AWARENESS, ATTITUDE & VULNERABILITY:

TOWARDS FINANCIAL FRAUD/SCAM

A Thesis

presented to the Faculty of the COLLEGE

OF ADVANCED EDUCATION

Ifugao State University

A Course Requirement for the Degree

MASTER OF SCIENCE IN CRIMINAL JUSTICE

with Specialization in Criminology

by

SEAN REY ZUÑEGA BONGAYON

MAY 2019
 APPROVAL SHEET

This thesis entitled “AWARENESS, ATTITUDE & VULNERABILITY:

TOWARDS FINANCIAL FRAUD/SCAM” prepared and submitted by SEAN REY
ZUÑEGA BONGAYON in partial fulfilment of the requirements for the degree MASTER
OF SCIENCE IN CRIMINAL JUSTICE with SPECIALIZATION IN
CRIMINOLOGY is hereby approved and accepted.

ANNIE A. TUMITIT, Ph.D.

Adviser

Approved by the Review Panel on JUNE 2019 with a grade of PASSED.

JANICE P. MILO, Ph.D. MICHELLE MABEL A. BAGTASO, Ph.D.

Panel Member Panel Member

NAPOLEON K. TAGUILING, Ph.D.

Panel Chairperson

Approved and accepted in partial fulfilment of the requirements for the degree
MASTER OF SCIENCE IN CRIMINAL JUSTICE with SPECIALIZATION IN
CRIMINOLOGY.

JORDAN L. MARIANO, Ph.D. ROMMEL B. SUMEG-ANG, Ph.D.

Program Chairperson/Coordinator College Dean

IFSU-QMS-DOC-F017
Rev.00 (Feb. 04, 2019)

ii
 ACKNOWLEDGMENT

The researcher desires to recognize with sincere gratitude and

appreciation to allthose who in any way or another contributed to the completion

of this study.

Ms. Mae P. Butic for her moral support and encouragement that pressed

theresearcher to pursue this study;

Ms. Nefeteri C. Cabbigat for her invaluable assistance to the completion of

this study;

Dr. Annie A. Tumitit, researcher’s adviser, for her expertise and important

support in organizing, criticism and improving the study and her boost of moral

support that enabled the researcher to pursue this research; Dr. Mary P. Caclini, for

being the statistician of this study;

Dr. Napoleon Taguiling, Dr. Janice P. Milo, and Dr. Michelle Mabel

A. Bagtaso,as the panellists for their constructive criticisms that improved this

research;

All of the members of the family, friends and relatives for their

financial and moralsupport in the completion of this study;

Above all, to Almighty God, for His wisdom and power He provided

during theconduct of the study.

S. Z. B.

iii
 DEDICATION

This study is sincerely dedicated to the residents especially the victims of investment

fraud in the municipality of Lagawe. They were the main reason for the making and

the completion of this research.

I also dedicate this study to our God Almighty and His Son Jesus Christ who gave

me the patience, strength, wisdom and comfort from beginning and to the end of the

completion of this study.

Lastly, I dedicate this work to my parents, brothers and sister who supported me in the

realization of this work. Thank You.

Sean Rey

iv
 ABSTRACT

The study was conducted at the Lagawe, Ifugao on the year 2018-2019 and

aimed to know the level of awareness of respondents of the different methods of

operations for the several types of investment fraud, assess the degree of

attitudes towards financial investing, and to see the extent of the vulnerability. A

structured questionnaire with a 4-point Likert scale was used to gather the needed

data. Data were analyzed using the frequency counts, percentages, means, t-test,

analysis of variance and correlation coefficient. The highlights of the study were

that the greatest number of respondents were young adults, female, married and

college graduates. The awareness for the modus operandi of investment fraud

was low. Their attitude towards financial investing were described as high-risk

attitudes in a sometimes practiced although they scored higher on low risk

attitudes. And in the extent of vulnerability, they were slightly prone to investment

fraud. The research findings revealed that there is significant difference on the

level of awareness when grouped by profile variables. There was also significant

difference on the extent of vulnerability when grouped by profile variables. In the

correlation on the level of awareness with the attitude of investing and the

vulnerability of respondents to investment fraud was found significant. Intervention

Plan was prepared to tackle the problems seen from this study.

Key Words: Investment Fraud/Scams; Vulnerability; High Risk Attitude; Low Risk

v
 CONTENTS

Page

TITLE PAGE ..................... i

APPROVAL SHEET ..................... ii

ACKNOWLEDGEMENT ..................... iii

DEDICATION ..................... iv

ABSTRACT ..................... v

CONTENTS ..................... vi

LIST OF TABLES ..................... vii

LIST OF FIGURES ..................... x

CHAPTER

1 INTRODUCTION

Conceptual Framework ..................... 5

Statement of the Problem . . . . . . . . . . . . . . . . . . . . . 16

Hypotheses ..................... 17

2 METHODOLOGY

Research Method ..................... 18

Research Environment ..................... 18

Respondents ..................... 19

Data Gathering Procedure ..................... 20

Data Gathering Tool ..................... 20

Statistical Treatment ..................... 20

vi
 3 RESULTS AND DISCUSSIONS

Profile of the Respondents . . . . . . . . . . . . . . . . . . . . . 22

Awareness of the Respondents . . . . . . . . . . . . . . . . . . 24

Degree of Attitude ..................... 29

Extent of Vulnerability ..................... 32

4 CONCLUSIONS AND RECOMMENDATIONS

Conclusions ..................... 36

Recommendations ..................... 38

REFERENCES ..................... 40

APPENDICES

A Intervention Program ..................... 52

B Questionnaire ..................... 56

CURRICULUM VITAE ..................... 62

vii
 LIST OF TABLES

Table no. Table Title Page

1 Summary Frequency Distribution of the Respondents’ Profile 23

2 Mean, and qualitative description of the Level of Awareness of respondents 26

on the different methods of operation of the different types of investment fraud

3 Mean, and ANOVA result on the Level of Awareness of respondents on the 27

different methods of operation of the different types of investment fraud when grouped

by Age

4 Mean, and t-test result on the Level of Awareness of respondents on the 28

different methods of operation of the different types of investment fraud when grouped

by Sex

5 Mean, and ANOVA result on the Level of Awareness of respondents on the 28

different methods of operation of the different types of investment fraud when grouped

by Civil Status

6 Mean, and ANOVA result on the Level of Awareness of respondents on the 29

different methods of operation of the different types of investment fraud when grouped

by Educational Attainment

7 Mean, and qualitative description on the Degree of Attitude of the 31

respondents towards financial investing

8 Mean, and qualitative description on the Extent of Vulnerability of 33

respondents in investment fraud

9 Mean, standard deviation, and ANOVA result on the Vulnerability of 34

Respondents to investment fraud when grouped by Age

viii
Table no. Table Title Page

10 Mean, and t-test result on the Vulnerability of respondents to investment 34

fraud when grouped by Sex

11 Mean, and ANOVA result on the Vulnerability of respondents to 35

investment fraud when grouped by Civil Status

12 Mean, standard deviation, and ANOVA result on the Vulnerability of 36

respondents to investment fraud when grouped by Educational Attainment

13 Correlation result on the Level of Awareness of respondents with 37

the different types of investment fraud to their Attitude towards investing and

their vulnerability to investment fraud

 LIST OF FIGURES

Figure No. Figure Title Page

1 Paradigm of the Study ................. 15

2 Map of Lagawe ................. 18

3 Computation Table of Sample ................. 19

4 Matrix Table of Interpretation ................. 21

x
 Chapter 1

INTRODUCTION

Are you planning to invest also? Or has someone offered you to invest your

hard-earned money on an investment scheme in which it is the money- making strategy

is “too complicated” for you to understand? If you have encountered this, hold your

horses and think about it. You’re in troubled waters. You may lose all of your hard-

earned money in a jiffy. You may be a victim of investment fraud or scam. Investment

fraud is a subset of financial fraud, and it occurs when someone ‘knowingly misleads

an investor using false information for the purpose of monetary gain (Beals et al,

2015). Investment fraud involves the illegal sale or purported sale of financial

instruments. The typical investment fraud schemes are characterized by offers of low-

or no-risk investments, complex strategies, or unregistered securities from the

definition provided by the Federal Bureau of Investigation. The examples include

advance fee fraud, Ponzi schemes, pyramid schemes, and market manipulation fraud.

