Articles on Use of Gemstones in Fraudulent
Investment Schemes
Handles Bull Not Oxen
Sweet Song Corporation of L.A. California dba Pacific
Wellington Associates marketed gemstones as investments to
consumers and had registered a fictitious business name, Windsor & White
Trading Company, under which it also did business. Ron
Hudson, Inc., and Tsavorite Sword Corporation also
did business as PWA.
They operated as a joint venture and shared a trade name, a business
location, telephone lines, promotional materials, sales scripts
and employees. Sweet Song and Tsavorite have the same owner, incorporator,
director, and share at least one officer.
Hari Jiwan Singh Khalsa ("Hari Khalsa"), a/k/a Stephen
Jon Oxenhandler a/k/a Bob Thomas, was the owner incorporator,
director and an officer of Sweet Song and Tsavorite. Siri
Ram Singh Khalsa ("Siri Khalsa"), a/k/a William
Taylor a/k/a Phillip Anderson, was a salesperson for
W&W and PWA.
According to the FTC, since at least 1993 and continuing thereafter
to 1998, they maintained a substantial course of trade in the fraudulent
offer and sale of gemstones as investments to consumers.
Gem Scam Operations in Thailand Continue to Victimize Tourists
02/08 - Thailand - Manoeuvring clients into paying top dollar
for ordinary items is a common practice in the business world,
but when there is outright trickery involved, as experienced by
a large number of foreign visitors to Bangkok who have fallen victim
to its infamous "gem scam", the question of legality
comes into play.
Typically, the scam begins when tourists are spotted in front
of popular tourist destinations, for example, at the entrance of
the Grand Palace, Wat Pho, Wat Arun or the Erawan shrine. As they
wander around, the tourists are approached by a friendly stranger
who is an expert at initiating conversation.
From victims' accounts over the Internet, the stranger commonly
opens with a casual, "Where do you come from?" This allows
the scammer to learn a little about the tourist instantly. Sometimes
the con artist gives "helpful" (though wrong) information
such as, "The temple is closed today for a celebration."
Most tourists do not wish to appear rude, and many are eager at
the chance to interact with locals. They tend to pay attention
to the scammer, who may be male or female, and the conversation
flows from there. Before long the stranger recommends to the usually
novice traveller an alternative tourist destination, most likely
a temple which is not marked on standard travel guides.
At this point, another stranger, usually better-dressed than the
first, may appear on the scene, and eventually join in the conversation.
He or she will recommend to the tourist a souvenir shop (almost
always a jewelry store) worth visiting.
This shop will be described as a government-run export centre,
often in the last day of a big discount promotion exclusively for
tourists. After about 5 to 10 minutes of persuasive chit-chat,
the stranger will then offer to call a tuk-tuk for the tourists
to visit the alternate destination and then the jewelry shop, and
even go to the extreme of bargaining the fare. The tuk-tuk driver
in the end offers an extremely low fair, as of course he, along
with the stranger(s) will get a commission on whatever jewelry
the tourist may purchase.
At one famous tourist destination in the middle of Bangkok, novice
tourists are approached by scammers seeking to make a quick buck.
Once the tourists are in the tuk-tuk, the driver may claim that
he has given them a discounted fare because he will get a "petrol
coupon" from the jewelry store for taking them to visit. Without
a doubt, this is a clever way for the driver to gain some consideration
from the tourists and guarantee their visit to the jewelry store.
Eventually the tourists arrive at the jewelry store, where they
are greeted by professional but warm salespeople. Every manner
of sales tactic is employed, but primarily they are enticed by
the ridiculously attractive discounts. The offer is made to have
the purchased items parcelled to their home address, "to avoid
problems with customs or the risk of loss or damage during the
trip," and of course, to prompt the sale.
Victims commonly report spending 100,000 to 200,000 baht on necklaces,
rings and other accessories ornamented with precious stones. Payment
is made at the store, and tourists are then made to sign a purchase
contract that sets the terms and conditions for the transaction.
After the customers have made their purchases it normally takes
days or weeks before they have the chance to have them valued by
another jeweler. Then they realise they've paid far too much for
too little quality, and that the friendly stranger(s), the tuk-tuk
driver and the keen sales professionals they encountered were all
working collectively to make some quick money.
