Pie in the Sky Award
The serious purpose behind this award is to warn you about financial scams. Scamsters frequently use sophisticated props and hard sell techniques that trap even financially experienced people.
Always deal with licensed Australian financial providers, because that way your rights are better protected if something goes wrong.
Awards for previous years
1st place
2008 Pie in the Sky Award winner
This year the award goes to a disturbing 'advanced fee fraud' scam. This email scam pleaded with people to help a Togo barrister access US$17 million from the estate of a man who along with his family was killed in the Boxing Day tsunami three years ago. This outrageous offer was just too good to be true.
According to the offer, people could get a share of the wealth by claiming to be the deceased's next of kin. To claim the wealth, you would need to respond to the email. The nature of this type of fraud is that you would need to pay a fee before you would receive the money. This is an advanced fee fraud where you would pay to receive nothing.
‘Of course there is no $17 million estate, and people were being scammed for the upfront fees’, said Ms Delia Rickard, ASIC’s Acting Executive Director of Consumer Protection.
Runners up
 | Pie In The Sky scheme | | How it worked |
2 |
The second-place getter is Instep Super.
Instep Super was advertising on television, radio and online offering returns on investment of superannuation funds between eight and 20 per cent.
The advertisements also claimed Instep Super was ‘the best performing superannuation fund in Australia’. | |
Simple! Just transfer your super savings into Instep Super.
Of course, Instep Super did not have an Australian financial services licence.
ASIC concluded that Instep Super did not have any reasonable basis for claiming to be the ‘best performing superannuation fund in Australia’. As a result the Instep claims were found to be misleading and deceptive. Fortunately, no one invested in Instep Super. |
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| 3 | The third-place getter is the Electroharvest.
This device supposedly recycled ‘ambient electromagnetic radiation back into usable household energy’ promising to cut ordinary Australians’ power bills by 37 per cent. | | Investors were invited to invest up to $40,000 with ‘guaranteed’ returns of at least 30 per cent per annum.
ASIC launched this fake scam on April Fool’s Day in 2007 to educate investors about how to identify and avoid financial scams. Anyone who tried to go ahead and invest was led to a page with advice about how to research investment offers and who to contact for help.
The fake website, www.electroharvest.com, has attracted more than 75,000 hits since it was launched in April 2007. |
Pie in the Sky awards for previous years
2007 | 2006 | 2005 | 2004 | 2003
2007
The 2007 winner is the Ponzi scheme operated by Guiseppe Mercorella that offered people between three and six per cent per month. Mr Mercorella’s illegal scheme received $216.9 million from investors who ultimately lost $76 million. Mr Mercorella is now serving a five year jail term on ASIC charges.
Many of the investors were from South Australia, and many from the local Italian community who became aware of the scheme through family and friends. This is typical of how many people become involved in ‘Ponzi’ schemes. Some investors mortgaged their homes to invest with Mr Mercorella. Read more about it
Runners up
| Pie In The Sky scheme | How to get it |
| A London man has $US34.5 million belonging to a US managed fund and he’s willing split it 50:50 with you. No risk, and the funds can never be traced. | Contact the writer, and he’ll discuss the deal.
A typical ‘advance fee’ fraud. You’ll be asked to pay various ‘handling’ and ‘administration’ fees until your patience or your money runs out. |
| Get a cheap one-way ticket out of Australia with New Flights Limited. | Email your ticket requirements.
A fake company, not registered with ASIC, uses stolen credit cards. (You can check company details for free on FIDO or through ASIC’s main website.) |
2006
ASIC’s award for 2006 goes to an illegal investment scheme promoted through wealth seminars throughout Australia. Operated by Mr Craig McKim, Pegasus Leveraged Options Group (Pegasus) lured approximately 90 unsuspecting investors and raised $3.7 million. Over $2.1 million of the funds raised were lost in personal gambling and other personal expenses by Mr McKim.
In the case of the Pegasus scheme, the NSW Supreme Court found investors were promised returns of up to 8% a week - figures described by the Court as 'astronomical'. Investors were even issued with a Certificate of Guarantee by a fictitious ‘International Investment and Securities Commission’.
Mr McKim was jailed in October 2005.
Runners up
| Pie In The Sky scheme | How to get it |
A firm of London solicitors is administering Princess Diana's estate which includes a lottery promotion.