The problem of investment fraud revolves around the globe. In the United

States of America, about 10 percent of the investors will be victimized by investment

fraud at some point in their lives according to (Kieffer, & Mottola, 2016). According to

the United States Sentencing Commission, there were 66, 873 cases of securities and

investment fraud reported to the USSC in the fiscal year of 2017. There were also 230

securities and investment fraud offenders who were caught. In the UK, thousands of

people every year are affected by

 2

financial crimes (National Fraud Authority & Experian, 2013). The FCA receives

5,000 calls a year about suspected investment fraud. 20% of the investors had already

paid money to fraudsters (Graham, 2014). Savers from London have been duped out of

51 million pounds from investment fraud in the first quarter of the new tax year, 70

percent more than in the same period last year shown by the London police based

from McGrath & Tom Selby, a senior analyst at AJ Bell investment firm stated that

millions of workers or savers are at great risk to financial fraudsters and every year

thousands are victimized to them (McGrath, 2018). These are only some examples of

the prevalence of investment fraud which is global wherein anyone with money who

wants to invest his/her money can be a victim. Not regarding the different prevalence

rates, studies conclude that investment fraud is a significant and costly problem for

Americans according to Graham. An example is the Standford Center on Longevity’s

Financial Fraud Research Center (FFRC) estimated that 50 billion dollars is lost yearly

to investment fraud in the US from the article of Deevy et al. (2012). And the UK’s

FCA estimates that 1.2 billion pounds is lost yearly to investment fraud, with an

average loss of 20, 000 pounds per investor from the article of Graham. The losses

above don’t extend to the indirect causes like legal fees, lost wages, and other non-

financial cost of fraud like distress, anxiety and depression he added. Since the effects

of investment fraud not only affects the financial aspect of men, but also the emotional

aspect, the indirect expenses and other facet of human lives just like
 3

any other crime. This is why it is important for us not only to research and study the

subject matter but also to have lines of defenses in combating the crime.

The Filipinos are not immune to this crime. They are enticed with low risk and

high pay investment schemes to a point where we put our retirement pay or our savings

on the line. One in every 100 Filipinos have been victim of investment fraud with an

estimate of 1 million Filipinos comprising of 1 % of the total population according to

Lalaine Monserate who is an assistant director in charge of investigations and

prosecution at the Securities and Exchange Commission (SEC) at that time. Some of

the biggest investment fraud/scams that happened are: Aman Futures Group by Manuel

Amalilio wherein according to the National Bureau of Investigation (NBI) at least

15,000 people have been victimized with estimated P12 billion and would most likely

be difficult to recover. The scheme of this group was basically your invested money

will get doubled or tripled within weeks only.

There were other handful examples of investment fraud in our country like

Performance Investments Products Corporation scam wherein the amount estimates of

12 billion pesos, FrancSwiss scam, and Phoenixsurf wherein these three offers online

investments. Other examples are Mateo Management Group (MMG), Multinational

Telecom Investors Corp (Multitel), and Royal Manchester Five (RMF). These

investment fraud examples offer the classic "double your money strategy”. Almost

every year, more and more people fall to the fraudulent act of investment fraud. People

remain vulnerable to the same strategies over and over again. The sad part of it is

that most suspects of

 4

investment fraud are not even met trial except for case of Rosario “Rose” Baladjay of

the Multinational Telecom scam whose trial is still on going. It is critical for one to

know if he/she can be vulnerable to the clutches of the crime. To self-reflect on our

knowledge of the modes of operation of the different schemes and to check our own

attitudes towards it. Also, it is important for one to see if he/she public security is

enough (Dumlao-Abadilla, 2015).

From the year, 2014-2016, investment fraud was rampant in the province of

Ifugao because of such companies named as SATARA, Future Marketing, 3 Angels

Merchandising, Greenwealth Gold Group of Companies, and others. Some even have a

cover story as product sellers. As I have interviewed Prosecutor Jeremie Bartina, who is

one of the prosecutors in charge with criminal cases involving companies committing

investment frauds, the suspected companies involve in investment fraud share the same

methods of operation or modus operandi wherein they use enticing words to convince

and they trick more people into investing. In the case of “Green wealth Gold Group of

Companies”, there are over 140+ members that was victimized with estimated value of

more than 2.4 million as monetary losses. Although the suspects were arrested and on

trial as of now, the main suspect has not yet been caught. The crime of large scale

estafa or investment fraud was the proper charge.

The study shows that lawyers, teachers, retirees, and other professionals are

not safe from investment fraud. This motivated the

 5

researcher to study this topic and also measure the vulnerabilities of people being

victimized by investment fraudsters.

Thus, through this study the PNP will have a relevant information regarding

investment fraud as a crime. As Sun Tzu stated, knowing your enemy (investment

fraudsters) and thyself (having ample information regarding investment fraud) will let

them not fear about the result of a hundred battle.

The local government units can have additional knowledge to strengthen the

support and their leadership in combating the crime of investment fraud in Lagawe.

The legislative bodies in the national and local settings that results may become

bases for crafting new bills or proposals in solving and controlling the progress of this

kind in our modern society.

To the community members, especially, for them to be more informed on how

they are vulnerable to the fraudsters in investing their hard-earned money.

The aforementioned situations and scenarios in the different locales previously

discussed motivated the researcher to conduct this study.

Conceptual Framework

This research is grounded on the issues, complications, facts, and ideas

surrounding the adverse effect of investment fraud. Investment fraud, generally, refers

to a wide range of deceptive practices that scammers use to induce investors to make

investing decisions. These practices can include untruthful or misleading information

or fictitious opportunities. Investment fraud may involve

 6

stocks, bonds, notes, commodities, currency or even real estate, FINRA Investor

Education Foundation (2019).

The following are the types of investment fraud used in the research:

Affinity Fraud – It refers to investment scams that prey upon members of

close-knit identifiable groups, such as religious or ethnic communities, the elderly, or

professional groups. The fraudsters exploit connection between members of a group

using their trust and friendship to bring more victims to the scam. Some examples are:

In the state of Utah, USA, Special Agent Michael Pickett stated that they investigated

$2 billion dollars’ worth of money done in fraud usually due to the high level of trust in

the Mormon community (an identifiable group). In state of Massachusetts in USA, a

community of Cambodian immigrants was victimized by James Bunchan and Seng Tan

with the amount of $30 million from more or less 400 Cambodian immigrants

exploiting their trust through fraudulent schemes. In the Philippines, Kapa Community

Ministry International (KAPA) ministry exploiting the trust and confidence of the

religious group members offering 30 % returns of an investment “donation” of Php 10,

000.00 or more which are very indicative of an investment fraud or scam to over 50,

000 members.

Advance-fee Fraud – fraudsters ask investors to pay a fee up front – in

advance of receiving any proceeds, money, stock, or warrant – in order for the deal to

go through. The advance payment may be described as a fee, tax, commission or

incidental expense that will be repaid later. A common example

 7

of these are the so called “419 advance fee fraud”. It is the act of obtaining property or

money by false pretense wherein it presents an opportunity to make money but giving a

certain amount first to try to transfer someone or something out from Nigeria. The scam

is done online through email. Over 94.7 billion dollars were reported losses in the U.S

alone from 2006-2013 and millions of people worldwide are being victimized

according to the report by Ultrascan Advance Global Investigations in 2013. Even to

this year, over 700,000 dollars amount are being scammed through this method.

Binary Options Fraud This fraud is conducted in a stock trading wherein it

is characterized by a stock broker who handles your invested shares fools the investors

with information on gains and losses usually putting high gains and encouraging the

investors to invest more. Another characteristic is by a manipulated trading platform

usually manned by a bot and providing free trading account is showing high gains to

your invested money after each trade of shares therefore encouraging the investors to

put more money in their free account. The money required in order to invest in both

mentioned characteristics are reasonable or it is not-so-low and not-so-high amount but

it leads to encouragement for more investment money by its fraudulent information on

its trading result information disguised as gains and the decision to withdraw the

invested money and the gained money will not be applied. In 2011, the IC3 of the FBI

received 4 complaints with reported loss of more than

$20,000. Until this year, the IC3 received more complaints with millions of dollars that

reported as loss. In other countries in Europe, their fraud complaints

 8

comprise 25% of the total fraud complaints (Federal Bureau of Investigation, 2019).

High Yield Investment frauds are unregistered investments typically run by

unlicensed individuals and are often frauds. It is a fraudulent investment scheme that

intends to deliver unusually high returns in investment with little or no risk in a time

frame of a week, a month or a short amount of time. They are run by unregistered

investments by unlicensed persons. Anything beyond 10% is already a good indication

of this scam (investor.gov). Examples of it are: (1) Zeek Rewards by Paul Burks that

offers investment opportunity with earned returns of 1.5% per day and members are

advised to let their gains be compounded and recruit newbies to increase their returns.

The company boosted into $600 million through its 1 million members. The US-SEC

immediately took action before its collapse. OSGold by David Reed wherein it offers

through the internet high yield programs with a promise of 30%-45% monthly returns.

Colonyinvest, wherein it cheated 50,000 Thai investors 5 billion baht through the

internet.

Internet and Social Media Fraud - Internet and Social Media frauds are all

investment fraud conducted in the internet are examples including in the social media

like facebook, twitter, online newsletter,online bulletin boards and chat rooms,and the

likes.Its common types are non-payment/non-delivery, misrepresentation of goods or

services, business email compromise, tech support fraud, phishing, malware,

ransomware, virus, etc. In the US from 2013- 2017, there is a total of $5.52 Billion

total losses with 1,420,555 total

 9

complaints. And in the data provided by Consumers International, Australians lose a

total of 42.2 billion Australian dollars from 2015-2018. Since there is a growing

number of internet or social media user, the amount and victimization will grow also.

