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Step up efforts to curb frauds

Writer: Wu Guangqiang  | Editor: Jane Chen  | From:  | Updated: 2017-08-07

Email of the writer: jw368@163.com

Over the years, China has been a paradise for all sorts of con artists from home and abroad, who have caused enormous losses to the Chinese people. The combination of the people’s accumulating wealth and the lack of precaution makes Chinese people some of the most vulnerable victims of chicaneries.

One of the latest victims was a woman in Chengdu, capital of Sichuan Province. One day last October, she entered a police station and asked the officers when they would unfreeze her money amounting to 9.6 million yuan (US$1.42 million).

Puzzled officers soon uncovered a multinational telecom fraud that swindled the woman out of the whopping sum of money.

The operation of the scheme was unbelievably complex. The owner and mastermind of the fraud ring is a native Taiwanese and he manipulated the whole scam in Taiwan while the operation center was in a farmhouse in India’s Gujarat State.

The operators approaching victims were from Taiwan and the Chinese mainland, who worked day and night to prey on unguarded victims by impersonating police, judges, procurators and other public employees so that they could entrap prey more easily.

In the woman’s case, the cheaters succeeded in convincing the woman that she had been involved in a fraudulent case and then tricked her into filing a report to the fake police, who, in turn, step by step, eventually cheated her of the money.

Working with Indian police, Sichuan police busted 51 suspects, thus smashing the scam ring.

Despite the vicious nature of the case, it was insignificant in terms of the amount of money and the number of victims involved compared to another staggering case of fraud.

Zhang Xuejiao, a pretty girl born in 1991, absconded on the early morning of June 11 with stolen money possibly totaling over 30 billion yuan. She acted as general agent of IGOFX in China and had lured over 400,000 investors before the collapse of the Ponzi scheme.

IGOFX is a mysterious entity. After searching around for information on who owns it, who originally founded it, when/where it was created, etc., I came up empty-handed.

Available information shows that the company is listed as a “dealer in securities” under the name of “IGO Global Limited” over in Vanuatu and it used the services of a shell company in order to officially register with the Vanuatu Financial Services Commission.

More ominously, a whopping 55 percent of all traffic that heads to the IGOFX website comes out of Malaysia, a country proven to be a breeding ground for MLM (multi-level marketing) schemes. Zhang’s husband is Malaysian and very likely the evil couple are hiding in that country.

Like other Ponzi schemes, IGOFX’s “marketing strategy” is MLM or pyramid selling, in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople they recruit. That’s why over 400,000 people were lured within a short period of time by the generous returns touted by the cheaters.

With the collapse of “the castle in the sky,” desperate and angry victims gathered before the public security agencies, demanding the arrest of the criminals and retrieval of their losses. One victim tried to end her own life.

Despite the authorities’ efforts to curb rampant fraud, the crime has yet to be contained.

Above all, any nonbanking financial activities, such as fundraising, lending and securities, must be placed under strict regulation and oversight. Without approval, any of such activities is illegal and must be banned.

It’s beyond my ken how the IGOFX fraud was capable of snowballing to such a huge scale without being investigated and how the culprits managed to escape so easily. It seems that regulation exists only in name.

Emphasis must be placed on prevention, early warning and nipping at the bud. The key to successful prevention is the surveillance and disclosure of suspect activities. The adoption of technologies like big data and cloud computing make the job much easier.

IGOFX had been in operation for quite a while in China before it was broken up, so it is obviously the responsibility of the watchdogs for failing to avoid the disaster. After all, it’s hard for individuals to recognize professional scammers.

(The author is an English tutor and freelance writer.)