Eventually they may take some small comfort in learning they are
not alone when they read about the near-identical experiences of
a host of other victims of the gem scam posted on the Internet,
for example at http://www.2bangkok.com.
Scammers everywhere
One particularly lively account of the gem scam is provided by
an expatriate living in Bangkok who recently contacted Perspective.
The reader, a 51-year-old man who used to run a tour business in
Bangkok, complains, "There are too many tourists getting cheated
these days, and the authorities don't seem to care."
He says that many of his guests had complained of the constant
scamming they faced during their visit. "I had a young couple
tell me the Grand Palace was closed, and that it had been closed
3 years before on an earlier visit. They had visited Thailand twice
and did not get to see the Emerald Buddha!"
According to the voluntary source, scammers are working around
the entry to the Grand Palace in plain view of management and security,
and there are 30 or more scammers working the Erawan. He estimates
that they are approaching hundreds of tourists every day.
The source remarked that on his last flight into Thailand he observed
a welcome video message from the Tourism Authority of Thailand
(TAT) which did not offer any warnings to arriving tourists about
possible gem scams, and in fact, it suggested that tourists buy
gems in Thailand.
"Thousands of holidays are ruined by the devious, organised
crime teams lurking at every tourism site. Even taxis and tuk-tuks
are in on the scam. It's relentless," he said.
According to the source, tourists are hit on as soon as they arrive
at the airport, and a recent crackdown at the Suvarnabhumi airport
caught 900 scammers of various types working the arrival area - "who
then paid a 1,000 baht fine and were back at it immediately." A
news piece from the Bangkok Post confirms that in June and July
last year, 900 illegal taxi drivers and tour guides were arrested
at the airport.
Having been in Thailand for nearly two decades, the source says
he is shocked to discover the extent of the multi-layered scams
on tourists and regrets that some unfortunate tourists have no
idea how devious these scammers are.
Suspecting he is a tourist, on his frequent walks past the Erawan
Shrine the scammers approach him as well, telling him that they
are doctors, lawyers or teachers in their attempt to lure him into
the gem scam. He recently decided to photograph every scammer that
approached him, and now has around 20 photos of different individuals.
He explains that these individuals are all working together, communicating
by cell phone. In his words, "It is a very elaborate operation.
They are well dressed, polite and speak good English. They pretend
to be friendly Thais wanting to help lost tourists. Their goal
is to lie and scam everybody they meet."
He alleges that many of the scammers are off-duty tourist police
officers, and claims that two weeks ago he was attacked by scammers
when he took their pictures.
"I fled into the Central World store when they tried to attack
me. They had pulled the strap off my camera. This was recorded
on the Central World security video system.
"But even though the security cameras clearly show the attackers,
the police did nothing," he added. He hints that the security
guards at the Erawan Shrine, the Amarin Plaza, the Gaysorn, the
Erawan Plaza, the Central World, as well as members of the Thai
police, the Tourist Police and BTS Security are all aware of what
is going on.
"These security guards see the scammers all day, every day,
but do nothing to protect the tourists. I even see the guards talking
with them."
The source said he first contacted the TAT in June 2007 to report
the matter, and has sent the Tourist Assistance division of the
TAT two dozen letters since, some of which have included photographs
of the scammers, but the same group of people congregate around
the major tourist attractions every day.
He cautions that the gangs operate "at just about every tourism
site in Bangkok, and many taxis parked in front of hotels are also
plying the gem scam on visitors".
The official view
Mrs Niramol Plianjaroon, head of the Service Standard Development
Section, Bureau of Tourism Service Development, TAT, admitted that
the gem scam is not new to Thailand.
"Gem scams ranked first among all tourist complaints received
when the TAT was established in 2002," she confirmed, acknowledging
that they occur in the same fashion and are repeated time and again.
She thinks it is vital to address the matter to maintain Thailand's
image among tourists. "Certainly, the scam sends the message
that in Thailand, high prices are charged for low quality.
"Sellers should not seek to obtain impossible profit margins," she
added.
