The Securities Commission Malaysia in its efforts to bring greater awareness on the modus operandi of clone firm scams conducted an investigation on 10 clone firm scams and is sharing the findings so investors can be more aware.
Clone firm scams are generally companies that fraudulently impersonate a legitimate or a licensed entity, including misusing the name and logo of a public listed company’s corporate credentials, and website, to dupe investors and solicit funds.
The SC’s investigation shows that the modus operandi would typically involve, putting out advertisements on social media such as Facebook to lure investors with investment packages guaranteeing high returns and seemingly managed by “licensed intermediaries”. Using a large number of “agents” to lure potential victims, soliciting investments through Whatsapp chats once the victims clicked on the link provided, and requesting victims to deposit monies for the “investment schemes” into bank accounts held by mule account holders to layer and launder the illegal proceeds received.
In the course of the investigation, SC found at least 32 mule account holders identified to be involved in facilitating the operators of these scams.
It also revealed that the scam operators have generated a large number of illegal proceeds given a large number of victims. In one of the scams, approximately RM3.6 million have flowed through one mule bank account within a period of six months. Based on the 154 bank statements reviewed, the SC also found that in total, at least RM24.7 million may have flowed to several “masterminds” of these scams.
The findings also highlighted that the clone firm scams will target victims/investors who are willing to part with a small amount of monies but with the expectation of making huge returns in a short period of time.
Given that most of the victims who were scammed lost only small amount of monies, many were reluctant to come forward and cooperate with the authorities in their investigation into the scams. Out of the 24 victims identified, 15 of them declined to cooperate. To clamp down on these illegal activities, the SC is currently reviewing the available evidence and considering various enforcement options against those involved in the clone firm scams.
The Commission would seek for investors to play their role by exercising vigilance and scepticism when evaluating investment opportunities by checking the legitimacy of individuals or entities who approached them to invest in any
investment scheme, especially when they are marketed through social media and Whatsapp chats.
Investors are also advised to never deposit money into personal bank accounts of any individuals and refer to the SC’s Investor Alert List for details on unauthorised websites.