Microcap Fraud, according to Bukh Law Firm, is a common type of financial

fraud and a form of market manipulation because the microcap market or over-the-

counter market is comprised of companies with low stock prices, acquiring large

volumes of these stocks is easy and inexpensive. Many schemes involve purchasing

penny stocks in the microcap market, heavily marketing the stocks so their price

increases significantly, then selling the stock at the higher price. After the stock is

dumped, the marketing efforts end, leaving the other investors with shares that plummet

in the price. According to the United States Securities Exchange and Commission on

June 7, 2011 have suspended 17 microcap stocks companies with suspicious accuracy

and adequacy in the providing trading information’s. And on the year 2018, the US

SEC froze assets of more than 50 microcap companies due to illegal sales of stocks.

Ponzi Scheme Fraud – is an investment fraud that pays existing investors

with funds collected from new investors (United States Securities Exchange and

Commission). Ponzi scheme organizers often promise to invest your money and

generate high returns with little or no risk. Originated from Charles Ponzi in 1919,

wherein it offers very minimal or no risk investment. It generates returns for older

investors by acquiring new investors funds. In the

 10

year 2009 in the US, it was dubbed as the “The year of the Ponzi Scheme” because of

the Bernard Madoff, investment manager at Wall Street, who rake nearly $20 billion

from his Ponzi scheme. In the US alone, billions of dollars are being reportedly loss

according to the database of Jordan Maglich, an attorney in Florida, USA ((James

Chen, 2020). The Kapa Community Ministry International (KAPA) ministry scam is a

Ponzi scheme as well since it provide returns of old investors by getting the ‘donation’

of new members ranging from Php 5,000.00 as minimum to 1 million as maximum

(Ralf Rivas, 2019).

Pyramid scheme is an investment fraud resembling a ‘pyramid’ shaped or

structured business model. It makes its profits from recruiting new members by paying

a certain amount where old members especially the direct recruiter and the members

above them gets a share from that amount (Andrew Bloomenthal, 2020). According to

the Scam Watch, an online resource that assist consumers, small businesses and

industry in understand and preventing scams, states that over over $1.7 million are self-

reported losses from 2016- 2019.Companies like Amway, Herbalife, Mary Kay, Nu

Skin Enterprises and USANA Health Sciences are being sued for conducting pyramid

scheme some of them paid fines of $100 million dollars and over.

“Prime Bank” Investments are forms of investment fraud that offers

you ‘exclusive’ investment program involving buying and selling of bank instruments

allegedly endorsed by World Bank, IMF, Federal Reserve and other international

central banks. Fraudsters uses complex, intelligent, official terms to convince the

investor (United States Bureau of Fiscal Service).

 11

According to Shah Gilani, that an estimated loss of $10 billion from Americans

accurate as of 2009 due to Prime bank scam.Until this year of 2019, many are still

victims of prime bank scams like in the case of Peter Baker of Prestige Global Trading

Ltd., Elizabeth Oharriz of Diversified Initiatives Consulting & Logistics Inc. And

Sienna Business Group Inc. who victimized Floridan and Georgian residents of over

$2.2 million.

A promissory note is a form of debt – similar to a loan or an IOU – that a

company may issue to raise money. Typically, an investor agrees to loan money to the

company for a set period of time. In exchange, the company promises to pay the

investor a fixed return on his or her investment, typically principal plus annual interest.

While promissory notes can be legitimate investments, those that are marketed broadly

to individual investors often turn out to be scams (US SEC, 2019) For example, the

SEC found fraudsters that purchased and used mailing lists to target elderly individuals

in north and west Texas for investments in so called "guaranteed" and fully-

collateralized "promissory notes." In order to solicit senior citizens, the fraudster

disseminated literature designed to alarm the elderly recipients with claims that the

Texas probate process was lengthy, complicated and expensive and to suggest that they

could provide "estate planning services," "living trusts" and "revocable trusts" to

overcome the identified problem. When the targets of the mailing responded, they were

urged by the fraudsters to liquidate legitimate, safe investments, to withdraw IRA

monies and to invest in high risk investments in order to achieve a higher rate of

return. Investors were told their investment

 12

would be used to fund business ventures, including short-term, high-interest notes, bank

cards, resort projects and short-term, interim mortgage loans, all of which did not exist.

Instead, investor monies were used by the fraudsters to make interest payments to

earlier investors ("Ponzi payments"), pay exorbitant sales commissions, purchase

several parcels of real estate, acquire and operate a pawn shop, make payments on

personal credit cards and to construct a residence and lake home (Forkey, Russell,

2018).

Pump and dump schemes are investment fraud involves penny stocks or

stocks sold on the microcap market and usually involves multiple parties working

together to commit fraud against investors. It involves the purchase of shares of stock

with the intention of artificially driving the price of that stock. A low value stock sold

on the over-the-counter market (the microcap market) is chosen. Large volumes of the

stock are purchased at rock bottom prices. The company and its stock shares are then

heavily marketed and promoted. False reports may be prepared touting the company’s

expected success or the value of the stock. Brokers may call clients and push the stock;

fake posts may be made in online investment chat rooms; and a host of other techniques

may be used to convince investors to buy the stock (Bukh Law Firm, 2018) Examples

of it is by Gregg Mulholland who generated more than $250 million fraudulent profit

using pump and dump scheme wherein he manipulated shares of more than 40 U.S.

companies including Cynk Technology whose shares rocketed to 24, 000%. (McCoy,

2016) According to Carson Block on 2015, several Hong

 13

Kong companies share prices are being manipulated by over 500 % in the past years

commonly done in the final 30 minutes of a trading day.

In summary, investment frauds come in diverse forms and it is also with

different methods of operation from each of its type. The stated types of investment

frauds were defined by the United States Securities and Exchange Commission.

The inclusion of the awareness of the different methods of operation of the

different types of investment fraud was stirred by the research done by Stacey Wood

and her colleagues on “why people fall to scams”. As mentioned in her research,

individuals informed of the investment scam still took chances in taking the investment

frauds particularly an affinity type of fraud, seeing that the potential for high benefits

outweighs the risk. Attitude towards financial investing was also plays a role in falling

prey to investment fraud high-risk takers equals to high-risk victimization as shown in

study of Doug Shadel et. Al in 2014. With regards to what makes a person vulnerable,

there are certain demographics which makes a person more prone towards

victimization. For example, the demographics of age, older victims are more likely to

become victims because of their assets and they are more trustworthy making them

vulnerable. Young adults are also more likely to be victims since they are more willing

to share their information in the internet according to Natwest. As stated by

scamwatch.gov.au on the reported investment scams for 2019, 75.7% of amount lost for

male and 24.1% for female from the $ 5, 839, 275 total amounts lost. And 61.9% from

the total number of reports coming from male, on the

 14

other hand 35.4 % from the female. Other demographic profile like civil status and

educational attainment somewhat plays in the role of investment fraud. According to

Christine N. Kieffer and Gary R. Mottola, and from the AARP Investment Fraud

Vulnerability Study in 2017, married individuals are more likely to be victim of

investment fraud. Another demographic that may have a factor in investment fraud is

the educational attainment of the victims. Usually our stereotype for high or regular

educated individuals will be smart enough to not fall prey to frauds especially frauds

dealing with money. If one think he or she is smart, or well educated, he or she is at

higher risk of being a victim of investment fraud according to (Tyler Tervooren, 2019).

It is because education may lead the investors to a misplaced confidence. It covers the

ignorance of finding and detecting scams which gives advantage to a ‘con’-man in

deceiving
 1

Paradigm of the Study

In the study, The Input-Process-Output (IPO) model was used to identify the

variables. The inputs were the different methods of operations of the different types of

investment fraud for the level of awareness, high risk taker and low risk taker attitudes

and the indicators of the extent of vulnerability.

The data were evaluated and used to come up with programs to tackle the

problems identified.

INPUT PROCESS OUTPUT

-Profile of the respondents Evaluation and analysis of the gathered

Vulnerabilities
data on to investment fraud/scam
-Level of awareness of the different methods
Level ofof the operations of the different investment fraud
-Degree of attitudes towards financialawareness
investing
-Extent of Vulnerability
Degree of attitudes on financial investing
Extent of vulnerability
Comparison of correlations vis-a-vis the profile

Figure 1. Paradigm of the Study

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Statement of the Problem

The main aim of this study was to evaluate the awareness, degree of attitude and

the extent of vulnerabilities of Lagawe residents in the 3 central business district.

Specifically, it study answered the following:

1. What is the profile of the respondents in terms of:

1.1. Age;

1.2. Sex;

1.3. Civil Status; and

1.4. Educational Attainment?

2. What is the level of awareness of the respondents to the different modus operandi

or methods of operation of the different types of investment fraud/scam?