Mrs Niramol said both the TAT and the Tourist Police Division
offer victims assistance. Incidents can be directly reported at
the Tourist Police Division, or by filing a complaint at any branch
office of the TAT. Tourists who have travelled out of the country
can report to the Ministry of Foreign Affairs or the Ministry of
Commerce.
"Officers will then facilitate communication between the
sellers and the tourists to address the matter," remarked
Mrs Niramol.
Pol Maj-Gen Choochat Suwannakom, commander at the Tourist Police
Division, noted that tourists who have been victims of the gem
scam can get a refund of as much as 80% of the purchasing price
from the store, provided that the gems are in good condition and
no agreement in the sales contract is violated.
"Before, it would have been possible to get a total refund
for the tourists, but nowadays the jewelry stores have the customers
signing the sales contract which sets forth conditions for returning
the items," he said.
The commander said the jewelry stores that have been reported
are legally registered with the Ministry of Commerce.
He suggested that the gem scam persists because only limited action
can be taken.
For example, overcharging for gems is not technically considered
a crime, as the gems involved are not fakes. What's more, the value
of gem stones can vary tremendously, according to cut, clarity
or origin - and unlike gold, the prices are not standardised across
the world.
"The only legal action that can be taken against those involved
in the activity is a 1,000 baht fine, given on the basis that they
are intentionally troubling tourists," he observed.
Nevertheless, the commander said there has been a decrease in
gem scam cases in Bangkok, and commented that these days complaints
from tourists who have been mugged or have lost bags on inter-provincial
buses outnumber those who have fallen for the gem scam.
Data from the Tourist Police Division suggests that 62 gem scams
had been reported over the course of 2007, a significant drop from
the 83 cases reported in 2006. Most of the complaints have come
from Australian, Malaysian, Singaporean and Korean tourists against
the same handful of jewelry stores.
Pol Maj-Gen Choochat says his officers, both in uniform and in
casual clothes, constantly monitor tourist destinations to apprehend
the quick pitch artists waiting to lure tourists to these stores.
He remarked that tourists can contact the division's hotline,
1155, to report these incidents, or for assistance on any other
matters. He said that on-duty officers on the hotline are skilled
in the English and Chinese languages, and the division also has
contacts with volunteers from 40 other nations.
To be on the safe side, he advises, tourists should be selective
and only visit big shops with good reputation when purchasing precious
items like gems. "Tourists should always look for a guarantee
of the quality of the gems," Pol Maj-Gen Choochat said.
He added that members of the Thai Gems and Jewelry Association
normally abide by a code of practice, which includes a provision
for a refund of at least 80% up to 45 days after purchase.
I contacted the Thai Gems and Jewelry Association to discuss the
issue with them, but they have been unable to schedule an appointment
over the past 2 weeks.
Commander Choochat concluded by saying it was impossible to guarantee
that tourists looking for jewels wouldn't face any problems. After
all, jewelry stores are profit-based, like any other business.
Hence, in the end the phrase "Let the buyer beware" applies
to those interested in purchasing gems in Thailand, particularly
when they find themselves surrounded by overly friendly strangers.
TIPS FOR GEMS SHOPPERS IN THAILAND
In Thailand, bargains can be found on gems and jewelry, but one
should not take risks unless they have guarantees of good quality.
Real gem shops very rarely offer sales, and anything advertised
as "one day only" or "export special" is almost
certainly a scam.
It is impossible even for a qualified gemologist to tell the difference
between genuine and fake gems without the proper equipment. If
you buy gems without getting them tested independently, you are
buying solely on the word of the salesman or store.
The Thai government and the Tourism Authority of Thailand (TAT)
do not own, sponsor, promote, endorse or authorise any gems stores.
Anyone who says otherwise is lying.
It is recommended that customers look for after-sales services
offered by the jewelry trader. For example, certain accredited
gem stores will give customers a certificate upon their purchase,
and they will offer customers a money-back guarantee for the merchandise
if customers are not satisfied.
Help for Gem Scam victims:
Tourists who have been tricked into the gem scam should file their
complaint with the Tourist Police or the Tourism Authority of Thailand
(TAT).
