‘Warner’ investors face fallout as FSC probe gets under way
‘WANT TO gain financial freedom – this opportunity is for you’, read a November advert to recruit new investors in the apparent failed ‘Warner’ scheme that the local financial regulator now aims to investigate.
The Financial Services Commission (FSC), which regulates the financial securities dealers and capital markets, wants to investigate the dismantled scheme, the disappearance of the website, and locals who solicited funds – knowingly or otherwise, from others, which can violate the securities law.
The regulator said Warner Jamaica Media Limited, otherwise called ‘Warner Media’, is not licensed by the FSC under the Securities Act, or any other law, in any capacity. The scheme plays on the false association with the legitimate media empire, Warner.
“Based on the allegations in the public domain regarding ‘Warner Media’, the FSC has initiated an investigation into the entity and will be collaborating with other law enforcement bodies in instances where there are indications of fraud and money laundering,” stated a notice from the FSC, which also blasted persons that solicited funds from others to invest in the scheme.
“To conduct securities business, persons and entities must be licensed by the FSC and a failure to be licensed is a breach of the Securities Act and a criminal offence.”
The FSC explained that schemes or opportunities that involve the payment of initial sums, with returns being based on the recruitment of new members, without any legitimate underlying investment activity, are hallmarks of fraudulent Ponzi or pyramid schemes and scams.
Earlier in the month, allegations emerged that several Jamaicans were conned out of cash by the scheme.
That reality hit when the website was taken down from the internet and viewers could no longer check their accounts, watch videos of the foreign-based leaders in glossy suits, or look at their gamified VIP levels.
The scheme worked by rewarding persons with an apparent monthly dividend on the purchase of so-called VIP levels. For instance, VIP level 1 costs US$60, VIP 2 US$200, VIP 3 US$500 and VIP4 US$1,500 and so on.
“My team has reached VIP 30 and Warner Media has really changed my life. It has helped me improve my passive income and I have been able to get my friends and family involved,” was the backdated testimony from an alleged local investor named Charmaine, and reposted on YouTube.
FALLOUT FOR CHARMAINE
These marketing schemes tend to instill the mantra of uplifting family and friends who are the new investors, while achieving financial freedom for the initial investor. Or, in Charmaine’s words: “Now I can live the way I want to live. And more than anything to be able to help others.”
Charmaine seems genuine in the video, but the fallout from the scheme could not only cost her funds, but also possible heartache from those who entrusted her.
The Warner scheme would have filtered across parts of the globe based on its online status with testimonials spoken in English and Spanish.
It echoes of the failed investment schemes in the early 2000s that spread across the Americas. Jamaicans lost between “US$1 billion to US$2 billion” which represented up to 12 per cent of GDP or the island’s total output, according to an International Monetary Fund (IMF) report entitled ‘Ponzi Schemes in the Caribbean’. The IMF report cited the cause as the rise and fall of unregulated schemes like “Olint, Word Wise, LewFam, Cash Plus, etc”.
Outside of Jamaica in the 2000s, other schemes included a few in Colombia that cost investors US$1 billion from entities “DRFE, DMG etc. Also Grenada from ‘SGL Holdings’ which cost US$30 million, and the US at US$50 billion arising from the ‘Madoff Investments Securities’,” the report stated.
“In several Caribbean states, unregulated investment schemes grew quickly, particularly during 2006-08, by claiming unusually high monthly returns and through a system of referrals by existing members,” stated the IMF report which added that the region remains somewhat resilient to these schemes.
“However, their impact has been greater in countries with weaker regulatory frameworks. This is illustrated by the well-known case of Albania, and by more recent and ongoing cases in the Caribbean, Colombia, and Lesotho,” added the IMF.