Fraudulent Investment Scams in Indonesia: Bali Investments Case
Around the globe there are plenty of fraudulent investment scams offered to investors (for example the "ponzi scheme", "pump and dump", and many others). This also occurs in Indonesia, or, related to Indonesia. Perpetrators can be Indonesian or foreign. In case of foreigners, the offshore investing scheme is a popular scheme (and a fairly simple one in the era of Internet). Criminals offer victims a lucrative investment opportunity in Indonesia, promising big profits. However, investors will never see their money again.
Two months ago, Indonesia's Financial Services Authority (OJK) warned domestic and foreign investors about the presence of unclear (and illegal) online platforms or companies in Indonesia that offer lucrative investment opportunities.
Read more: Be Aware of Illegal Investment Offers & Online Scams in Indonesia
However, the OJK was only referring to illegal platforms set up by Indonesians. Here, we would also like to remind our audience about the presence of fraudulent investment scams, set up by foreigners, that use Indonesia as an attractive investment destination.
A great example is Bali Investments B.V., a real estate company that was established in 2014 and headquartered in Arnhem (the Netherlands). On its website, social media, and prospectus it described itself as a real estate company that focuses on new emerging markets including the famous island of Bali in Indonesia. Its LinkedIn profile, which is still available (contrary to its website that is now offline), it states: "supported by local partners, a qualified staff and external local experts, Bali investments B.V. is able to thoroughly investigate all of its investment projects, which allows for highly flexible and efficient trading and limited operational costs. This causes an optimal balance between risk and revenue. Bali Investments believes in its investments and therefore it always participates in its own projects."
On Bali, the most popular destination for foreign tourists in Indonesia, it offered very attractive returns for investment in two property development projects. With this promising opportunity, Bali Investments B.V. managed to collect €1.2 million from more than 30 investors. However, the projects never started and after Bali Investments B.V. was declared bankrupt by the local Gelderland court in February 2017, the curator (Mr. S.J.B. Drijber) is now investigating where all the money went. According to the board of Bali Investments B.V. funds were used for operational activities. However, it remains unclear what these costly operational activities actually were (without any of the money going to the projects in Bali).
Bali-Investments B.V. also has an outstanding €7,000 rental debt at Ovvice, which rented out an office in the center of Arnhem, a city and municipality that is situated in the eastern part of the Netherlands. Bali-Investments B.V. used this office for a few months only.
The Dutch justice department had increasingly been aware of Bali Investments B.V. due to possible malversations. Justice links Bali Investments B.V. to the former Arnhem real estate fund Centurion, which is accused by the public prosecutor of large-scale investment fraud. Centurion developed holiday homes in Costa Rica. However, reportedly, the €21 million that was invested by a group of private investors went missing.
In a local Dutch newspaper it is reported that the director of Bali Investments B.V., who once worked at Centurion, denies any involvement in the Centurion fraud case. He also claims that the development projects on Bali were affected by negative publicity in media, and therefore new investors could no longer be found.
This should be a warning for potential investors. It is always important to do your own research about an investment project and about the developers behind the project (don't be dependent on information you receive from the developers). Always ask a lot of questions and request additional information (fraudsters will not be happy to reply because they don't want to give potential victims valuable and accurate information). Lastly, there exist no guaranteed returns, and when an investment opportunity is "too good to be true" it may very well be not true.
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What is the difference betwee a Ponzi and a pyramid scheme?
http://www.investopedia.com/ask/answers/09/ponzi-vs-pyramid.asp
U.S. SECURITIES AND EXCHANGE COMMISSION - Fast Answers: Ponzi Schemes
https://www.sec.gov/fast-answers/answersponzihtm.html
About the Dutch Authority for the Financial Markets [AFM]
https://www.afm.nl/en/over-afm