You've won a slice of her inheritance. | Collect your winnings by contacting the writer.
This is, of course, 'advance fee' fraud having nothing to do with Princess Diana or her estate. You'll be asked to pay various 'handling' and 'administration' fees until your patience or your money runs out. |
Get into the action on the overseas share markets
'This stock's ready to explode. It's our hot pick this week. It can easily go up to $2.25 very fast here', says the email offering 'unparalleled investment research'. Recommended on 10 September 2005 at a price of US $0.80, the stock topped out at US $1.30 on 14 September, and then sank to a paltry US $0.39 by the end of 2005. | Buy shares recommended by unlicensed advisers.
Without a shred of protection, you could easily be taken to the cleaners. A time-honoured scam, these emails pump up interest in little-known offshore companies traded through international bulletin boards, so the promoters can dump their own shares quickly before the share price drops. |
Surprise! You own some valuable overseas shares.
If you want to double check, just contact the International Asset and Compliance Centre. | Just pay the fee to have these shares transferred to your name. Currently various restrictions prevent this.
No genuine investor protection agency exists. It's just another front set up to persuade you to pay the fees. |
2005
The winner is a so-called 'interest-free loan' that was offered to Queenslanders, with 220 people investing $2.4 million in The Carsworthy Scheme. People were told if they purchased a car through a car buyers club, and borrowed a little more from their financier and invested it offshore, the high returns would repay their car loans. In fact when the offshore investments failed to deliver promised returns, people were left to find their own repayments, often for very high loans which they would probably not have otherwise entered into.
Another case involved Wide-I Design Corporation, a company registered in Vanuatu, ETP Ventures Pty Ltd and Cyrus Strategies Pty Ltd where car or home loans were offered on a similar basis. In that case, ASIC's investigation found the unregistered managed investment schemes promoted the investment of Australian investors funds offshore, and raised at least $2.2 million.
ASIC's investigations found that these two separate schemes combined raised at least $4.6 million from around 400 investors, many of whom were members of church communities on the Sunshine Coast, Queensland.
These illegal investment schemes have since been wound up.
Runners up
| Pie In The Sky scheme | Here's how to get it |
| Why wait till you retire? Get your super early. Set up a self-managed super fund, invest offshore, and get a cheap loan from your own fund. Use the 'Comcash' superannuation scheme and invest through the Commonwealth of Dominica. | This scheme was closed down by ASIC. Such schemes are illegal and can involve heavy penalties, including tax penalties. |
| A Senegalese mortician has inherited a sum of money from a priest she used to work with in a morgue. You can get a slice of her inheritance. | Help collect the money with your identification. A typical ‘advance fee’ fraud, similar to a ‘Nigerian letter’. |
| Cash in on the booming Chinese economy. An Australian-based scheme has struck exclusive rights to supply gas meters to Chinese residential, commercial and industrial premises, and has the rights to install 'car monitoring devices'. Returns of up to 120 per cent on offer. | The illegal investment scheme, which people were advised to join, is now in liquidation, and two key figures were sentenced to jail, one subject to appeal, as a result of ASIC’s action. Unfortunately no evidence of such ‘rights’ could be found, investors were told that the factories were washed away in floods, and some of the money raised was found to have been used to buy luxury cars instead. |
2004
Did you pay real money to Lifewealth8, a ‘digital marketing company’, for ‘an outstanding life enrichment opportunity via the Internet’ that includes a simulated stock market and simulated shares?
A Sydney couple who refused to play nominated it for our 'Pie In The Sky' (PITS) award and it won our 2004 award for the most outrageous financial scheme of the past 12 months.
‘They went to great lengths to make the stock look interesting and attractive, but it looked just like a pyramid scheme in fancy-dress’, was how the nominating couple described the scheme.
Unfortunately, Lifewealth8’s simulated stock market isn’t all that’s simulated. One Australian player tried to cash out her gains, but Lifewealth8 made all sorts of excuses and did not pay up. Even the company’s basic registration details are ‘simulated’ or maybe just plain fake.
This scheme, when first nominated for our awards in 2003, claimed to be incorporated in Malta. The Maltese authorities informed ASIC that no such company was registered there. Today, Lifewealth8 claims to be registered as a company Wealth 8 Limited in the British Virgin Islands. The British Virgin Islands authorities have informed ASIC that no such company is registered there*.
