Scam - Sunshine Empire

While looking for passive income streams, I had a close encounter with Sunshine Empire and its "MLM" (Multi-Level Marketing) products.

I stayed in Toa Payoh then and on one fine day at HDB Hub, I saw a grand new office/company.  Looking into Sunshine Empire's office to check what they are selling, I was invited in by a sales person for product presentation.

I could not remember the product details now, but I remember in the presentation, we were told that Sunshine Empire had attractive product packages with high rates of return.  I remember a "Silver Product" and a "Gold Product" that enables a investor to recoup his investment within 1 year.

The minimum investment was $12K, and the investor gets $1000 back every month, and this monthly payout continues for the next 8 years.

Also, I was told that Sunshine Empire was not just an MLM company.  They are also developing theme parks and underwater hotels (Wow!) in Malaysia and Asia.  The high returns were generated from these investments and businesses.

We were also asked to introduced family members and friends, so that we can enjoy rebates on the products that we purchased.

I did not want to purchase their investment products on the spot and told them I would go home and "think about it".

After going home, I did some research and found that Sunshine Empire was open for business only in 2006.  This is a new company, no history and track record.  I do not even know whether their products are legitimate or not? 

The return on investment (ROI) just sounds too good to be true; and in such cases, usually it would not be true. 

I have decided against investing in Sunshine Empire and my money stayed in the low interest paying Fixed Deposit.

Later, it was found out that Sunshine Empire ran a Ponzi scheme using funds from new investors to pay existing ones.  Using slick marketing and hard-selling technique from a team of well dressed sales people, Sunshine Empire actually amassed up to $180 million from 20,000 people in their 15 months of operation. 

Sunshine Empire's founders were tried and sentenced in court, but the investors have lost their money in this ponzi scheme, some with their life savings.

Lesson learnt -
When investing in any investment scheme, especially those that promised high returns and short investment time, find out the following:
1. Is the investment product legitimate?
2. Is the company subject to regulation?
3. How are the returns generated? From new inflows of funds or from actual investments?
4. When will returns be paid? How much is guaranteed and who is the provider for the guarantee?
5. How long is the period of investment? Are there any penalties for early withdrawal?
6. Any way to monitor the investment’s performance? Any reports?

Still, the best investment plan would be staying out of these abnormally high ROI products.