Securities

Indonesian Man Suspected of $630 Million Ponzi Scheme Involving Meat-Trading Company

While Ponzitracker usually reports on Ponzi schemes in the United States, a scheme recently uncovered int he Indo-Pacific region is drawing attention due to the severity of the alleged losses.  Indonesian authorities announced they had arrested a man they suspected of running a Ponzi scheme that had bilked its victims of $630 million since 2010.   Jaya Komara was arrested at a hotel in Purwakarta following a manhunt led by the special crimes unit of the Indonesian National Police.  Komara, who was arrested carrying a large amount of cash, is believed to have stashed most of his assets in Purwakarta and is currently being questioned there.

Komara owned Kooperasi Langit Biru, a meat-trading company that operated on a multi-level marketing program ("MLM").  MLM programs operate in a pyramid-like style, compensating sales agents not only for their personal sales but also for sales of other salespeople that they recruit.  Komara, who started out selling meat door-to-door in 2003, instituted a program in 2010 through a company, Transindo Jaya Komara, where investor funds could be used to purchase meat from producers and then sell to retailers.  In exchange, Komara offered exorbitant returns of 240% in just ten months.  The company continued to grow, and at point one had over 125,000 members.

However, the scheme imploded in June when Komara stopped paying dividends to investors and later disappeared.  As is the case with Ponzi schemes offering substantial rates of return, when the inflow of new investor funds cannot support the monthly "dividend" payments, the scheme unravels.  Authorities are still trying to account for the missing money.  

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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