The Financial Markets Authority has listed a financial company popular with some Tongans as a scam.
The FMA urged people not to trade or invest with the company.
“We are concerned that Validus is operating in breach of the New Zealand financial markets legislation,” the Authority said.
“Validus is providing financial services in New Zealand without registration as a financial service provider as required by the Financial Service Providers (Registration and Dispute Resolution) Act 2008.
“We strongly recommend that investors do not trade or invest with entities that are not registered and/or licensed in New Zealand.”
The Tongan community has already been affected by scams, including pyramid schemes in which people have lost hundreds of thousands of dollars.
In June Kaniva News reported on a Onecoin scam that cost people thousands of dollars, including a woman who lost all her savings.
As we reported at the time, the Financial Markets Authority warned that scammers often took advantage of people’s desire to achieve financial goals such as owning a home, promising to help them ‘get rich quick’ with little or no risk of losing their money.
However, the FMA warned that if people handed over money it could be very hard to get it back. It said Pacific communities in New Zealand were more at-risk from investment scams.
Scammers often took advantage of close-knit community groups such as churches, convincing one member who then helps them convince others in the group.
Validus launched its services with an event at the Trusts arena in West Auckland on August 5.
Validus appears to be based in Dubai. It claims to offer a 500% return on investments in just 13 months, but it is clear that people are expected to keep selling the scheme to others to keep money coming in – what Validus calls “affiliate marketing.”
Returns on such schemes are only possible so long as new investors sign up. When people become aware of the nature of the scheme and stop investing, there is no more money and the scheme collapses, leaving everybody – except the scheme’s operators – out of pocket
Some Tongans have urged others to invest in the company and attend their seminars in Auckland.
They have claimed that the seminars and the presence of company staff in Auckland meant they were legitimate.
Some have even printed t-shirts with the name of Validus and distributed them to members of the Tongan community. They have also promoted it online.
Others have described the company as a scam because of the way they collected money and recruited people. They registered their members by collecting their identities, addresses and personal information before allowing them to deposit their money.
Validus describes itself on its website as a “training academy.”
It claims to offer a brokerage service registered in the Caribbean islands of St Vincent and the Grenadines, which have been described by the US State Department as a major centre for laundering drug money.
