Thousands of distraught depositors have been flocking to a suburban police station in the past two days to lodge complaints against Sakvithi Ranasinghe.
Ranasinghe had posed as a popular English tutor and also ran investment firms.
Police spokesman Ranjith Gunasekera said several complaints had been received about the scam.
About 2,000 people had gathered at the Mirihana police in a southern suburb of Colombo, Monday, when a team from our sister news website Vimasuma.com visited the station.
Angry depositors were demanding police hand over a suspect they said they believed had been detained.
Police in Mirihana said they had received about 5,000 complaints about the scam.
Depositors and police said Ranasinghe, the suspect fraudster, had attracted deposits from the public by publishing ads in newspapers for many years.
One woman depositor who spoke with Vimasuma.com at the Mirihana police station said she had deposited 2.5 million rupees which she had earned after working for years in Lebanon.
"In the first few months I managed to get interest with difficulty," she said. "Now I hear he (Ranasinghe) has stolen the money and fled abroad. We ask for a reasonable solution from the authorities."
She displayed an investment certificate under the name of Sakvithi House Constructions, in Nawala Road, Nugegoda, a nearby suburb.
Ranasinghe ran several companies included one called S R Profit Sharing Investments.
He had been questioned by the central bank some months ago about his newspaper advertisements calling for deposits.
Sri Lanka's central bank has repeatedly warned the public against Ponzi and pyramid style investment scams.
The government brought in new laws a few years ago after a popular pyramid style Goldquest multi-level marketing scheme was banned and several of its members arrested.
The central bank has also run a publicity campaign warning the public against being duped by the offer of high returns.
A Ponzi is a variant of a pyramid scheme which offers high returns to people who deposit money.
But the payments are not actually met from the underlying business, but from deposits or fees of those who join the scheme later.
Such scams are named after Charles Ponzi, an Italian immigrant who lived in the United States, who offered high returns for investing in his firm, which traded in international postal reply coupons.
"Best Way is avoid germs than giving the medicine.
A good example is Fido, the Australian Securities and Investment Commission\'s Consumer Website: http://www.fido.gov.au/fido/fido.nsfAustralia requires all "investment schemes" to be registered.
The definition is: What's a managed investment scheme?
In a managed investment scheme:
* Your money and other members' contributions are pooled together or used in a common enterprise to produce financial benefits for scheme members.
* You and other members give up day-to-day control over the operation of the scheme to someone else.
A great many investment opportunities are structured as managed investment schemes.
The most common managed investments schemes include:
* cash management trusts
* property trusts
* equity (share) trusts
* agricultural investment schemes (for example, pine trees, olives, flowers or fish farming).
More unusual types of investments can also be structured as managed investment schemes, for example:
* betting schemes
* some lottery syndicates
* small property syndicates
* timeshare schemes and
* managed mortgage schemes.
A comprehensive definition such the above will allow the regulator to close down any scam as soon as it is brought to the notice of the regulator and it is also possible to carry out effective publicity campaigns against such schemes.
At the moment the Central Bank can only carry lists of licensed deposit taking institutions, they cannot name the crooks directly - because they do not fall into the narrow definition of "deposit taking institution".
Proper awareness campains about the risks of bad financial institutions should be carried out. Also it should be taught at schools at a resonably early age so that everyone has some sort of idea, what kind of risk banks pose. Even well established ones. Pramuka for example.
And the government should take a more active role in enforcing the law against all organisations that accept deposits without proper authorisation including unauthorised finance companies.
Where else there companies running legitimate biz for over 30years & striving hard due to this racketeers.Also the necessary autorities should take blame to some extent when such crazy propaganda is made to see what sort of biz or reinvestments such company has...
All Rights Reserved.