Is the Profitable Group a scam?

There was a report on 29 May 2010 in Today Online of 12 disgruntled investors turning up at the office of the UK land banking company Profitable Group to demand their owed payouts of around $700,000. They claimed they took this drastic step after their complaints to Profitable Group management were ignored.

This was followed up by another report on 1 June 2010 of an investor suing Profitable Group to recover $31,500 overdue by nearly a year.

Complaints and misgivings about the Profitable Group as a scam have been brewing in online forums since 2009, which have since spilled over into offline protests at the Speaker’s Corner by over 40 affected investors on 12 Jun 2010.

Profitable Group protests at Speaker's Corner

Source: Straits Times

The only surprise is that it took so long for people to realise that not all is right with the Profitable Group. Having a large marketing budget to advertise on the ESPN Star Sports’s football channel and getting the endorsements of celebrity hosts (ex-Liverpool player Steve McMahon and ex-Manchester United captain Bryan Robson) do not make a company credible.

A quick check with Singapore’s Accounting and Corporate Regulatory Authority (ACRA) revealed that Profitable Plots Pte Ltd was first registered in 2005. Strangely enough, there was no record of the “Profitable Group” in Singapore or UK databases.

A spot of online investigation uncovered more dirt. UK newspaper The Guardian’s consumer reporter reported in Feb 2009 that the UK-based Profitable Plot Company Ltd had already gone into liquidation in 2008 for “failing to produce accounts”. They were promoting land which was designated as “green belt”.

(A “green belt” is land which is sandwiched between urban and rural areas, and is designed to stop urban sprawl. These land have tight planning restrictions on them and therefore highly unlikely to be developed. To overcome these restrictions, a land development company has to overcome objections at different levels of government. So the possibility of development is practically zero.)

A check with company credit report company UK Data confirmed that The Profitable Plot Company Ltd has already been dissolved.

The Profitable Plot’s woes weren’t confined to UK alone. Their subsidiary Profitable Plots Sdn Bhd in Malaysia were raided in Oct 2008 for “offering investments in illegal land investment schemes”.

My suspicions were raised by the Profitable Group’s website. I first visited it when I wanted to purchase tickets for the Liverpool football match in Singapore in May 2009. The website was poorly designed and I couldn’t find any information on how to buy. My friend eventually managed to buy the tickets for us.

(Why is an investment company in the business of organising football matches? The coordination and traffic management on match day were poor, highlighting their lack of experience in event management. They even played the Liverpool club anthem “You’ll never walk alone” twice, but failed to broadcast the Singapore anthem when the Singapore national team marched in, displaying blatant disrespect for the host nation.)

On their “Word from the Board” page, they claimed that “we are not an investment fund; we are not financial advisors” and that “not one client has ever lost money”. That should have been an early red flag.

Source: Profitable Group web site

Source: Profitable Group web site

I then explored the rest of the offerings from the Profitable Group, and I was especially intrigued by the Entegros smart client. I had seen the TV advertisement, read the technical information and marketing materials on their website, and still had absolutely no clue how it worked.

The same goes for the Boron-CLS fuel lubricant. There were many technical reports available for download, but I couldn’t make sense of the graphs at all.

I am a reasonably well educated and tech-savvy person. If I can’t understand the information, it’s not my fault.

Rule number one: if a company’s products and services are too complex to understand, it usually means they have something to hide.

The only part that was comprehensible was how investing money with them would bring you incredibly high returns. At one point, they were advertising daily returns of 1% to 9%.

Rule number two: if something sounds too good to be true, it probably is.

For what was supposedly an internationally renowned company, there was a shocking lack of contact information on the website. I couldn’t find a telephone number nor their office address. They only had an e-mail contact form.

Rule number three: if a company says “don’t call me, I’ll call you”, don’t expect to hear from them when something goes wrong.

My sympathies go out to all those investors who have been conned, there are probably many more who are too embarrassed to speak out. At the same time, I am disappointed at the lack of protection and regulation by the authorities. Land investment is not regulated by the Monetary Authority of Singapore (MAS) nor is it under the purview of the Small Claims Tribunal or Consumer Association of Singapore (CASE). A land banking investor simply has no legal recourse in Singapore when things go awry.

It is simply not enough to say “buyer beware”. These scams are happening with alarming regularity, and should be stamped out to avoid any damage to Singapore’s reputation as an aspiring financial hub. The ex-CEO of NTUC Income Mr Tan Kin Lian has written widely on the need for regulation of the land banking industry in Singapore.

I’ll end off with a screenshot of Google’s word completion capability:

Google helpfully suggested “profitable group scam”, “profitable group Singapore scam”, and “profitable group complaints” in the top four results if you type in “Profitable Group”.

