RICHARD PIERSOL/Lincoln Journal Star | Posted: Tuesday, September 19, 2006 7:00 pm
A couple accused of bilking Nebraskans out of half a million dollars in an international pyramid scheme has been arrested in Malaysia by that country’s securities authorities, the Nebraska Department of Banking and Finance said.
The department issued a cease and desist order in June 2005 against an organization that called itself People in Profit System Inc., which the department had been investigating since January 2005.
The organization was a global Ponzi, or pyramid scheme, promoted as a Web-based private investment club by Bryan Marsden, a British subject living in Malaysia, and several others named in the department’s order, according to the department.
Marsden and his wife, Phan Sew Ken, were arrested in Malaysia earlier this month for their participation in the scheme, which investigators estimate netted them nearly $10 million illegally, the department said.
They’re in custody there and will be prosecuted there, said Nora Tallmon, spokeswoman for the department.
Ponzi, or pyramid schemes, are illegal to operate in Nebraska and elsewhere. They work by taking new investors’ money to pay off others who invested earlier in the scam. Most investors are usually left with nothing, while the organizers escape with the investments.
The department said its securities bureau first became aware of the organization’s presence in January 2005, but learned of an organized Internet attempt to form a “PIPS Club” in Nebraska later.
In June of last year, the department reported the organization offering investment products that promised from 5,000 to 14,000 percent annual interest returns on investors “loans” of $450 to $1,000, or lump-sum returns of almost $88,000 with more than $9,000 in dividends, “for the duration of their life.”
Approximately 70 people had responded to the scam in Nebraska by the time the department issued its cease and desist order last year. The department said its securities bureau received dozens of calls and eight formal complaints over the last year and a half from Nebraskans who claimed they lost a total of $500,000.
The department would not identify any of those who have claimed they lost money.
Their recovery of any money is uncertain.
“It will depend on a lot of factors, none of which we can predict at this time, said Jerry McFarland, a department securities analyst.
Other states and nations that were after those involved in the scheme were: Alaska, Texas, Iowa, Oregon, Pennsylvania, South Dakota, Missouri, Connecticut, Australia and Ireland.
“We want Nebraskans to know that this type of scam is common and ask them not to let their guard down,” said McFarland. “Pyramid schemes never pay off in the long run. As the scheme begins to collapse, victims are given a constant stream of flimsy excuses, double-talk or no response at all, while the operators of the schemes are pulling out and disappearing with others’ hard-earned money, or reinventing themselves under a new name—as Marsden did several times before his arrest.”
On the phone or on the Web: Nebraska Department of Banking and Finance:
(402)471-2171, toll free at (877)471-3445, or online at www.ndbf.org.
Reach Richard Piersol at 473-7241 or at dpiersol@journalstar.com