Character Risk Assessment: Investigation revealing a potential $44 million Ponzi scheme Written by Kaizen Enterprises Pty Ltd
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Case Studies

 

Client: Private investor

Project: To conduct a risk assessment regarding On The Go Transport Pty Ltd

Service: Character Risk Assessment

Key achievements:

  • Identified the likelihood of a Ponzi scheme
  • Worked closely with The Age to expose the alleged fraud
  • Scheme shut down because of the publicity
  • Promoter later sentenced to 12 years jail for defrauding investors (December 2008)

Synopsis:

Kaizen Enterprises was engaged in 2004 by a potential investor to provide a risk assessment of a Melbourne investment scheme 'On The Go Transport Pty Ltd'.

We immediately discovered issues that suggested the possibility of a Ponzi scheme. On The Go Transport had several characteristics which were similar to earlier frauds, including:

  • A previously unknown businessman developing an instant high profile;
  • The establishment of that profile by word of mouth, supported by beaming press reports, always with photos of the person;
  • A targeted focus on specific ethnic or religious communities, in this case the Turkish-Cypriot/Muslim community; and
  • Clearly surreal claims that would appeal to people looking for significant instant returns.

Further investigation revealed that the trucking business appeared to be running at a significant loss, which caused us to question where the money for continued operations was coming from. There also seemed to be significant expenditure in keeping up the appearance of an ‘empire’. On visiting the trucking headquarters and company offices, it was clear to us that there was no radio mast.  Experience suggested that there should have been a radio mast present to enable communication with the supposed trucking fleet.

The company claimed to have 236 trucks, which would have equated to a capitalisation of around $9 million. We were told that the company intended to obtain an additional $35 million from investors, and, alarmed by the potential for substantial investor losses, we contacted the Australian Securities and Investment Commission (ASIC) to report the fraudulent scheme.

Throughout our assignment, our principal, Ian James, worked closely with David Elias, a journalist at The Age, regarding the matter. The Age published a number of investigatory reports into On The Go Transport, and its promoter, ‘Prince Omar Yusuf’, in November 2004 and April 2005. The Victorian Police subsequently opened an investigation into the company and uncovered a complex multi-million dollar fraud. Yusuf then fled to Malaysia. In December 2008 Yusuf returned to Victoria, where he was arrested and plead guilty to defrauding investors of $7.29 million and was sentenced to 12 years imprisonment.

Further reading:

  1. Supreme Court sentencing report, December 2008 (The Age)
  2. Initial investigation, November 2004 (The Age)
  3. Follow-up report, November 2004 (Sydney Morning Herald)
  4. Further investigation, April 2005 (The Age) 
  5. Yusuf departs Australia, April 2005 (The Age)