3. Is there a significant difference in the level of awareness of respondents on the

different modus operandi of the different types of investment fraud/scam when

grouped by profile variables?

4. What is the degree of attitudes of the respondents towards financial investing

5. What is the extent of vulnerability based on the level of awareness and attitude of

the residents of Lagawe?

6. Is there a significant different in the extent of vulnerability when grouped by

profile variables?
 17

7. Is there a significant correlation on the level of awareness with the attitude of

investing and the vulnerability of respondents to investment frauds/scam?

8. What intervention program can be proposed to eliminate or reduce the

vulnerabilities of community residents to investment fraud/scam?

Hypotheses

The researcher hypothesized that:

1. There is no significant difference on the level of awareness of respondents on the

different modus operandi or methods of operation of the different types of

investment fraud when grouped by profile variables.

2. There is no significant difference in the extent of vulnerability of respondents to

investment fraud when grouped by profile variables.

3. There is no significant correlation on the level of awareness with the attitude and

the vulnerability of respondents to investment fraud/scam.

 Chapter 2

METHODOLOGY

This chapter presents the proposed research design and methodology, population

and locale of the study, data gathering tool, data gathering procedure, and treatment of

data.

Research Method

The researcher utilized descriptive-survey method with the usage of questionnaire

in the collection of data in which it served to identify the awareness, degree of attitude

towards financial investing and extent of vulnerability of the respondents.

Research Environment

The study was conducted at Lagawe, Ifugao to its 20 barangays. It was chosen

since investment fraud was rampant in the area ever since and it may still continue as of

today. Greengold Group of Companies, 3 Angels, Satara and many other investment

fraud groups situated their offices in the area of Lagawe. It was bound to Lagawe because

it is the business center of Ifugao which means that most people gather here to invest.
 1

Source: DILG

Figure 2. Map of Lagawe

Respondents

The total population of Lagawe, accurate as of 2018, is 19, 466 residents. The

respondents chosen were 18 years old above amounting to 11, 884 residents across all the

barangays of Lagawe. The reason in non-inclusion of below 18 years old is that it is their

grade school education stage wherein they are busy with their schooling. Although there

are maybe some children who are not involve in schooling, the number is very low. The

researcher used stratified random sampling because it allowed the researcher to obtain a

sample population that best represents the entire population being studied. Using the 20

barangays as the basis for the getting the strata of the sample population which is 387, it

is shown below:

The computation in getting the sample respondents of each stratum was first,

getting the percentages of each stratum from the total population and lastly using that

percentage to compute for each stratum.

 1

Figure 3. Computation Table of Sample Respondents

Barangays 18 Year old and Percentage in Sample
above the respondents
Total Population
Abinuan 389 3.27% 13
Banga 163 1.37% 5
Boliwong 1,258 10.59% 41
Burnay 673 5.66% 22
Buyabuyan 175 1.47% 6
Caba 760 6.40% 25
Cudog 1,081 9.10% 35
Dulao 306 2.57% 10
Jucbong 291 2.45% 9
Luta 170 1.43% 6
Montabiong 374 3.15% 12
Olilicon 322 2.71% 10
Pob. East 1138 9.58% 37
Pob. North 1162 9.78% 38
Pob. South 710 5.97% 23
Pob. West 1366 11.49% 44
Ponghal 264 2.22% 9
Pulaan 222 1.87% 7
Tungngod 664 5.59% 22
Tupaya 396 3.33% 13
Total 11,884 100% 387

Data Gathering Tools

The main instrument that used by the researcher was a questionnaire checklist that

was adopted and modified consisting of three parts. The first part collects data on the

level of awareness on the different methods of operation of the different kinds if

investment fraud. The second part evaluates the degree of attitudes towards financial

investing. The last part gather the data regard the extent of vulnerability of the

respondents.

Data Gathering Procedure

After the approval of the questionnaire, with indicated improvement and

suggestions by the panelist, was granted. The researcher together with Ms. Mae
 2

Butic and Ms. Nefeteri Cabbigat conducted, distributed and administered the

questionnaire personally to the 387 respondents of the different barangays of Lagawe

computed from population data given by the Population office of the MLGU of Lagawe.

The laborious task of finding the respondents, convincing them to answer and the added

privation of explaining the contents of the questionnaire for better comprehension has not

faze the researcher.

Statistical Treatment

After tallying the results, the researcher computed the mean based on the ratings

of the respondents. Descriptive interpretations were determined based on the weighted or

average means, frequencies, and percentages. The Likert Scale was used to interpret the

responses regarding the level of awareness of the methods of operation of the different

types of investment fraud, the attitudes towards financial investment, and the level of

enforcement by the local law enforcers and or other authorities concerned. The statistical

technique of analysis of variance was used to measure the significant differences between

level of awareness when grouped by profile variables and extent of vulnerability when

grouped by profile variables. And to measure the correlation on the level of awareness of

respondents with the different types of investment fraud to their attitude towards

investing and their vulnerability to investment fraud using the Pearson coefficient.
 2

The basis for interpretation is also contained in the matrix table presented below:

Figure 4. Matrix Table of Interpretation

Statistical Weight Scale Descriptive Equivalent
Limit Level of Degree of Extent of
Awareness Attitude Vulnerability
3.25-4.00 4 Very Much Always Very Much
Aware Vulnerable
2.50-3.24 3 Moderately Oftentimes Vulnerable
Aware
1.75-2.49 2 Slightly Aware Sometimes Slightly
Vulnerable
1.00-1.74 1 Not Aware Never Not Vulnerable
 Chapter 3

RESULTS AND DISCUSSIONS

This chapter contains the result and discussions of the study. It presents the

discussions on the respondents profile; level of awareness on the different

modusoperandi of the different types of investment fraud; degree of attitudes of the

respondents towards financial investing; extent of vulnerability based on the level of

awareness and attitude of the respondent; significant difference in the extent of

vulnerability when grouped by profile variables and the significant correlation on the

level of awareness with the attitude of investing and the vulnerability of respondents to

investment fraud.

Profile of Respondents
Below are the demographics or the profile data, composed of age, sex, civil status,

and educational attainment. It was gathered, analyzed and interpreted taken from the

sample population which was 387 residents of Lagawe.

 2

Table 1. Summary Frequency Distribution of the Respondents’ Profile

Age Frequency Percent

Below 20 19 4.9
20-29 163 42.0
30-39 62 16.0
40-49 65 16.8
50-59 52 13.4
60 & above 27 7.0
Total 388 100.0
Sex
Male 172 44.3
Female 216 55.7
Total 388 100.0
Civil Status
Single 184 47.4
Married 188 48.5
Widowed 16 4.1
Total 388 100.0
Educational Attainment
Elementary 21 5.4
High School 61 15.7
College Level 297 76.5
Post Graduate 9 2.3
Total 388 100.0

Most of the respondents are 20 to 29 years old comprising 42% with few of them

who are below 20 years old and also those who are 60 years old and above. This shows

that the respondents are in their young adulthood congruent with the collected population

data from the Municipality of Lagawe Population Department that category for young

adults as one of the highest numbered. As for the sex profile, female respondents

outnumbered the males but the disparity in number is not so great. The random sampling

and distribution of questionnaire happened at a normal office hour wherein most of the

male respondents’ works while their

 2

spouses, sisters, and other female respondents stays at home. There is almost an equal

number of single and married respondents of 44.3% and 55.7% respectively with few

widowed individuals basing from the table. This confirms that in the 2018 Population

Statistics Data of LGU - Lagawe that there are only a few numbers of widowed residents

of Lagawe and the two remaining civil status are the common ones. More than three-

fourths of the respondents have reach college level of education (76.5%) with 21.1% who

finished high school or elementary level. There are a few who took post graduate courses.

It implies that respondents with college level educational attainment participated most

willingly to answer the questions in the survey.

Awareness of the Respondents to the Different Methods of Operation on

the Types of Investment Fraud

The respondents rate their awareness in the different methods of operation on the

different types of investment fraud. Among the eleven types of investment fraud,

respondents are moderately aware with high-yield investment fraud, internet and social

media fraud, Ponzi scheme, and pyramid scheme; slightly aware with affinity fraud,

advance-fee fraud, prime bank investments, promissory notes; and not aware on binary

options fraud, microcap fraud, and pump and dump schemes. The over-all awareness

level of a mean of 2.30 indicates that the respondents are slightly aware on the different

types of investment fraud. Although the over-all awareness level is slightly aware, it is

very much aware for high-yield investment fraud having 3.31 mean, and moderately

aware for Ponzi scheme with 3.16 mean. It reflects that due to the sudden popularity of

the different fraudsters that was

 2

Satarah, Future Marketing, 3 Angels Merchandising, Greenwealth Gold Group of

Companies and others practicing ponzi scheme, and at the same time a high-yield

investment fraud in the region of CAR. Fontanilla (2015) states that 40 companies in

CAR could be engage in investment fraud wherein two companies namely Stiforp

Trading and 3 Angels General Merchandising were involved in Ponzi schemes and High

Yield investment fraud. As for Binary Options Fraud, Microcap Fraud, and Pump and

Dump schemes, the respondents are not aware since the three fraud mostly relates to the

stock market, foreign exchange and others wherein the respondents doesn’t know what it

is. Only 3 % of Filipino adults invest in bonds, funds and stocks says Banko Sentral ng

Pilipinas, and the top three reasons were perception of investments as expensive, lack of

awareness and no need for investments (Subido, 2018).

