scams.

Tradies frustrated by banks as business email scam costs them $51,000

One of the scams that circulates periodically in the travel sector is the fake industry magazine or website ad scam.

I recall having a discussion with one group out of Europe threatening to sue because a manager had inadvertently signed their invoice for fake ads.

Given the complexities of enforcing foreign judgments in Thailand and the problems associated with civil litigation there, I welcomed the prospect of spending some quality time with them in court. Never heard from them again.

November 2020