June 30, 2022

One of the most common financial frauds is the “Ponzi scheme,” which promises “guaranteed” high returns, higher than those offered by other financial institutions and businesses. To pay the original investors, payments from new investors are usually used to pay profits to the scheme’s operators and pay a return to prior investors. This cycle continues until the scheme can longer find new investors or if too many investors try to cash out their investment. In almost all cases, investors lose everything.

Thailand is no stranger to Ponzi schemes, especially in real estate and currency/stock investments. It got so bad in the 1980s that the government stepped in with a strange-sounding law called “The Emergency Decree on Borrowings which Constitutes Fraud to the Public B.E. 2527”, also known as the Anti-Ponzi Law.

Ponzi Schemes

The Anti-Ponzi law primarily covers offences that are like a classic Ponzi scheme, where someone publicly presents a scheme with a guarantee of attractive returns higher than traditional investments. It sets a maximum interest rate anyone can offer to investors as that offered by financial institutions which are currently capped at 3% per year. Any type of investment offering a return over this could fall foul of the Anti-Ponzi law.

Generally, to be found guilty, a defendant must know or should have known that the money received from recent investors was to be diverted to compensate earlier investors and knowingly failed to conduct a…

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