 2

Table 2. Mean, and qualitative description of the level of awareness of

respondents on the different methods of operation of the different types of
investment fraud
Methods of Operation on the Different Types MEAN Qualitative
of Investment Fraud Description
Affinity Fraud 2.50 Slightly Aware
Advance-Fee Fraud 2.23 Slightly Aware
Binary Options Fraud 1.35 Not Aware
High-Yield Investment Fraud 3.31 Very Much
Aware
Internet and Social Media Fraud 2.77 Moderately
Aware
Microcap Fraud 1.47 Not Aware
Ponzi Scheme 3.16 Moderately
Aware
Pyramid Scheme 3.12 Moderately
Aware
“Prime Bank” Investments 2.02 Slightly Aware
Promissory Notes 1.91 Slightly Aware
Pump and Dump Schemes 1.47 Not Aware
Overall 2.30 Slightly Aware
Legend: 3.25 - 4.00 - Very Much Aware
2.50 - 3.24 - Moderately Aware
1.75 - 2.49 - Slightly Aware
1.00 - 1.74 - Not Aware

Differences on the Awareness of the Respondents to the Different

Methods of Operation on the Types of Investment Fraud according to
Profile of Respondents

Age. Respondents who are 20 to 29 years old have the highest mean rating in

their awareness on the different methods of operation of the different types of investment

fraud, followed by those who are 30 to 39 years old, then those who are 40 to 49 years

old. The lowest in mean ratings are those whose ages are below 20 years old and those

who are 60 and above years old. The mean differences as shown in the ANOVA result

showed significant differences having the p-value <

0.05. Further analysis signified that those who are below 20 years old and those who are

60 years old and above significantly differed from the rest. Older people
 2

tend to be victimized because of their false hopes that it may work somewhat for them but

if not, older people assure themselves of their effort of trying basing from the report of

AARP Fraud Watch Network in the year 2013. Also, older people are susceptible to

investment fraud because they likely to respond to remote sales pitch and often trusting to

people that they know (Carrns, 2017). A study was conducted and shows that old

Americans aging 65 years and above were more likely to lose money to financial fraud

than those in their 40’s (FINRA Investor Education Foundation, 2013) researchers found

that decreasing cognition associated with aging is predictive of future financial fraud

incidence (Gamble et al. 2014). And the young adults are susceptible to investment fraud

due to their inexperienced and trusting nature and mostly because of their involvement to

into the cyber world wherein it is an optimal environment for preying teens (Fowler,

2019). A study conducted by Alison Pask to more than 2000 students aged 14-18, showed

that 4 out of 10 teenagers falls victim to cyber criminals (Javier Espinoza, 2015). False

hopes, trustful nature and being naïve are factors of lack of awareness to the nature of an

investment fraud/or scam leading to their victimization of both the elderly and young

adults.

Table 3. Mean, and ANOVA result on the Level of Awareness of

respondents on the different methods of operation of the different types of
investment fraud when grouped by Age

Age Mean F-Value p-Value Remarks

below 20 1.72 8.100 0.000 Significant
20-29 2.48
30-39 2.35
40-49 2.31
50-59 2.24
60 & above 1.58
 2

Sex. The mean rating of awareness of female respondents on the different types

of investment fraud is higher than the males. And the correlation between the awareness

and age is not significant as shown in the p-value > 0.05.

Table 4. Mean, and t-test result on the Level of Awareness of

respondents on the different methods of operation of the different types
of investment fraud when grouped by Sex
Sex Mean t-Value p-Value Remarks
Male 2.26 -1.016 0.310 Not Significant
Female 2.33

Civil Status. The respondents who are single has the highest mean rating

followed by those who are married and the widowed have the lowest mean rating. The

analysis of variance result showed significant differences in the level of awareness of the

respondents on the different types of investment fraud among single, married, and

widowed individuals as indicated in the p- value < 0.05. Further analysis showed that

widowed people significantly differ in their perception than single and married people.

Widowhood is a factor that leads to poor decision- making due to loneliness and isolation

therefore being a risk of victimization (Gentry et. al., 1995; Lichtenberg et al., 2013 &

Lee et. al, 1997).

Table 5. Mean, and ANOVA result on the Level of Awareness of

respondents on the different methods of operation of the different types of
investment fraud when grouped by Civil Status
Civil Mean F-Value p-Value Remarks
Status
Single 2.39 8.100 0.000 Significant
Married 2.26
Widowed 1.78
 2

Educational Attainment. The level of awareness on the different types of

investment fraud of those who finished their post graduate education is the highest in

mean rating followed those who finished a college degree, then those who finished high

school and lowest were those who finished elementary. The same table showed

significant differences in the perceptions of the respondents as shown by the p-value <

0.05. Scheffe test indicates that elementary and high school graduates significantly have

lower level of awareness than those who finished college and those who pursued post

graduate education. The same test showed that those who finished college and post

graduate studies do not differ in their level of awareness on the different types of

investment fraud. According to Philip Vincent Tolentino, a financial adviser, people who

are financially illiterate are easily victimized by investment fraud due to lack of basic

understanding of the methods of operations (Rudolph Ian Alama, 2019). Filipinos are

ranked 2nd worst in the 2015 MasterCard Financial Literacy Index can slow down

Philippine economic growth (Christina Mendez, 2015).

Table 6. Mean, and ANOVA result on the Level of Awareness of

respondents on the different methods of operation of the different types of
investment fraud when grouped by Educational Attainment
Educational Mean F-Value p-Value Remarks
Attainment
Elementary 1.29 42.222 0.000 Significant
High School 1.93
College Level 2.43
Post Graduate 2.83

Degree of Attitudes of the Respondents towards Financial Investing

High Risk Taker. Respondents sometimes take high risk in financial investing as

shown in the over-all mean of 2.02. In all the nine indicators, respondents would
 3

invest when there is constant and repetitive invitation to invest. The indicators when

arranged with the highest to lowest mean ratings shows that “being influenced when the

business office is organized and well- equipped” ranks first with a 2.15 mean. It is

followed by “the acceptance of offers/endorsements from relatives and friends in terms of

legitimacy of a business investment plan” with 2.14 mean. “The least is given warning to

prevent financial investments but still pursued in investing” have a 1.80 mean score. And

having a mean of 1.85, “being convinced because the investment speaker spoke

intelligently and seems to know what he/she is telling”. Investors still continue to invest

even though it is high risk because they are prone to two fallacy. One is the “gambler’s

fallacy” wherein investors keep going and hopes luck will be in there way according to

Conning Honest John (2018). Another is the psychologist fallacy, wherein it arises when

a person’s own subjective experiences interfere with the logical conclusion of a particular

subject, topic or decision. (Yang, 2018) According to Mark Huffman, greed, makes you a

willing to consider unregulated types of investments. High level of confidence is actively

trading in an unregulated investment finds the AARP Fraud Watch Network Survey 2016

conducted in the month of August and September.

Low Risk Taker. Respondents often take on the low risk attitude in investing their

money as indicated with the over-all mean of 3.17. Among the indicators, respondents

equally “verify first the companies that are authorized to sell investment instruments” and

“double check or if not, triple check how the investment work before joining” are the

indicators with the highest mean of 3.23.

 3

The two indicators with the lowest mean were “Not swayed by flowery or hollow

investment pitch of a business person” with 3.18; and having a mean of 3.02 is the

indicator “understand how fraud works and don’t just buy it”. This indicates a positive

attitude of respondents in safeguarding their hard-earned money in investing through

legitimate instrumentalities.

Table 7. Mean, and qualitative description on the Degree of Attitude of the

respondents towards financial investing
Attitudes MEAN Qualitative
Description
High Risk Taker
I accept offers/endorsements from relatives and 2.14 Sometimes
friends in terms of legitimacy of a business investment
plan
I accept offers/endorsements from lawyers, mentors, or 2.10 Sometimes
superiors in terms of legitimacy of a business investment
plan
I accept offers/endorsements from co-workers or 1.96 Sometimes
well-
standing/ popular individual in the community in terms
of legitimacy of a business investment plan
I am given warning to prevent financial 1.80 Sometimes
investments but I still pursued
I am excited of the 25%-150% returns of investment. 2.01 Sometimes
I am secured that there is little or no risk involved.

