How Maria and Jason lost $70,000 down the drain
First time investors, Maria and Jason, heard about the Paratoo and Lameeka investment scheme through Maria's friend of nearly 40 years. Genuinely excited about the returns she was getting on her investment with Steve La Rosa and Andrew Bell, she told them, 'It's a bit embarrassing the money I'm getting'.
Maria and Jason, both shop assistants and getting close to retiring, were interested. Maria, who describes herself and Jason as ordinary people, says they had never so much as owned a share before this, they'd never been in a position to. This seemed an opportunity too good to refuse.
Steve La Rosa told them that their investment would be used to trade in the 'overseas money market' and involved no risk whatsoever because it was guaranteed by the Bank of America. They could withdraw their capital at any time after the first 12 months.
The interest rate promised was remarkable: after La Rosa's commission (a hefty 40% of their return), they would still make 26% per annum on their initial investment. Jason says the interest rate didn't surprise him. He thought there was big money to be made in the money markets. After all, you hear about rich people making that sort of money all the time.
La Rosa helped the couple to arrange finance to borrow the money that they would invest (negative gear), all $70,000 of it.
Maria and Jason still rue the decision to borrow to finance their investment. Not only did they lose their capital, but they got stuck with paying the interest as well. And the interest really mounted up.
When the money coming back from the investment started to dry up, La Rosa said that it was due to the interference of the ASC (as ASIC was named at this time). This was one of many false stories fed to the investors by La Rosa and Bell, to keep them on side. 'We believed them,' says Jason.
He was very angry with the ASC for, as he thought then, ruining their chances. 'It seemed as if all the big investors could do what they liked, but the minute some small investors got in on the action, they got pounced on. That's how it felt.' Asked to come and give a statement to the ASC as part of its investigation, Jason agreed. 'I wanted to give my view that they should butt out.'
Maria and Jason hung in there with Bell almost until the end, through all his many excuses. 'You want to believe,' says Jason. 'You don't want to lose your money. After all, it's $70,000 down the drain.'
Of course, things look very different now. The truth eventually came out that the scheme wasn't real and Maria and Jason, along with the other investors, did assist the ASC with its investigation and the prosecutions of La Rosa and Bell.
Sitting in their modest home over a cup of tea, the two pensioners choose to tell their story in the hope that it will be a warning to others. 'You can't describe the effect that it's had on us', says Maria. When Jason's mother died in 1995, his inheritance was completely swallowed up by the debt. This was money that could have been put to very good use in their retirement. 'Still, to put things into perspective, we feel very fortunate that at least we've only lost money'. And a few dreams…
Jason says:
'As the old saying goes, "Anything that sounds too good to be true, probably is." Nothing is 100% sure. Only invest what you can afford to lose.'
Maria says:
'Be really, really careful before you invest. Get a second opinion from a professional not involved in the scheme.'
Steven Antonio La Rosa spent two years in jail and Noel Andrew Bell is serving a two years and ten month sentence after we took action.
This is a true story. The names of the investors have been changed at their request.
Our warnings
1 Maria and Jason were the victims of a ponzi scheme.
Part of the money deposited by early investors in such a scheme is used to pay their first dividend cheques or interest. These schemes only require a few people in their early stages to be successful. The swindler pays them dividends from the money the early investors pay in upfront. The early investors continue to be happy and invest more money and recommend it to their friend. But here's why the success doesn't last
2 A common trend with illegal fundraising schemes is that early on you are paid the interest that was promised.
Genuinely encouraged by the apparent success of their investment, early investors unwittingly advertise the scheme to friends and family who may then become involved. Often the people who make these recommendations to friends are respected members of clubs and other communities.
Read about other schemes in which people have lost their savings:
Affinity fraud: can it happen to you?
3 High returns invariably mean high risk.
Don't believe anyone who offers high returns that are 'guaranteed' and involve no risk. Higher returns = Higher risk
4 Negative gearing can be extremely expensive, increasing any losses you make.
Always seek independent professional advice before borrowing to finance an investment. Borrowing to invest