[Updated on 9 Jun 2010: Additional information on Profitable Plot Company Ltd and Profitable Plot Sdn Bhd.

Updated on 13 Jun 2010: Added info on Speaker’s Corner protest, Mr Tan Kin Lian, and Profitable Group web site screen shot.]

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About Hun Boon

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21 Responses to Is the Profitable Group a scam?

  1. Pingback: Walton International feeling the heat | Hun Boon's Blog

  2. james says:

    This is an old scam that has been around in the uk for years , essentially its not illegal , but what you do when you invest is not actaully buy a piece of land , you buy shares in a company that owns a piece of land – the trick is of course you don”t know who you are buying the land from ( not profitable group , but likely to be a buddy !! ) – and of course you can”t get a return because the land is already worth less than you paid for it and will never go up , because they won”t get permission to build on it –

    Legally you have problems , maybe misrepresentation , – but its caveat emptor – m view is if you wanna invest in property always stay in a country you know well , like singapore .

    Amazing that the footballers didn”t seem to realise what they were endorsing – maybe sue them ?

    • Hun Boon says:

      thanks James, I didn’t realise that investors were buying shares in the company instead of the land directly. And I’m not sure how many investors were aware of this distinction, or the legal implications of it?

      Interesting point about suing celebrity endorsers: there was a lot of debate in China about holding endorsers responsible for the products, in the wake of the tainted milk scandal. Celebrities are definitely more cautious now, but probably still not legally responsible.

  3. Steven says:

    i have a good friend working for them, and I almost bought some of their products because of the relationship. For once I am thankful for my indecisiveness, or whatever you call it. When they were doing well initially, he managed to attract lots of investors. I recall him telling me that there was this doctor that was very cash rich and invested hundred of thousands of dollars with him.

    My friend was very careful and reasonably street wise, so for him to believe in PP’s model and even decided to work for them must definitely indicate that they told a very compeling story. In fact, I believe all the PP employees were suchI great believers that they even invested their commission and salary into the very products that they were selling.

    My friend also told me that he observed that PP was a credible company with high integrity. There were several cases where clients ran into financial difficulties and requested to withdraw their investment before due dates and PP was flexible to bend the rules to provide refunds.

    Some time in 2009 when Sunshine Empire scam was busted, we were discussing if PP is also another case of ponzi scheme. There were definitely some similarities between Sunshine and PP but PP had a more substantiable business model behind the schemes
    than Sunshine.

    I am not sure about the previous comment about investors were dubed into buying shares of the company rather than the actual underlying products because for the UK land investment schemes, I did indeed see a title deed of the parcel of land that one of the investor bought from my friend. However, how true is the land ready for development in the near future as promised by PP, could be the key of the misrepretation. PP would train their sales people to tell potential investors’ that they use the same consultant as the UK government, and they buy land as recommended by these consultants. In other words, the consultants act as a double agent, first advising the UK government of which plot of lands to best develop, then provide that same info to PP. This paints an impression to the potential investor that the land that PP purchase has a high chance of getting permission for development.

    After all these issues, I just caught up with my friend again, and he informed me that he is leaving PP soon. I guess he’s a victim himself and have lot’s of his hard earned money locked up in PP’s products. With his confidence for the product he is selling shaken, he can never do well in the sales anymore.

    • Hun Boon says:

      Steven, thanks for sharing the story about your friend. It’s not just the customers that get duped but also the employees too.

      Your comment about the UK government consultant just attests to the numerous hazards in investing in overseas properties. Customers should verify such statements with independent sources, but most won’t know how to go about it.

      It’s yet another argument for stronger consumer protection in Singapore. Unless the government acts, there will be future Profitable Group incidents in the future.

      • John says:

        Good question. ‘Unless the (Singapore) government acts!’
        I sense that the modern day Singapore govt is taking a laissez faire approach towards many issues. They just ‘don’t care’ until very big issues surface.
        e.g. those forex ‘education’ seminars, etc. and their presenters. They can just add anyhow titles they want, PhD (Dr Clemen Chiang, remember. I have seen him writing numerous times in the ST using that title), CFA, MBA, 1st class honours, etc
        Who to check on them?
        and the best is one of the ministers has said leaving people using PhD freely to the market demand and supply forces.

  4. hoonkeeman says:

    Any investor should do their own check before investing in anything.

    Don’t be implusive – Do not let them pressurise you into parting with your money. Many times, the sales people will make you tired by giving lengthy talks and presentation and at the end of the presentation, they will go attacked you one on one. Just be brave and say no and walk away, is your money anyway. If you choose to use it on some lavish items, it your choice.

    I have been to the Profitable Group talk and I cannot believe on all the things they say. I simply went there for some free snacks and coffee, 🙂 They keep asking me to sign up on that day and I say I need to discuss first. But ignore them subsequently.