I am convinced because the investment speaker spoke 1.85 Sometimes

intelligently and seems to know what
he/she is telling.
I am influenced when the business office is 2.15 Sometimes
organized and well-equipped
I am swayed when they have a business permit from 2.07 Sometimes
the municipality
I am convinced when I hear from first investors that 2.08 Sometimes
they were paid with a good amount.
Overall 2.02 Sometimes
Low Risk Taker
I verify first the companies that are authorized to sell 3.23 Oftentimes
investment instruments.
I understand how fraud works and I don’t just buy it. 3.02 Oftentimes

I double check or if not, triple check how the investment 3.23 Oftentimes
work before joining.
I am not swayed by flowery or hollow investment pitch 3.18 Oftentimes
of a business person.
I suspect investment schemes that are too good to be 3.21 Oftentimes
true.
Overall 3.17 Oftentimes
 3

Extent of Vulnerability of Respondents to Investment Fraud

The vulnerability of respondents to investment fraud showed that they are slightly

vulnerable as indicated in the over-all mean of 2.03. In all the indicators, respondents

perceived that they are slightly vulnerable. The leading causes of the respondents’

vulnerabilities are on believing the legitimacy of the company due to complete papers as

proof having a 2.22 mean followed by lack of initiatives and resources to verify before

investing with 2.18 mean. The indicators that have the lowest were hoping it would be

different this time with a 1.85 mean and continuing to invest, refusing to back out despite

signs of fraud with 1.81. People are not aware of a “complete” paper the act as proof of

legitimacy that’s why they are vulnerable or they don’t know the role of the Securities and

Exchange Commission. There is a certain behavior in investors that is called

“confirmation bias” wherein even though the facts or the signs of fraud are there, the

investor is more likely to look for information that is in support of his or her idea about an

investment according to Albert Phung of Investopedia.com. According to the AARP

2011, there is inability to identify the ‘red flags of fraud’ like statements of ridiculous

very high returns due to the perception that it is appealing, lack of understanding of

reasonable investment returns (FINRA Investor Education Foundation, 2013) and desire

for a higher investment gain.

 3

Table 8. Mean, and qualitative description on the Extent of Vulnerability of

respondents in investment fraud
Methods of Operation on the Different Types MEAN Qualitative
of Description
Investment Fraud
Lack of initiatives and resources to verify before 2.18 Slightly
investing Vulnerable
Good testimonies from fellow investors and up- 2.11 Slightly
lines Vulnerable
Complete papers of proof of legitimacy of the 2.22 Slightly
company Vulnerable
Unknown ‘rich’ owner with ‘good’ back story 1.97 Slightly
Vulnerable
Psychological techniques are used to convince or lure 2.01 Slightly
individuals like ‘flowery’ words, friendship, rare Vulnerable
opportunity investment, or telling you it’s very
limited,
etc.
The investment group’s employees are 2.17 Slightly
‘kababayan’, ‘kailyan’, or ‘ibba’ Vulnerable
Realistic and appealing looks of legitimate 1.95 Slightly
websites, emails, or texts Vulnerable
“Inside information”, hot tips, and rumors that 2.11 Slightly
supposedly will give you a big advantage over Vulnerable
other,
or less knowledgeable investors
Recognizing suspicious loopholes in the overall 1.94 Slightly
investment scheme while on the process of Vulnerable
doing it
Continuing to invest, refusing to back out despite 1.81 Slightly
signs of fraud Vulnerable
Investing again, hoping it would be different this 1.85 Slightly
time Vulnerable
Overall 2.03 Slightly
Vulnerable
Legend: 3.25 - 4.00 - Very Much Vulnerable 2.50 - 3.24 - Vulnerable
1.75 - 2.49 - Slightly Vulnerable 1.00 - 1.74 - Not Vulnerable

Difference on the extent of vulnerability of Respondents to Investment

Fraud and the Profile of Respondents

Age. The vulnerable group to investment fraud are those below 20 years of age,

followed by those who are 20 years old and above who are slightly vulnerable. The

differences of the vulnerability of respondents to investment fraud

 3

is significant as shown by the p-value < 0.05. Further test shows that those whose ages are

below 20 significantly differ with those who are 40 to 59 years old. All age groups are at

risk but younger individuals are actually the most likely to be scammed according to

Emma Fletcher due to “optimism bias” (Eisenberg, 2016).

Table 9. Mean, standard deviation, and ANOVA result on the Vulnerability of

respondents to investment fraud when grouped by Age

Age Mean F-Value p-Value Remarks

below 20 2.65 5.311 0.000 Significant
20-29 2.15
30-39 2.04
40-49 1.76
50-59 1.80
60 & above 1.92

Sex. Male respondents are more vulnerable to investment fraud than females.

The t-test result showed a significant difference in their mean rating as indicated with p <

0.01. Trends in the different surveys and studies shows that males are more prone to

investment fraud than females according to the study of Deliema et. al, AARP

vulnerability studies (2017), and quantitative analysis of victims study by financial

conduct authority. According to Brian Bloch, men who are financially ‘confident’ takes

more risk than women who tends to go for security.

Table 10. Mean, and t-test result on the Vulnerability of respondents to

investment fraud when grouped by Sex

Sex Mean t-Value p-Value Remarks

Male 2.18 3.230 0.001 Significant
Female 1.91
Civil Status. The vulnerability of respondents when grouped by civil status

showed that single people have the highest extent of vulnerability followed by those who

are widowed and then those who are married (Table 11). The analysis
 3

of variance showed significant differences as indicated in the p-value <0.018. Scheffe test

showed that single people are significantly more vulnerable to investment fraud than

married and the widowed people. According to Marilyn Lewis, loneliness plays a role

whether you can be scammed or not. In an AARP (American Association of Retired

Persons) article, a scammer named ‘Enitan’ from Nigeria confessed that widowed or

divorced people are the easiest to victimized. And from the AARP 2014 research survey

shows that 66 % of victims often or sometimes feel isolated.

Table 11. Mean, and ANOVA result on the Vulnerability of respondents to

investment fraud when grouped by Civil Status
Civil Status Mean F-Value p-Value Remarks
Single 2.15 4.106 0.018 Significant
Married 1.91
Widowed 2.05

Educational Attainment. High school graduate garnered the highest mean

rating in the extent of vulnerability to investment fraud. Next to them are the elementary
graduates then the college graduates and last are those who finished post graduate
courses. On one extreme end of education, having a higher degree of education like
having a master’s degree, means less likelihood to be a victim of investment fraud (Titus
et al., 1995; Kerley and Copes, 2002). Having a ‘sufficient’ education or having a high
school diploma may lead to misplaced confidence which will be a factor for having a
high vulnerability on investment fraud or scam (Tervooren, 2014).
 3

Table 12. Mean, standard deviation, and ANOVA result on the Vulnerability
of respondents to investment fraud when grouped by Educational
Attainment
Educational Mean F-Value p- Remarks
Attainment Value
Elementary 2.08 15.542 0.000 Significant
High School 2.60
College Level 1.93
Post Graduate 1.21

Relationship of the Level of Awareness, Attitude in Investing, and the

Vulnerability of Respondents to Investment Fraud
The level of awareness on the different types of investment fraud is significantly

correlated with the respondents’ high risk attitude of investing together and to low risk

attitude of investing. This indicates that respondents with high level of awareness have

lower high risk attitude of investing but have higher attitude towards low risk

investments. Likewise, the level of awareness of respondents towards the different types

of investment fraud is significantly correlated with vulnerability to investment fraud. This

shows that those with a higher level of awareness are less vulnerable to investment fraud.

Those who are repeatedly exposed to fraud awareness education reduces being an

investment fraud victim (FINRA et. al, 2021). Low financial educated person or those

who have low level of awareness have more likelihood of victimization to fraudsters

(FINRA, 2019).

On the attitude towards investing, those with high risk attitude have a high

positive correlation to vulnerability to investment fraud which is significant. This means

that people with attitude of high risk of investing is more vulnerable to investment fraud.

On the other hand, those who takes on low risk attitude of investing is also correlated to

investment fraud. The correlation is significant which

 3

means that people who maintain a high attitude of low risk investment are less likely to

be vulnerable to investment fraud. Victims of investment frauds seems to exhibit

impulsiveness. The victims loses the ability to control one’s impulses under high stakes

(Knutson, et. al, 2014). Victims who has risky investment behavior could increase their

exposure to investment fraud (Deliema, et. al, 2020).

Table 13. Correlation result on the Level of Awareness of respondents with

the different types of investment fraud to their Attitude towards investing
and their Vulnerability to investment fraud
Variables Correlatio p- Remarks
Mean n Valu
Coefficient e
(r)
Level of Awareness and High- -0.133 0.009 Significant
Risk Attitudeof Investing
Level of Awareness and Low- 0.476 0.000 Significant
Risk Attitude of Investing
Level of Awareness and -0.233 0.000 Significant
Vulnerability to Investment
Fraud
High Risk Attitude 0.710 0.000 Significant
of Investing and
Vulnerability to
Investment Fraud
Low Risk Attitude of Investing -0.319 0.000 Significant
and Vulnerability to Investment
Fraud
 Chapter 4

CONCLUSIONS AND RECOMMENDATIONS

This chapter presents the conclusions and recommendations. Conclusions were

derived in answering statement of the problem of the study. Recommendations were

provided by the researcher in one way or another to be able to reduce the instances of

investment fraud/scams at Lagawe.

