AMAN FUTURES PYRAMID SCHEME

Submitted to:

Mrs. Rosalina Erece

Submitted by:

Sebastian, Jan Mariel

Sobrevilla, Romer Christian

Tabula, Honey Angel

Tagle, Shaneska

Ugay, Dianne Clarissa

Valdez, Denise Pauline

4MA1
 FACTS ABOUT THE CASE

Aman Futures Group was a privately held investment company based in Malaysia

with branches in the Philippines. Manuel K. Amalilio, a Filipino of Malaysian decent,

founded the company. The company would then be a subject for controversies and

anomalies and be discovered to be a huge investment scam, particularly a Ponzi

scheme.

Ponzi Scheme is "an investment program that offers impossibly high returns and

pays these returns to early investors out of the capital contributed by the later

investors." (GR Nr 10860 -02, September 3, 1998). These are schemes that "promise

high financial returns or dividends not available through traditional investments. Instead

of investing the funds of the victims however, the con artist 'pays' dividends to initial

investors using the funds of subsequent investors. The scheme generally falls apart

when the operator flees with all of the proceeds or when a sufficient number of new

investors cannot be found to allow the continued payment of dividends." (FBI definition)

The timeline of events started on January, in the year 2012 when Aman Futures

Group first started luring investors in Pagadian City, encouraging them to invest with the

offer of a return 30-40 percent in eight days and 50-80 percent return in 18 to 20 days.

With such a promising offer, Aman was able to grow and investors flock in and out

to invest in the company. The boom in the business made it possible for Aman to

expand its operations to other parts of Mindanao and Cebu.

At the beginning, the clients of Aman were low-earning people but professionals

and retirees followed en suite because of the tempting high return on investments.
 In April of the same year, the Aman Futures Group was given a permit for general

merchandise.

Pagadian Mayor Samuel Co would later reveal on June 4, 2012 that he ordered the

police to investigate on Aman. Police would then tell Co that there are no complaints

against Aman and that collection of evidence is impossible because money was

deposited into the account of Fernando Luna who ran the company's operation in

Pagadian City. They arrived with the recommendation to have Co cancel the company's

business permit.

However on June 6, Aman was able to submit all necessary documents to let them

keep their business permit including a Securities and Exchange Commission (SEC)

registration and a Department of Trade and Industry (DTI) permit duly signed by DTI

Secretary Gregory Domingo. Aman also claimed that the money invested went to

Okachi Malaysia, which was a trading firm.

Co revealed on June 18 that he canceled the business permit of Aman Futures

Group on the basis that the permit that Aman holds does not suit the kind of business

they have which is an investment company, clearly different from a general

merchandise. But despite the cancellation of permit, Aman continued its operations and

the collection of money since investors pleaded not to close the company since they are

earning returns.

On June 29, Co wrote a letter to Sangguniang Panlunsod to help him put a stop to

Aman's operation but then revealed that he was ignorant of the latter's conclusion on

the case.
 During the month of July, Aman tried to reacquire permit from the local government

of Pagadian City but Co stressed that he did not want to give them yet another permit

so he purposely dragged the application. He then asked Aman to present a secondary

permit from SEC to grant approval on their request. He cleared that he only allowed

them to operate but ultimatel did not technically grant them another permit. He said that

since Aman is operating, he would just collect taxes from them.

It was on August that Co himself invested money in Aman Futures to help him

grow his campaign funds for the 2013 Elections. He said that he invested a total amount

of Php 500, 000 under a different name. It was also in this month that Co and Amalilio

met for the first time when Co showed the founder of Aman a spot in the City

Commercial Center, a goverment-owned mall, which Aman could rent out since the

company and its operations are getting bigger and bigger.

Co then invested a total of Php 42 million along with some friends, relatives and

even some government employees in September. Approaching the end of the month,

Luna left ahead of Amalilio. It is also in September when investors started filing

complaints against Aman in the National Bureau of Investigations (NBI) for not paying

them their money. On September 27, Aman Futures was forced to shut down its

operations.

