By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamians were yesterday urged to become "more savvy and sceptical" to prevent themselves becoming victims of an "uptick" in financial scams as criminals seek to exploit the COVID-19 pandemic.

Kendrick Christie, the Crowe Bahamas accountant and partner, and a past president of the local Association of Certified Fraud Examiners (ACFE) chapter, told Tribune Business that too many persons "tend to just put our guard down" when get-rich-quick schemes are presented to them.

He warned Bahamians to be especially cautious if something appears too good to be true, and said alarm bells should be triggered by any investment-related scheme offering huge rates of return; requiring them to find other persons to invest in it; or levying penalty fees for the withdrawal of their funds.

Mr Christie said these were classic signs of a pyramid or Ponzi-type fraud, which typically promise or guarantee investors a high return, claiming they can turn a small investment into a much larger sum of money within a short period of time - but without saying how.

They use ‘new investor’ monies to meet the promised payments to investors who entered the scheme earlier, relying on attracting a high number of new participants on a daily basis to stay afloat. Eventually, when they are unable to attract enough money to meet the promised pay-outs, the scheme collapses.

The Crowe Bahamas accountant, adding that some persons participated in such schemes while suspecting they were scams, but believing they could withdraw their money and profit before it failed, said the ACFE globally had seen a 90 percent increase in scams and frauds, including cyber crime, as a result of the COVID-19 pandemic.

"There's a lot of desperation, a lot of persons out of a job or who have lost income," Mr Christie said, adding that this made Bahamians and others more vulnerable to "falling for them". He added: "I think people have to slow it down and ask themselves if it's really believable, and why do I have to bring other people in. We are already seeing an increase."

Mr Christie said COVID-19 had increasingly driven financial frauds and scams online due to the restrictions imposed on 'bricks and mortar' operations, which often made it easier for those behind them to cover their tracks once such schemes collapsed and avoid detection/prosecution. It also makes it harder to recover the money taken.

In a close-knit society, with interlocking family relationships and where everyone knows everyone else, social media and ‘word of mouth’ have often proven effective tools for sucking hundreds of Bahamians into unregulated investment schemes.

"What we're lacking is research," Mr Christie argued yesterday. "When persons approach us, question them more and be more sceptical. Go online. The Bahamas is one of the most online countries. Type in the name of the company and person, get a feel for what it's about and what people are saying. If you are getting too much for too little you've got to think it's a scam."

Craig A. 'Tony' Gomez, the Baker Tilly Gomez accountant and partner, told Tribune Business that those seeking "short-term monetary satisfaction" - especially among the unemployment and loss of income caused by COVID-19 - were likely to be particular targets for criminals operating such schemes.

"Those schemes are very attractive for those looking for significant gains in a short period," he added. "We are likely to see more of them as time goes by. Why? People are financially frustrated. Financially frustrated people are looking for returns. People are looking for financial relief. The Bahamas, because of its apparent per capita wealth, will always be a target for these kind of schemes."

Both accountants spoke out after the Securities Commission, the capital markets and investment funds regulator, warned this week that there was an increase in social media and websites calling on Bahamians to joins schemes where an individual pays a certain sum of money to join, and then in turn must solicit and encourage others to join to receive a large cash pay-out.

The regulator added that a group calling itself ‘Foundation Family Sou Sou’, based in the US, has launched a financial scheme they claim is linked to traditional African sou sous, similar to Bahamian asues.

This has been deployed in The Bahamas under the names ‘Fire Starter’, ‘Magnolias Jr’, ‘The Winning Team’, ‘Ujamma Family & Friends Share Plan’, ‘242 Financial Partners’ and ‘Everybody Eats’. This programme, in its various forms, carries the same characteristics of fraudulent Ponzi and/or pyramid schemes.