    Also, Multi Level Marketing companies are other companys that you need to be aware of. They will protray a lot of successful sales person earning big bucks from doing the business. Just remember that their success comes from your contributions. They will use hard sell tactics and will keep calling you. There was once a MLM person keep calling mt to invest $10,000 and keep saying why am I hesitating. My answer: I am not hesitating from the start when you told me about this.

    Some tell tale signs that a company is a scam:
    – Ask the person to tell you what is the registered company name and you can do a quick check from the ACRA website. There was once a sales person don’t even know what is the registered company name. She told me a name and I do a quick search and I told her that is not registered. After a while, she told me a company name which does not even sound anything near to the brand that they marketing. She told me they are from a chain of hotels worldwide. What a crappy registered name they have.

    • Larry says:

      In 2008 I attended PP or PG Seminar at Suntec City if I’m not wrong.
      Most of their consultants were of a particular race group besides Chinese.
      They form batches of internal staff or friends doing a mock up on the sales front as though to give an impression that their product selling like hot cakes (from what I gathered from some smart investors). I had a good laugh and shook my head only to realise the the latest happenings.
      Guess what?, I ignored their approach as though they do not exist.

  5. B.Ang says:

    I blogged about landbanking in the news as well.

    http://mywealthmodel.blogspot.com/2010/06/land-banking-in-spotlight-again.html

    http://mywealthmodel.blogspot.com/2010/05/6million-lost-in-land-banking.html

    Did you know this of landbanking?

    “Land-banking investments involve investors acquiring direct interests in real estate rather than in securities related to real estate and, as such, fall outside the scope of the Securities & Futures Act (SFA) and Financial Advisers Act (FAA)”
    – spokesman for the Monetary Authority of Singapore

    Before parting with any money, you should check Monetary Authority of Singapore’s (MAS) Investor Alert List http://www.moneysense.gov.sg/check_our_list/Consumer_Portal_IAL.html

  6. Joe P says:

    In case people not aware Profitable Group are now bring investigated by the CAD commercial affairs department in Singapore.

  7. Joe P says:

    There is a site for Profitable Group victims
    http://profitable-group-victims.blogspot.com/

    Over 100 people have already posted.

  8. Joe P says:

    Profitable Group website seems to have gone off line . Hopefully this is a clear sign that this era has come to an end.

  9. Hun Boon says:

    PP is a spent force now. I’m just wondering where the scamsters will target next. Maybe forex/options trading with “guaranteed profits”?

  10. Steve Fual says:

    The is another land banking company operating in Singapore which is currently offering UK greenbelt land plots worth S$ 6 per square metre for S$ 300 per square metre. They are suggesting but not committing that this land could be converted to building land within 6 years. Presumably there is no law against overcharging for useless UK land plots but there should be legal controls if commission based salespeople get over enthusiastic in their promotion of the future potential. These people are completely unregulated and can say whatever they want. There is no chance of return on investment on these land plots and most investors will lose most or all of their investment.
    Presumably

  11. Pingback: SIAS finally acts on Profitable Plots issue | Hun Boon's Blog

  12. Paul Hewitt says:

    Hello. I’m researching Profitable Group’s organisation and sponsorship of Liverpool FC’s 2009 Asian tour. Do you know if the PG/Liverpool partnership was just for the tour, or were their links longer term? Thanks.

  13. Oscar says:

    My girlfriend has informed me that on a vacation in Singapore ’08 Steve McMahon Jr claimed both he and his father are employed to communicate, promote and sell ‘opportunities’ in Profitable Group. It doesn’t take a corporate lawyer to realise that a company called ‘profitable’ is destined for success like other such entities as ‘titanic’, ‘poseidon’, ‘great leap forward’, ‘Fernando Torres’, ‘My name is prince mmfufu and I require $n to give you $n x10000’ and ‘NINJA 10yr Interest Free 110% profit guaranteed Mid-West Property Conference to find out secrets for you today!’

    Dont let the wannabe philanderer & footballer hide behind his daddy and his minimal knowledge of separate legal entity. In my view if a promoter, let alone negotiator, manager or director, claims to be acting on behalf of the company, and speaking for the company then they must provide justification for their decisions. If they they cant do that then they’ve failed their various duties to shareholders. Ooops not just my view, but the High Court of Australia (not binding but often visionary) on 3 May 2012, ASIC v Meredith Hellicar & Ors [2012] HCA 17, agreed promotional material that non-exec directors put their name to, may attract liability if the material misleads shareholders.

    Legalese aside, I’m particularly outraged (proper outrage, not your typical FOX/grannie typewriter sort) that a demonstrable fraudster, albeit forever a scion, flagrantly gallivants poolside with stolen (whether larceny, embezzlement or both) monies.

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