SEC issued a Cease-and-Desist Order in October stopping Aman Futures from

soliciting further investments from the public. The decision was caused by the result of

the probe by the Enforcement Prosecution Department, following complaints from the

public and other government agencies.

 The wronged investors then began filing cases of syndicated estafa against

Amalilio and his accomplices, which according to Article 315 and 316 of the Revised

Penal Code, is "committed by a syndicate consisting of five or more persons formed

with the intention of carrying out the unlawful or illegal act, transaction, enterprise or

scheme, and the defraudation results in the misappropriation of moneys contributed by

stockholders, or members of rural banks, cooperatives, "Samahang Nayon(s)" or farmer

associations, or of funds solicited by corporations/associations from the general public."

Syndicated estafa is a nonbailable offense and is subject to life imprisonment.

On October 12, NBI receives a letter from Governor Antonio Cerilles of

Zamboanga del Sur, implicating Co of a connivance with Amalilio in the scam. The letter

addressed that Co distributed the checks to the investors. Co denied the allegations.

NBI confirmed that Amalilio had flown out to Kota Kinabali in Sabah, Malaysia on

November 14. This information led to the Philippine Ambassador to Malaysia J.

Eduardo Malaya to work with the Malaysian government to bring Amalilio back to the

Philippines. The Bureau of Immigrations also issued a lookout bulletin against 38 people

said to be part of the scam.

A 14-member special panel of prosecutors joined together to start a preliminary

investigation of the investment scam. Then Department of Justice (DOJ) Secretary Leila

de Lima tasked the group to prosecute the suspects and file the cases against them.

Maria Dona Coyme, a finance manager of Aman, submits an affidavit implicating

that Co was involved in the scam, sought investors for the group, and that he issued a

temporary business permit for Aman. Coyme said the bulk of investment came in the
middle of July after Co issued the temporary permit. But Co insisted that the temporary

permit was given to Aman to return back the investments within the 60-day period and

not to collect money.

The Court of Appeals then ordered the freezing of the bank accounts of 23 Aman

Futures executives and their companies. The said order covered accounts in 25 banks

and financial institutions.

On the other hand, Co filed a case against Aman in NBI indicating that he lost Php

5 million but stressed that no public funds were used. Meanwhile, DOJ ordered the

release of subpoenas for 44 officers and members of Aman.

Two witnesses, both investors, stepped forward and further implicated Co and his

wife on their participation in the scam. They went to NBI with a paper trail linking Co and

his wife to Aman including deposit slips to accounts under the couple's names. They

said Co set up an Aman branch in Manila.

On November 25, five directors of Aman surrendered to NBI as they feared

retribution from angry investors. The five directors were Leilan Lim Gan, Eduard Lim,

Wilanie Fuentes, Naezelle Rodriguez and Lurix Lopez.

NBI filed cases of syndicated estafa against Co, his wife and 10 other persons as

the investors implicated them. It was also noted in the timeline of events that the SEC

also hit the firm’s directors for engaging in fraudulent transactions and operating without

the proper registration, violating Sections 8 and 26 of Republic Act No. 8799, the

Securities Regulation Code.

 On December 27, Fernando Luna who was the president of Aman Futures showed

up at the DOJ and revealed that he is only the personal driver of Amalilio. He claimed

that he was introduced to Amalilio who was in need of a personal driver but then was

suprised when a box of documents was left for him to sign arrived one day. He then

continued that he learned later that Amalilio named him as the president of at least three

Aman firms.

The pyramid scam, dubbed one of the biggest in the country's history, is estimated

to have robbed investors of P12 billion in hard-earned cash.

In 2015, Co, and his wife Priscilla, who were then prohibited from paying bail were

granted the same by the CA Special 11th Division who reversed their prior ruling on the

couple.

The CA said that the prosecution "failed to prove that petitioner performed any overt

act in furtherance of the alleged conspiracy." Furthermore in the CA ruling, The

allegation that petitioner is a friend of the direct principals does not constitute strong

evidence that he had conspired with them."