The hotline for the Tourist Police is 1155. The head office is
located at 2170 Krungthep tower, New Petchaburi Road, Huay Khwang.
The number for the TAT call centre, open daily from 8am to 8pm,
is 1672. The TAT head office is located at 1600 New Petchaburi
Road, Makkasan.
Visit http://www.tourismthailand.org or http://www.tourist.police.go.th
for more information.
Bangkok Post - SIRIPORN SACHAMUNEEWONGSE
Mining The Same Victims
TWO INDIVIDUALS "RELOADING" PREVIOUS VICTIMS OF
GEMSTONE FRAUD - 10/94
The Federal Trade Commission has charged the perpetrators of
an allegedly deceptive telemarketing scheme that preyed on consumers
trying to sell gemstones as investments.
The FTC charged two Florida residents, Thomas E. O'Day and Jeffrey
L. Kelley, alleging that they misrepresented the cost of
their gemstone liquidation program and falsely promised that
they had buyers ready and willing to purchase the consumers'
gemstones.
The FTC alleged that consumers often paid thousands more for
the gemstone liquidation program than the amount represented (including
agreeing to purchase additional overpriced gems or coins from the
defendants), and that the defendants did not locate buyers for
consumers' gemstone collections.
The FTC is seeking consumer redress and a permanent prohibition
against the deceptive scheme. The FTC's complaint detailing the
charges names Thomas E. O'Day, doing business as Thomas O'Day (also
known as Thomas O'Day Company, Tom O'Day Company, Thomas O'Day & Associates,
or Tom O'Day & Associates) of Orlando, Florida, and Jeffrey
Kelley, also known as Jeff Barnett.
Since at least 1992, the FTC alleged, the defendants have contacted
consumers throughout the United States who had previously purchased
gemstones as investments, many of whom purchased overpriced gemstones
from the operators of other schemes and offered to liquidate consumers'
gemstone portfolios for a fee.
The defendants allegedly offered to advertise the consumers'
gemstone portfolio, and promised to fax copies of the gemstone
certificates to prospective buyers who responded to their ads.
Consumers were told that they would be charged a fee, usually $529
or one of their gemstones, for the advertising program, and would
be charged a 5 per cent commission to be paid at the closing of
the sale.
Thereafter, the complaint charges, the defendants misrepre sented
that:
-- they had identified buyers ready and willing to purchase consumers'
gemstone portfolios at a signifi- cant profit for the consumers,
and that a sale was imminent (in fact, the FTC alleged, in numerous
instances, the defendants had not identified a qualified buyer
willing to buy the consumer's gemstones at a significant profit,
and no sale was consummated).
-- consumers would not have to pay anything beyond the advertising
fee and commission for the defendants to sell the consumers' gemstone
portfolios (in numerous instances, the defendants allegedly pressured
consumers into buying additional coins or gemstones to "round
out" their portfolios, or into paying extra fees by claiming
that they had a buyer and the additional money was necessary to
close the sale); and
-- the coins or additional gemstones they sold consumers would
be liquidated at prices that equaled or exceeded the prices consumers
paid, and that the prices con sumers paid equaled or were close
to the prices at which the gems or coins could be liquidated through
a market sale (in fact, the FTC alleged, the defendants' victims
are left owning additional overpriced gemstones or coins which
they cannot liquidate at or close to their cost through a market
sale).
Thomas E. O'Day agreed to pay up to $350,000 for consumer
redress, related to charges arising from his role in an allegedly
deceptive telemarketing scheme. Jeffrey Kelley has pledged
$200,000.
Charges against Kelley are still pending.
The settlement also permanently prohibits O'Day or Kelley from
making misrepresentations regarding any material aspect of any
future telemarketing offer though they must also post a bond of
$1 million to protect future customers before marketing or liquidating
coins or gemstones, or before acquiring any interest in a business
that does so.
The order includes various reporting requirements that will assist
the FTC in monitoring their compliance and further prohibits Kelley
from using, or providing to any third party, his customer lists.
05/08/95 FTC File No. x95 0023 - Civil Action No. 94-1108-CIV-ORL-22 |
