Consumer literacy should be the number one priority of financial advisers everywhere, particularly in the wake of a corporate watchdog consumer alert highlighting some pie in the sky schemes.
The Mercorella investment scheme offers a return of 36 per cent a year in the first instance and up to 72 per cent for those who refer friends and acquaintances. There is also the option of splitting a cool $35 million with a Dr Paul Mbizala, who's got his hands on money belonging to investors in a US managed fund.
ASIC awards the most outrageous scheme as the Pie in the Sky winner.
"Pie in the sky financial schemes still devastate far too many people. They frequently use sophisticated props and hard-sell techniques that lure even financially experienced people," ASIC executive director of consumer protection Greg Tanzer says.
"The serious purpose behind these awards is to warn the public that get-rich-quick schemes promise the world but usually end in tears."
This year's winner of the Pie in the Sky Award is the Guiseppe Mercorella Ponzi scheme, which offered investors between 3 and 6 per cent a month returns. The illegal scheme received $216.9 million from investors, who ultimately lost $76 million. Mercorella is now serving a five-year jail term.
Many of the investors were from the Italian community in South Australia, who became aware of the scheme through friends and family.
Dazza, where have you been? Some investors mortgaged their homes to invest.
ASIC recommends investors deal with licensed financial providers to ensure rights are protected if something goes wrong.