The court also said that the prosecution failed to present evidence to prove that Co

indeed invited people to invest in the company. Ultimately, Co and his wife paid Php

500,000 each as bail.

Meanwhile," the alleged mastermind, Emmanuel Amalilio, is in jail in Malaysia for

carrying fake identification documents. In 2014, the Philippine government failed to have

him extradited back to the country to face charges related to the scam.
 OBSERVATIONS BASED ON FACTS

 Burning Love for Money

Aman Futures Group Philippines Inc. lures investors by offering them a

return of 30-40 percent in eight days and a return of 50-80 percent in twenty days

in the form of post-dated checks (What Went Before: P12-B Aman Futures Scam,

2013). Demanding for instant results is a typical attitude of an individual

nowadays. The people are growing more impatient and they want to immediately

acquire their wants and needs. The get-rich-quick mindset is what drives the

investors to join the game. With a high rate of return but with low risk investment,

an investor who wants current investment income will find it difficult to resist.

Also, in a system based on financial insecurity, all people become greedy for

money. Our love for money is beyond measure, and although we usually like to

point fingers to the affluent for their immense greed for money, the truth is that

the way of our socioeconomic system is structured inevitably leads to this kind of

behavior (Arcon, n.d.). Thus, the Aman Futures Group was able to use their

investors’ weakness for them to perform their evil deeds and schemes, and made

the latter believe that the company has the resources and capabilities to

generate the return guaranteed.

 Insufficient Information
The injured parties trusted the Aman Futures Group Philippines Inc.

largely because of the endorsements from their friends and acquaintances that

the company promises to double the entire amount invested. The victims were

blinded by the recommendation of their friends and relatives who became rich

because of the investing company. Ecstatic by the promise of having a return of

 30-40 percent within a week, they were not able to do a background check of the

company. Many people got attracted of how big this gets that is why it

continuously spread without further knowing the company. Due to insufficient

information, the investors were not able to notice the red flag signals that the

company is performing a pyramiding scheme.

 Economic Messiah
According to the interview of Philippine Inquirer to Aman Futures, when

they started their operations, they considered themselves as the “Economic

Messiah” as they promised a very good return of investment for the low-income

earners. This is mainly the reason why the people continued to believe that the

scheme was sincere in helping the poor people. The first investors were the

vendors and motorcab drivers until it grows and grows. Professionals, overseas

Filipino workers and retired employees shortly entered in the investing company

since the company guaranteed a promising return. Sources said that they also

dominated some Christian groups wherein Amalilio promised to build a church

and fund their mission works.

RISK IMPLICATIONS

In the Aman Furture case we have discovered from our observation the different

malpractices and misbehaviors that the managers of the said business used in order to
scam and take advantage of others. The first observation we had was that; from the

start of their operations they considered themselves as the “Economical Messiah”

because of their good return on investments. But seeing this at a different stand-point

isn’t it questionable? As the saying goes; “Isn’t it too good to be true?” from this we can

infer that the risk should be high for the investment is high since it also offers high

return, but Aman promises that it is a low-risk investment. We can also infer that the

management could be using “high return” as “baits” so that they can haul more

investments. Since doubling or even tripling the investment is very hard to resist, the

company became popular and mainstream, but this brings us to very questionable

situation wherein how can a company maintain this steady stream of high rate of return

to investors? There is that risk that something fishy is happening behind the scenes

which can lead to a loss of investment.

The second observation is that Aman Futures primarily catered the investments

of low income earners, they could have done this to appeal to the general public and

show that they are trust worthy, another is that they offer high returns on investments

which is what most people today are looking for, easy money with low risk. The risk that

can be deduced from this is that the company could be using this tactics to take

advantage of others.