By the way, the company president and founder claimed to hold an accountancy degree from Malta. The Maltese authorities also told us the local university had no record of giving an accountancy degree to the person concerned. Today, the president and founder does not tell us where he gained his accountancy degree.
‘Stock market games played with real money offer you none of the legal protections of genuine markets’, ASIC Executive Director of Consumer Protection, said.
‘If you want to invest, stick to the real thing where you can easily check company details, and get the protection of dealing through licensed markets and licensed financial services businesses’, our Director said.
‘Furthermore, because it’s a game and based overseas, it falls outside ASIC’s legal coverage.
‘It bears all the hallmarks of a pyramid scheme, based around incentive payments for getting other people to play. ASIC issued a warning to the public in March 2003 when we received complaints that Lifewealth8 was recruiting members in Australia.
‘Its nomination for a Pie in the Sky Award was one of the ways in which this first came to our attention’, he said.
‘The serious purpose behind these ‘PITS Awards’ is to warn the public. Financial scams still devastate far too many people. Scams frequently use sophisticated props and hard sell techniques that trap even financially experienced people.
‘After a period of low returns from genuine investments, consumers need to double their guard against scams and get-rich-quick schemes’, he said.
‘A common feature of all this and our runner up schemes is that they are all unlicensed offshore operations with the real prospect of losing your money and very little that can be done to get it back’, he said.
‘The message is that you should only deal with licensed Australian businesses, because that way,your rights are protected if something goes wrong. Investors who choose to deal with unlicensed overseas businesses, lose the protections afforded by the licensing regime. You can check ASIC’ investor and consumer website for free to make sure a business is licensed’, our Director said.
*Correction : This statement indicating that the British Virgin Islands authorities had informed ASIC that Wealth8 Limited was not incorporated in that jurisdiction was based on earlier advice received from those authorities. On 18 February 2004, the British Virgin Islands Financial Services Commission advised that Wealth8 Limited was in fact incorporated in that jurisdiction on 2 May 2003. ASIC apologises for this error.
Runners up
| Pie In The Sky scheme | Here's how to get it |
Make millions, help Saddam Hussein’s son.
Saddam Hussein’s little known son, Nassery, wants to get loot out of Iraq, and you can keep 20 per cent for your troubles. You just have to pay a few fees in advance to help the deal go through. | An ‘Iraqi’ version of the emails sent worldwide, commonly known as ‘Nigerian letters’. Contact your State police if you have been defrauded. |
New stocks for old.
Swap your worthless dot.com shares for blue chip stocks. Sounds good? They hit you for 'fees' and the blue chip stocks never arrive. | Offshore unlicensed ‘stockbrokers’ email or phone you out of the blue. Known organisations are named on our blacklist of illegal cold callers. |
Get rich, launder some money!
Become an illegal money launderer. Just let your bank account be used to shuffle money from place to place, and keep a slice as commission. | Offered through a website. Now closed down. |
Give up your day job, trade foreign currency.
Just do it from your own home. Anyone can make a fortune. | Just send your money offshore to Aragon Currency Management, an unlicensed company apparently based in Florida. Added to our blacklist of illegal cold callers. |
2003
You wanted to be rich, and this man promised it to you. Now with the trillions of dollars you’ve made, you can buy the whole world five times over! But surprise surprise, it’s not a legitimate offer – in fact, it’s the PITS. That’s why it wins our inaugural ‘Pie In The Sky’ award for 2003.
The 2003 winner is a so-called ‘high yield trading program’ offered by email by someone calling himself Adam Petersen. Move over Bill Gates, our winner ‘Adam Petersen’ is apparently the world’s richest man, and its most successful investor. He sends out emails saying he’s an ‘experienced high-yield trader’.
He claims: I have been a full time trader for the past 15 years. Throughout this time, profits have CONSISTENTLY EXCEEDED 890% percent annually (20% per month compounding)… Returns on a monthly basis may be significantly lower than this projection - or significantly higher!
Invest just US$1 for 15 years with Adam
‘Let’s assume Mr Petersen invested just one single US dollar 15 years ago’, ASIC Executive Director of Consumer Protection, Mr Peter Kell said when announcing the award.
‘If what he says is true, Mr Petersen’s total wealth should be about $179 trillion. Which is interesting, given that total world gross domestic product (GDP) reached only US$31 trillion in 2001 according to World Bank figures - a mere trifle in comparison!’, Mr Kell said.
