Scam Watch - Facebook investment adverts October 27th, 2022
A Coogee investor has avoided losing $100,000 to scammers through a bond investment scheme.
The highly sophisticated scam is likely to have attracted other victims, keen to generate income as deposit rates and investment returns languish at historic lows.
Investor Steven McGuinness, recently received a pay-out following the sale of an investment property in Perth's south. He wanted to invest some of the left-over funds and was interested to learn a bit more about Bonds, including those issued by the Commonwealth government and other secure providers.
"I had heard about bonds and wanted to learn a bit more. I clicked a link on Facebook that simply offered information about how bonds worked. They were very helpful, professional and explained all the ins and outs of bonds and it all made perfect sense" said Seven McGuinness.
Mr McGuinness was directed to a now-closed website that looked highly polished and provided a lot of useful information.
"Once I was engaged with them, it didn't take long for them to start the subtle sales push. Before I knew it, I had some very legitimate looking prospectuses and documents in front of me" says Steven McGuinness.
Mr McGuinness started digging into whether the "deals" promoted by the scammers looked like a good investment. The rouse was so convincing, it took nearly an hour to ascertain that Mr McGuinness was about to be scammed out of $100,000.
He is keen to share his story so that others can avoid being caught by the scammers too.
According to ASIC, fake bond scams are gaining popularity amongst crooks.
A bond is a form of fixed interest investment which is typically issued by governments and large corporations as a means of raising funds. For example, a mining company keen to expand operations, might borrow money by issuing bonds. This is instead of raising capital by issuing new shares or retaining profits. Bonds typically pay a fixed rate of interest for a set period of time ranging from a few months or in the case of Government issued bonds, up to 30 years.
Unlike a term-deposit which can be cashed in, bond issuers won't return the invested capital before the maturity date. Investors can however, sell their bonds in the open market, typically through exchanges like the ASX and individual brokers.
The world bond market is estimated to be worth close to $100 Trillion which is significantly larger than the value of the world's stock markets at $70 Trillion.
Unlike other economies, Australian consumers do very little direct investing in bonds with most having an exposure through their super funds. A capital stable super fund for example, would hold about 70 percent of their investor's money in bonds.
The scammers in this cased, forged the documents of large Australian banks to lure investors into thinking they could earn up to 9 percent per annum in Federal Government guaranteed "bonds" issued by Australia's big four banks including the CBA.
"It really was very convincing. Thank goodness I listened to the little alarm bells going off and made some of my own enquiries" says Mr McGuinness.