Conclusions

In light of the findings of the study, the following conclusions of this researched

were reached:

1. The dominant respondents are young adults within the age bracket of 20 to 29

years old comprising 42% and below 19 years old having the lowest with 7% of the

respondents. The dominant number of respondents were female with the percentage of

55.7% and the males with only 44.3% of the total respondents. Married respondents were

the leading civil status with 48.5 %, followed by the single with 47.4 and lastly the

widowed who have 4.1%. Both sex and civil status has no great disparity. And for the

educational attainment, mostly were college graduate comprising 76.5 % of the

respondents hinting that they were the most willing to participate in the survey.

2. Overall level of awareness were slightly aware with the mean of 2.30.

Affinity Fraud, High Yield Investment Fraud, Ponzi Scheme, and Pyramid Scheme were

classified as moderately aware while Binary Option Fraud, Microcap Fraud and Pump

and Dump schemes having a not aware description. Most people from Lagawe are only

aware of the 3 from the 11 type investment fraud.

 3

3. Differences on the level of awareness on the different modus operandi and the

profile variables of the respondents are significant except for sex. Young adults and the

old aged folks tends to be more susceptible because the former is inexperienced and have

more of a easily trusting nature while the latter tends to engage more to fraudsters leading

to a more risk of victimization, decreasing level of cognition and also too trusting of

people. Due to loneliness and isolation experienced by the widowed, it leads to poor

decision-making leading them to be more victimized from the other two groups. Lastly,

elementary and high school graduate as opposed to college and post graduates are more

victimized since the latter group tends to be more financial literate than the former.

4. With regards to the degree of attitudes of the respondents towards financial

investing, the high risk indicators has an over-all mean of 2.02 labelled as ‘sometimes’

while 3.17 for low risk indicators. Respondents inclines more to a low risk taking attitude

although exhibiting gambler’s and psychologist fallacy relating to the 2 indicators of

having the highest mean on the high risk attitude particularly “being influenced when the

business office is organized and well-equipped and the acceptance of offers/endorsements

from relatives and friends in terms of legitimacy of a business investment plan”.

5. The extent of vulnerability scores an over-all mean of 2.03 indicating that

respondents perceived that they are slightly vulnerable. Though it is low, factors such as

confirmation bias from the respondent, and the appeal of high returns coupled with lack

of understanding of reasonable investment returns make the respondent be of slightly

vulnerable.
 3

6. Differences on the extent of vulnerability to investment fraud and the profile of

respondents indicates are significant. Younger male individuals are most vulnerable as

compared to the other age brackets and from the female counterpart. Single and being

widow are vulnerable to investment fraud due to loneliness. Lastly, high school graduates

are the most vulnerable due to their misplaced confidence, as opposed to the post

graduate who have the least likelihood to be vulnerable due to their level of education.

7. The relationship of the level of awareness on the different types of investment

fraud with the high risk attitude and low risk attitude of investing is significantly

correlated. It indicates that respondents with high level of awareness, have lower high

risk attitude of investing and possessing high level of low risk attitude. The level of

awareness to the different types of investment fraud is significantly correlated with the

extent of vulnerability to investment fraud. Low awareness or low financially educated

individuals are more likely to be victimized. And there is a significant relationship on the

attitude towards investing particularly the high risk attitude with vulnerability to

investment fraud. People with high risk attitude are more vulnerable to investment fraud

than those having high level of low risk attitude. Possessing a high risk attitude increases

the exposure to investment fraud.

Recommendations

1. The LGU of Lagawe should conduct an information drive like trainings or

seminars regarding the different types of investment fraud in order for the public to
 4

become aware of its methods of operations and other essential information regarding

the subject matter.

The priority targets for the information drive will be young adults and the old aged. Also

for the single and the widowed and lastly the elementary and high school graduates. The

information drive should be continuous and practiced every year. Continual contact to

trainings or seminars of fraud awareness reduces victimization (FINRA, 2021).

2. Mental treatment should be available to gambling addicts or victims of

investment fraud to prevent further recidivism and repetition of victimization.

3. The academic institutions should include financial literacy programs in their

curriculum as early as high school level.

4. The LGU of Lagawe particularly its business permit committee should be strict

in giving business permits and be watchful of those fraudsters who uses cover-up

businesses.

5. The PNP Lagawe should help the its constituents in detecting and

arresting of fraudsters.

6. Financial literacy should also be conducted LGU Lagawe with the help of the

Security Exchange Commission, and other related agencies concerned.

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 5

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 5

Appendix A

PROPOSED INTERVENTION PROGRAM

As a result of the study, the researcher was able to draft an intervention program

to address the problem of investment fraud or scam for the people residing at Lagawe,

Ifugao.

1.1 Rationale

In the study, there is a call of concern to address the result basing from the
research conducted wherein the residents are slightly aware of the different types of
investment fraud and its methods of operation especially the young adults with one
of the lowest awareness rate. The degree of attitude can be improved by lessening
low risk attitude and raising the high risk attitude of the people. Even though the
extent of vulnerability is slightly vulnerable, downscaling vulnerability is always
welcome to prevent victimization.
Exposure to programs like financial literacy program, financial
management seminars and seminars to be made aware of the different investment
fraud to heighten the mindfulness of the people, improve their attitude and reduce
the level of their vulnerability. The programs suggested should be done effectively,
given free, and extensivelydone to accommodate at least the majority of the
population of Lagawe.

1.2 Objectives

This proposal aims to achieve the following:

a. To spread awareness of the different methods of operation of the

different types of investment fraud.
b. To improve the attitude of the residents on financial investing by
conducting financial literacy program.
c. To reduce the extent of vulnerability of people of Lagawe.
 5

1.3 Discussion Details

1. This intervention program being proposed by the researcher intends to address

the problems encountered by police officers particularly the factors that prevents
or hinder better performance of their job as police officers. These intervention
program in which details are more elaborated in the framework which includes
periodic or regular visitations of higher officials or supervisors in the police
station to witness the actual situations or problems in the Bambang Police Station
as a result of the lacking equipment or facilities. At the same time, higher officials
may also verify the accomplishment of the said police station and be given a
chance to personally appreciate such accomplishments. This will boost the morale
of police officers and may become more motivated in their job.
2. Further, this will also strengthen partnership of the Police Station with other
government or non-government institutions like the NBI, DSWD, PAO and,
Learning Institutions etc. The said institutions may provide speaker or trainers for
related trainings to be undergone by police officers. Seminars related to spiritual
and morale recovery activities, self-improvement trainings that consists primarily
of ethics and integrity, communications, professionalism, stress
prevention/management, and observance of gender sensitivity may be provided by
trained professionals from DSWD or learning institution, while those related to
police work like investigation and legal matters maybe provided by the NBI or
PAO.
3. Likewise, the proposed intervention program includes the strengthening of the
social media account (ex. Facebook account) of the Bambang Police Station. At
present the Facebook account of the said police station only showcase activities or
programs done by personnel. This may be strengthened by designating personnel
to monitor such social media account and be used to give public information to
the community, like holiday schedules, municipal activities (ex. barangay fiesta),
traffic situations and advisories, list of wanted persons or new modus operandi
(mode of operation) of criminals, requirements for police clearance and clean
rider sticker. This information may be accompanied by advisories encouraging the
public to participate with the police and to remind the public not to be victims of
crime or not to be involved in criminal activities. The community shall also be
able to confidentially communicate information to the police station through the
social media account. Further, to give more motivation and to boost the morale of
police officers, performance-based incentives, for example: never been late, no
complaints filed against him/her, exhibited good performance, and personnel of
the month.
4. Furthermore, this will also enable police officers gain more participation
 5

from the public by conducting frequent random foot and automobile patrol. This
will increase police visibility in their area of responsibility and therefore
improving community relations and thereby boosting trust and confidence of the
public.
5. Lastly, this will create a healthy competition within the police station and to
encourage every personnel to perform well. The PNP individual scorecard
maybe strengthen for the said purpose. Appropriate recognition may also be given
to personnel who stand out among his colleagues. This is to ensure that all
personnel are motivated to perform well in their job through individual
evaluation of their performance.