Perhaps Mr Petersen keeps his breathtaking fortune on another planet to escape publicity … his past investment returns are certainly out of this world.
Warnings from regulators around the world
‘Authorities around the world regard so-called ‘high yield’ trading programs as a total fabrication, and issue regular warnings against them’, Mr Kell said.
‘High yield trading programs usually offer a get-rich-quick scheme for trading international bonds with global banks. Cloaked in secrecy and using a mumbo-jumbo of legal and financial terms, they pretend to offer special access to global high finance’, he said.
Even Mr Petersen himself acknowledges that some people in his line of business are less than reputable. His e-mail says ‘…it has angered me to see the way unscrupulous individuals have tainted this arena and taken advantage of people.’
ASIC is equally concerned, and would be happy to meet Mr Petersen to discuss the matter further at any of our offices around Australia.
Only deal with licensed Australian businesses
You should only deal with licensed Australian businesses, because that way your rights are protected if something goes wrong. Make sure you check that a business is licensed before you deal with it. Read why FIDO suggests you take advantage of the laws that protect you from scams.
Runners up
| Pie In The Sky scheme | Here's how you get it |
| Why wait for your super till you retire? Get it now and buy that car, boat or your business. | No longer offered, because ASIC stopped the advertising which we found misleading and deceptive. |
| Want a slice of $8.35 million? Claim the private bank account of a deceased person whose name is the same as yours. | Contact James in London, and split the proceeds. |
| Get 1000% return in foreign exchange trading. | It’s easy. Forget the MBA! Jason will get you into his 2 day FOREX trading course. |
| Make a fortune building a world business centre in Krasnoyarsk, Russia. Land’s going dirt cheap. | Just send your share of US$25-50 million to Dimitry in Russia. He’s already bought the land. |
How to nominate a scam for the Pie In The Sky Award
Anyone can nominate entries for ASIC’s Pie In The Sky Awards. We’ll give you $100 prize money for an entry that wins an award. If you know about an outrageous, far-fetched or unbelievable financial scam, here's what to do:
1. Check whether the scam qualifies for the Pie In The Sky Awards.
| YES | NO |
To qualify for the Pie In The Sky Awards, a scam must be within ASIC's responsibilities.
We cover:
- consumer protection for investments
- investment advice
- superannuation
- insurance
- deposit taking
- credit/borrowing.
| Some scams don't qualify for the Pie In The Sky Awards because they are outside ASIC's responsibilities. These scams include:
- Nigerian scams
- lottery scams
- pyramid marketing schemes.
See schemes outside ASIC's powers for details of who to contact about these scams. |
| 2. | If the scam qualifies for the Pie In The Sky Awards, tell us about it (in around 100 words or less if you can). |
| 3. | Email your entry to pieinthesky@asic.gov.au. Or fax hardcopy entries to 02 9911 2642. |
| Because we receive so many entries, we're unable to personally reply to your email or fax. Throughout the year, we will publish entries that are in the running to win the annual Pie In The Sky Award on this page. We may edit your entry for clarity or length. |
Complaining about a scam
The information you give us about financial scams is important. It helps us catch the operators of shonky schemes and to shut them down. Our complaints section reviews entries for the Pie In The Sky Awards for information about scams.
You can lodge a formal complaint with us about a financial scam. Some scams use the language of "financial investments", but they are outside ASIC's responsibilities because they involve sales offers for non-financial consumer goods and services. Read schemes outside ASIC's powers for details of who to contact about these scams before you fill in our online complaints form.
Our internet safety checks
Before you invest, protect yourself by doing a free search of our databases. Find out:
- if the company you want to invest in exists and has an offer document such as a prospectus or product disclosure statement, sometimes called a "PDS"
- if a company running a managed investment scheme has a licence, and
- if your adviser is licensed.
The Gull Awards
The Gull Awards was the forerunner to our 'Pie In The Sky Awards'. We launched our Gulls in 1999 to help identify and expose scams, swindlers or misleading and deceptive conduct.
Read FIDO's other warnings and stories of financial scams
 | Keep in touch with the latest information for people with investments, superannuation, insurance and deposit accounts by getting our free monthly email newsletter, FIDO News. |
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FIDO Website: Printed 08/22/2008
