Thai Property Investment Scams

Why Thai Property Investment Scams Target Foreigners

Thailand runs on relationships, prestige, loyalty, money and the law – in that order, which often makes Thai property investment scams successful.Unless you’re a member of the Thai ‘club’ it’s wise to have a prestigious friend who is, because Thai Property Investment Scams are common.  The (current) experience of farang friend who owns a restaurant shows why: his restaurant has been a great success in its first year and, last month, the landlord announced he was doubling the rent. “But we have a 5-year lease agreement,” stammered my friend, caught off guard. The socially prominent owner made it clear that the increase was non-negotiable, and my friend realized that he was vulnerable to extra-legal actions (like cutting off the electricity) and recourse to the courts was hopeless since the case would take months to reach a magistrate and the landlord’s prestige would make it difficult to win a judgement.

My friend had fallen in love with the restaurant property – it was an abandoned karaoke bar when he found it – that he had brushed aside my suggestion of involving a third party to oversee the deal. After all, wha could go wrong? The owner is one of the most socially prominent women in northern Thailand, after all (and my friend is an upper-class Brit). He and his wife signed a standard lease agreement and proceeded to invest their life savings fitting out the building and grounds. Realizing that the landlord could redouble their rent whenever she chooses they’re now raising money from friends and relations to move the restaurant into town.

My friend’s mistake was imagining that (a) the law protected him and (b) his social status would make him the landlord’s peer. He was wrong on both counts. If you’re not a member of the Thai ‘club’ and you’re involved in a Thai transaction, third parties can save the day.

Thai society is intensely nationalistic and clannish (so are most: American society’s acceptance of foreigners is an outlier). It’s a club that you’re born into and your birth determines your status within it. So if you’re going to do any serious business – even a long-term lease – in Thailand it’s wise to have a third party present and on your side. That way, if the other party to your agreement attempts to abrogate it, your friend can approach them as a peer or, better still, a social superior and straighten things out for you. In reality, their presence at the consummation of the agreement will prevent such shenanigans – and that’s what you really want. Third parties’ participation is preventive.

How do you find such people? In Thailand it’s usually accomplished through gift-giving. Forced to give up driving after a heart attack, a friend recently donated his new BMW motorbike to the local Chief of Police, who bestowed it on an outstanding young officer. The officer, thrilled to own such a prestigious thing, showed it off to his fellows and praised his chief’s generosity. His chief repaid my client by handing him his business card: “Just show this to anyone who bothers you and tell them to call my personal number at the bottom”.  The friend was subsequently in a fender bender  and the other driver, who was drunk, demanded to be compensated despite being clearly in the wrong. Following the Chief’s instructions my friend flashed the card and the angry man vanished.

Property Law in Thailand isn’t what we’re used to at home so, instead of complaining, I recommend always using a third party when you’re transacting business. Sounds funny, I know, but that’s how Thailand works.

We can’t all give pistols to police chiefs, of course. But we can be on the lookout for opportunities to prove our good heart (jai ren) to influential members of Thai society. And we’ve now started issuing such get-out-of-jail cards to all our clients, just as a precaution.

Thai property investment scams are like property investment scams in Australia, China, or the USA. The thing to remember is that they exist and you can take precautions to prevent being ripped off.

Property investment is supposed to be a safe investment but, in Thailand today, pensioners are being cheated out of their life savings through investing in real estate. These unfortunate individuals are used to there being a substantial amount of rules and laws under which financial advisors and the like must operate, along with a substantial amount of education being required to become such a professional. Outside Europe, these laws are far from being a given, and (if they exist) they are frequently “overlooked” without there being real consequence. Companies in Thailand, for example, can operate without proper registration with the Thai authorities, and seldom do they face real persecution for doing so, despite this quite obviously being completely illegal.

The Harlequin company, for example, which has operated in both Thailand and the Caribbean, took in a huge amount of cash for several developments which were never built. Under the direction of Richard Haughton (President of the Pattaya – Jomtien Rotary Club) the land meant for development was put into a company called Headland Holdings. Thereafter, the already-sold properties were mortgaged to the Kasikorn Bank.

Subsequent involvement by lawyers from an embassy-recommended legal firm saw a plan created that would require the buyers to also buy out the debt with the Kasikorn Bank, or else risk losing their entire investment.  Fearful, many paid. Only now are Thai courts finally ruling that the condos actually belong to the buyers, and that they should not be held accountable for a massive debt that is not theirs.

More Thai Property Investment Scams: Many of the supposed “financial advisors” who get unsuspecting elderly to invest in such fraudulent schemes, such as the the British founder of the Chiang Mai Expats Club, simply flee back to Britain (or elsewhere) themselves, after having conned many people out of their pension.

Other elderly persons have been victimized by the failed Australian LM Managed Performance Fund, their funds deposited there by the same sort of “Independent Financial Advisors” mentioned above. These IFA invariable work on very high commission, and are not always registered with anyone at all. The Australian Securities and Investment Commission has been ineffective in rectifying the damage done by this scheme.

Asia Pacific Pensions claimed that LM’s debt instruments were secured against Australian properties, but this turned out to be an almost complete falsehood. The only property the LM Managed Performance Fund had was a worthless property on the Gold Coast, for which LM had already taken out mortgages.

Finally, here are some tips for avoiding property investment scams in Thailand…or anywhere:

Comments

  1. Really sad story.

    It’s definitely not legal or fair what happened to your friend.

    Hindsight is always 20/20 and we don’t want to come across as an “I told you so” when writing about things like this, but this story can serve as a good lesson for other expats in Thailand so they don’t make the same mistake. Firstly, no matter what type of contract you have in Thailand, it’s still important to diversify and not put all your eggs in one basket. Also, it’s never a good idea to put your life savings into a place you are only renting. If they opened the restaurant with just a small fraction of their net worth, it would be much a different story and much easier to walk away from, regardless of who is right. That’s good advice for any investment anywhere in the world.

    I’ve heard quite a few stories over the years where the same thing happened, even to Thai people. I think your friend would still have had the same thing happen even if a Thai friend was in the middle because Thai owners who are that high up don’t care about anyone, not even other high-so Thai’s.

  2. There are very many investment scams nowadays I advise all people to deal with tall cautiousness and those who deal with them to ask to withdraw large amounts and see the reaction. Conditions of dealing with them are all bad and against the customer.
    My sister lost a lot of money to these brokers and they made a flimsy excuse about it, we were able to recover some of the money with the help of a professional before it was too late. Be sure it isn’t a scam. Are you sure other ones are real? do not lose your money before you start looking for how to get it back thats not smart, talk to a professional today to help you with your background checks, monitoring people, cooperate espionage and so on, mail rootgatehacks at tutanota dot com for more on this

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