1.4 Framework

Key Result Objectives Activities Target Responsible Resources

Areas Participants Persons

1.Awareness 1.1 Provide 1.1 Conduct of 18 years old Office of the 1. Lagawe
on the guidelines to seminar on all and above and Mayor Multi-
different detect and details of must be a purpose
methods of avoid the known resident of Hall
operation of different investment Lagawe.
2. Guest
the different investment fraud/scam that
types of fraud/scam is happening Lecturer
17 years old specializi
investment and their locally and and below may
fraud methods of internationally ng in
join if the fraud.
operation. . budget can
1.2 Conduct of (preferabl
accommodate y an
seminar of
popular experienc
investment ed lawyer)
fraud/scam’ 3. food,
methods of snacks,
operation water for 1
day
 5

2. Degree of 2.1 Providing 2.1 Training 15 years old Office of the 1. Lagawe
attitude in financial workshops on and above and Mayor Multi-
financial literacy to the money must be a purpose
investing Lagawe spending, resident of Hall
residents banking, and all Lagawe.
2. Guest
therefore legal and
lecturer (an
improving their correct 65 years old
experienced
attitudes financial and above
accountant);
towards processes and
Psychologis t
financial ethics.
investing. 3. food,
2.2 Mindful snacks and
2.2 Attitude ness training water good
calibration for for the young for 3 days
Lagawe adults and
residents when elderly
dealing with
investment

3. Extent of 3.1 Lessening 3.1 Continual PNP

vulnerability the update of the
vulnerability different type
towards of investment
investment fraud/scam
fraud/scams and its
methods of
operations

3.1 Seminar on
the legal
requirements on
for different
investments
 5

Appendix B

Questionnaire

Instruction: Please check below the profile that corresponds to your background. Please
do not leave any blank space on the profile given

Name:(Optional)

Age:
Sex:
Civil Status:

Educational Attainment:
PART 1. Level of awareness to the different methods of operation of the
different types of investment fraud.

Rate yourself for each item indicate stress which, put a check of your answer on the
blank based on the following scale.( I-rate ang iyong sarili para sa bawat item, maglagay
ng check sa iyong mga sagot sa mga blangko na batay sa mga sumusunod na sukat.)
4 Very Much Aware
3 Moderately Aware
2 Slightly Aware
1 Not aware

Types of Investment Fraud 4 3 2 1

VMA MA SA NA
1. Affinity Fraud - Fraudsters targets identifiable group such as
religious or ethnic communities, elders, or professional groups
and the fraudsters frequently pretend to be members of the group.
2. Advance-fee Fraud - Fraudsters try to convince you with its
legitimacy of documents and/or processes in order to build up your
confidence in paying that “advance payment” or a series of advance
payment for the promised money or other promised
values like employment, contract, loan, gifts.
 5

3. Binary Options Fraud - A type of fraud wherein the trader (you)

takes a yes or no position on the price of a stock or other assets, with
the resulting payoff being all or nothing. The fraud is usually found in
indices, forex, commodities and stocks. Some refuse to credit customer
accounts or reimburse the deposited funds to customers. Also in their
internet platforms, they are collecting customer information. And they
manipulate their trading software
to make the customer lose more.
4. High-yield Investment Fraud - You are promised High-money
returns with little or no risk. Usually done through telephone call or
online.
5. Internet and Social Media Fraud - Offering “suspicious” and “can’t
miss” investment pitch on facebook, twitter, and other social media
sites. Online investment newsletters, online bulletin boards, online chat
rooms, and email spam disguised as legitimate online
investment business.
6. Microcap Fraud - Unsolicited stock recommendations through emails,
and other communications platforms, unexplained increase in stocks
price or trading value, often un-registered in SEC, frequent company
name change or business change are some indications of fraud in
microcap or penny stocks – stocks that are having very low small value.
The fraudsters then, sell their
shares after the stock price have been boosted fraudulently.
7. Ponzi Scheme - Fraudsters promise to invest your money and
generate high returns but actually they use the money of new investors
to pay the investor who have invested earlier. The fraudsters usually
are unlicensed and unregistered in the SEC,
have secret and complex investment strategy.
8. Pyramid Scheme - Fraudsters Promises high returns in a short
period of time, having no genuine product or service, and put
emphasis on recruiting new participants.
9. “Prime Bank” Investments - Fraudsters offers investors that their
contributions will be used to purchase or trade “prime bank”
– known big companies money or other instruments on a hidden
overseas markets in order to generate huge returns. The fraudster will
tell a very complicated plan of investing by the “prime banks” when
you invest and it should remain as a secret according to
them.
 5

10. Promissory Notes - Fraudsters will entice you to load money on

a company, in return you are promised a fixed, high amount of
periodic income. And the level of risk promised is very low.
11. Pump and Dump Schemes - Fraudster will “pump” or boost the
value of their stock with fraudulent statements about the company. If
the stocks went high, they will then sell their own holdings of the
stock, “dumping” their shares into the market.
 5

PART II. DEGREE OF ATTITUDES TOWARDS FINANCIAL INVESTING.

Instruction:

Rate yourself honestly for each item. Put a check of your answer on the blank based on
the following scale.

4 Immediately gives in easily

3 Think about it for sometime
2 Only when invitation is repetitive
1 Never concede / accept

Indicators A(4) O(3) S(2) N(1)

High Risk Taker
1. I accept offers / endorsements from relatives and friends
in terms of legitimacy of a business
investment plan.
2. I accept offers / endorsements from lawyers,
mentors, or superiors in terms of legitimacy of a
business investment plan.
3. I accept offers / endorsements from co-workers or well-
standing / popular individual in the community in
terms of legitimacy of a business investment
plan.
4. I am given warning to prevent financial investments
but I still pursued.
5. I am excited of the 25% to 150% returns of
investment with little or no risk involved.
6. I am convinced because the investment speaker spoke
intelligently and seems to know what he/she
is telling.
7. I am influenced when the business office is
organized and well-equipped.
8. I am swayed when they have a business permit
from the municipality.
9. I am convinced when I hear from first investors that
they were paid with a good amount.
Low Risk Taker
 6

1. I verify first the companies that are authorized to

sell investment instruments.
2. I understand how fraud works and I don’t just buy
it.
3. I double check or if not, triple check how the
investment work before joining.
4. I am not swayed by flowery or hollow investment
pitch of a business person.
5. I suspect investment schemes that are too good to
be true.

PART III. EXTENT OF VULNERABILITY

Instruction:

Rate yourself honestly for each item that can lead you into becoming vulnerable and to
what level. Put a check of your answer on the blank based on the following scale:

4 Very Much Vulnerable

3 Vulnerable
2 Slightly Vulnerable
1 Not Vulnerable

Vulnerabilities 4 3 2 1
VMV V SV NV
1. Lack of initiative and resources to verify before investing.
2. Good testimonies from fellow investors and uplines.
3. Complete papers of proof of legitimacy of the company.
4. Unknown ‘rich’ owner with ‘good’ back story.
5. Psychological techniques are used to convince or lure individuals
like ‘flowery’ words, friendship, rare opportunity
investment, or telling you it’s very limited, etc.
6. The investment group’s employees are ‘kababayan’, ‘kailyan’,
or ‘ibba’.
7. Realistic and appealing looks of legitimate websites, emails,
or texts.
 6

8. “Inside information”, hot tips, and rumors that supposedly will

give you a big advantage over other, or less knowledgeable
investors.
9. Recognizing suspicious loopholes in the overall investment
scheme while on the process of doing it.
10. Continuing to invest, refusing to back out despite signs of
fraud.
11. Investing again, hoping it would be different this time.
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CURRICULUM VITAE

I. PERSONAL DATA
Name: Sean Rey Z. Bongayon
Sex: Male
Religious Affiliation: Roman Catholic
Occupation: Teacher
Affiliation / Agency: Ifugao State University Email
address: sr71zb@gmail.com

II. EDUCATIONAL ATTAINMENT

Level Institution Course Year Graduated
Tertiary PLT College Inc. BSCrim 2015
Secondary Don Bosco High School Secondary Ed 2011
Primary Lagawe Central School Primary Ed 2007

III. EMPLOYMENT BACKGROUND and ACTIVITIES

Occupation / Position Institution / Agency / Business Period
Instructor 1 Ifugao State University 2021-22
Instructor 1 Kalinga State University 2019-2020
Instructor 1 Nueva Ecija University State Tech 2021

IV. TRAININGS, SEMINARS AND CERTIFICATIONS

Trainings / Seminars Organizer / Venue Date

Violent Extremism in Mindanao State University 03/10/2021
SEA amidst the
COVID19 Pandemic
Global Response Mindanao State University 04/18/2021
Against Online
Exploitation of Children
Understanding Online Mindanao State University 05/08/2021
Sexual Exploitation of
Children

V. SPECIAL AWARDS, RECOGNITIONS AND COMMENDATIONS

Awards Sponsor / Venue Year
N/A

VI. GOVERNMENT EXAMINATIONS / ELIGIBILITIES TAKEN

Examination / Eligibility Year
Criminologist Licensure Examination 2015
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Licensure Examination for Secondary Teacher 2017

PD 907 2015

VII. ORGANIZATIONAL AFFILIATIONS

Organization Role / Position Year
Professional Member 2015
Criminologists
Association of the
Philippines (PCAP)
Philippine Red Cross Member 2021