Walls are closing in for ‘pyramid schemes’

Authorities have urged damaged parties to come forward and file complaints against suspects in the scandal engulfing The iCon Group as investigations continue into allegations that it ran a pyramid scheme.
While 18 suspects including the company’s CEO and founder have been arrested, the fraud scandal, one of the largest in recent years, will not be the last as pyramid scams and other fraudulent investment schemes are still thriving, authorities said.
Despite the well-documented risks and repeated warnings by law enforcement agencies, many continue to fall victim to scammers because they allow themselves to be lured by the promise of quick and easy money lures.
In a pyramid scheme, members are often promised big profits for recruiting new members. It is often structured to funnel money put in by new investors back to earlier participants.
It is designed to appeal to people’s greed and desire for financial gain, offering high returns on investment, with little or no effort required by the investor.
Many pyramid schemes are often disguised as multi-level marketing (MLM) businesses or other legitimate investment opportunities.
Kosolwat Inthuchanyong, director of the Office of the Attorney-General (OAG)’s rights protection and legal aid office, told the Bangkok Post that pyramid schemes disguised under the cover of direct selling have been around in the country for a long time.
“They respond to people’s greed and offer hope to people who are struggling with the current economic hardships,” he said.
He said many who fall victims include unsuspecting retirees or elderly people who were conned out of their hard-earned life savings by pyramid scams in disguise.
Scammers, many of whom are celebrities, often use charm, social status and even fake credentials to build trust with potential victims, he said.
Asked if any laws should be amended to keep up with the current circumstances, he said existing laws are adequate to deal with scammers.
“But some elderly investors must also know their limitations. They must consider whether they are able to measure up to the demanding task of recruiting new members [in pyramid schemes disguised as MLM businesses],” Mr Kosolwat said. “Some investors were angry when someone warned them about the potential risks.”
He said agencies that are responsible for protecting the rights of victims include the Office of the Consumer Protection Board (OCPB), the OAG’s rights protection and legal aid office, and the Rights and Liberties Protection Department under the Justice Ministry.
Mr Kosolwat also said that fraud victims who lost their money in pyramid schemes in the past stood little chance of recovering it.
Many received only small sums of their money back.
However, the current anti-money laundering law authorises the Anti-Money Laundering Office (Amlo) to quickly proceed with the freezing of assets belonging to scammers while modern technologies are used to track the online money trail and freeze it, he said.
“Even if scammers move stolen money abroad, Thailand has international agreements with other countries to help victims,” he said.
“In the past, victims did not get much money back.
“In recent years, the amount of money they have recovered is relatively higher. But it is still not worth it, compared to the huge losses,” he said.
“Victims should step forward and file complaints at police stations nationwide,” he said.
National police chief Pol Gen Kitrat Phanphet has instructed the Metropolitan Police Bureau and all nine Provincial Police Regions to set up complaints centres to help victims of The iCon Group fraud scandal.
As of Saturday, a total of 2,910 people had filed complaints against the iCon Group, according to the Central Investigation Bureau (CIB).
Warathaphon “Boss Paul” Waratyaworrakul, The iCon Group’s founder and CEO and a prime suspect in the scandal, was detained at Bangkok Remand Prison along with 17 other suspects after the Criminal Court approved a police request for detention on Friday.
The 18 suspects, some of them celebrities, were wanted on charges of colluding in public fraud and inputting false information into a computer system. All denied the allegations.
All were taken to jail after the court rejected bail requests submitted by three high-profile celebrities, citing flight risk, while the others did not apply for release.
The three celebrities are actor Yuranunt “Boss Sam” Pamornmontri, actress Pechaya “Boss Min” Wattanamontree and television show host Kan “Boss Kan” Kantathavorn.
The suspects, referred to as “bosses” within The iCon Group’s marketing hierarchy, were apprehended on Wednesday following numerous fraud complaints.
Victims reported the company lured them with online marketing courses costing less than 100 baht and pressured them into further financial commitments, resulting in substantial losses.
Saree Ongsomwang, secretary-general of the Thailand Consumer Council (TCC), said The iCon Group registered as a direct-marketing business, not a direct-selling company.
“But what the company has done is direct selling. Therefore, it is against the law,” Ms Saree said.
“The company’s dealers invested 250,000 baht each to buy products worth the same value. But some victims said the number of products did not match the order placed.
“Does this mean the products and the direct-sale strategy were used to disguise [a pyramid scheme]?” Ms Saree said.
She urged state agencies to examine the money trail of the company’s dealers and look into whether the business focuses on recruiting members rather than selling products, which could be deemed to be a pyramid scheme.
“The money trail of the celebrities [working for The iCon Group] must also be examined. Any of their ill-gotten gains must be returned to damaged parties,” Ms Saree said.
She said celebrities are influencers as they have the trust of people. They should be careful and avoid getting themselves involved in any public fraud themselves.
“Many people tend to believe in what they say,” she said.
She also expressed concern about scammers seeking help from some state officials in exchange for under-the table-money to ensure their businesses operate smoothly.
The government should step in to investigate and punish these officials, she said.
Pol Lt Col Krisanaphong Poothakool, an associate professor in criminology and vice president at Rangsit University, said it is important for police investigators to find evidence the company and suspects recruited new members.
“The key point is for police to prove that the suspects recruited new members rather selling products as they claimed,” he said.
“As long as people are motivated by greed and a strong desire for quick and easy money, similar scams will occur in the future and more people will continue to be cheated,” he said.
A 61-year old victim who asked not to be named said she learned about the company’s business from a television show during the Covid-19 outbreak a few years ago.
During the show, Mr Warathaphon talked about the company’s online marketing course costing only 97 baht so she decided to try her hand and contact the company, she said.
After an online orientation session, she said she paid more than 250,000 baht to apply to be a company dealer and buy the products after the people who were above her, also known as uplines, assured her that she would earn hundreds of thousands of baht.
She tried to use products herself first to test their qualities, but it turned out the products were not as good as advertised so she did not sell them to others, she said.
She tried to return the products to the uplines only to be refused, she said.
They told her the only solution was for her to recruit new members and to share the percentage of her recruits’ sales, she said.