The last observation was the lack of information, since the company gained a

lot of popularity because of their promise of high return on investments. The people

were blinded by the opportunity of gains and they invested without further researching

about the said company. The risk that we can find here is that the company is using high

return as a diversion to prevent people from seeing through their evil schemes.
 Thus we can see that management had already plans of committing this

scandal led by Manuel Amalilio C.E.O. was the alleged mastermind of the scandal. We

can see from reports that Aman Futures was running operation under a business permit

as a general merchandise but is engaged in investing activities, the management and

employees should have realized this since there would be the risk that their operation

would be cancelled. We can also see that there were collusions inside the company

especially in the top-level management thus the establishing risk of corruption. Most

importantly since the company was receiving high inflow of cash, there was the risk that

management is already blinded by greed.

RECOMMENDATIONS

In order to prevent people from becoming a victim of investment scams such as

Aman Pyramid Scam here are some recommendations that one should to take into
account.

People who will invest their money should first peform a background check about

the investment company that they are going to entrust their money with. People who will

invest should ask on how the company runs and who are going to run the company.

They can search it whether the company is a legitimate investment company and look

for feedbacks and other information that will help them learn more about the company.

Those who will invest their money should also be suspicious when the

investment company promises high returns on the investment in just a short amount of

time. This is the usual tactic and early warning sign of a scam that induces people to

invest their hard earned money. People who will invest should not be easily deceived by

the promises that is too good to be true and they should be more wary and they think

twice before investing to such investments. Be logical in investing and dont let greed get

the best of you.

Learn from past experiences. Aman Pyramid Scam is not the first scheme or

pyramid scheme that happened here in the Philippines. People should be more cautious

and learn from the patterns of investment scams. If one doesn’t have any information

about the investment company, then one should not invest even if it promises a quick

and easy money.

While being a smart investor is the best solution and prevention, the government

should also do its part in protecting investors from such fraudulent acts. It should take

action in duly penalizing existing companies who deceive the people by these kinds of

schemes. More than this, the government should implement stricter regulations in order

to prevent more companies or people in devising pyramid frauds. By doing so,

investors, most especially people who do not know much about investing, would be

protected.

References:

AMLAC Ignored Red Flag Signals On Aman Scam Groups. (2012). Retrieved

November 24, 2018, from

http://www.senate.gov.ph/press_release/2012/1127_escudero1.asp
Arcon, S. What Makes People Greedy for Money: Understanding the Causes of

Monetary Greed. Retrieved November 26, 2018, from

https://theunboundedspirit.com/greed/

Camat, R. (2012). Aman Future Group Investment Scam – How To Avoid Similar

Scams. Retrieved November 25, 2018, from

https://www.moneytalkph.com/investing/aman-future-group-scam-testament-of-lack-of-

financial-education-among-filipinos/

Carvajal, N. (2016). Thousands Duped in P12-Billion Scam. Retrieved November 26,

2018, from https://globalnation.inquirer.net/56132/thousands-gypped-in-p12-billion-scam

Lessons from the Aman Future Group Scam. (2014). Retrieved November 25, 2018, from

https://www.pinoymoneytalk.com/aman-future-group-scam-philippines/

PNP Memorandum Circular Number 2013-001. (2013). Retrieved November 26, 2018,

from https://didm.pnp.gov.ph/Memorandum%20Circulars/MC%202013-

001%20GUIDELINES%20FOR%20THE%20DETECTION%20AND

%20INVESTIGATION%20OF%20INVESTMENT%20FRAUD.pdf

Rosauro, R. (2012). Pyramid Scam ‘Like a Storm’ Victimizing Rich, Poor. Retrieved

November 25, 2018, from https://business.inquirer.net/93186/pyramid-scam-like-a-

storm-victimizing-rich-poor

SEC Administrative Case No. 11-12-164. (2013). Retrieved November 26, 2018, from

http://www.sec.gov.ph/wp-content/uploads/2016/02/admin-case-no.-11-12-164-order.pdf
What Went Before: P12-B Aman Futures Scam. (2013). Retrieved November 25, 2018,

from https://newsinfo.inquirer.net/347161/what-went-before-p12-b-aman-futures-scam