The Securities and Stock Exchange Committee in Pakistan (SECP) has raised concerns about an increasing number of fraudulent real estate investment plans, which especially affect the elderly who have fallen victim to these deceptive operations and lost their life savings. According to the details of SECP, these frauds use the public confidence through the promising of unrealistic returns on investment, and often manipulates official accreditation data such as national tax numbers in the Federal Council (FBR) and SECP certificates to show legitimacy.
These fraudsters attract reassuring investors by submitting attractive offers, claiming to invest their money in real estate projects. They falsely guarantee shareholders with high and included monthly returns, with large deposits in bank accounts under unregistered or unconventional entities, using registered companies as an interface to lend an atmosphere of credibility.
These fraudulent settings, which act as classic Ponzi plans, initially work on the first investors using deposits from new investors to create an illusion of legitimacy. However, with the collapse of the plan, subsequent investors are left without money and no legal resort to restore their losses. SECP emphasized that the registration of a SECP company does not give permission to collect general deposits or promise guaranteed returns in any form of investment, including real estate.
SECP also explained that it does not organize most of the real estate investment plans, with the exception of real estate investment funds (Reits), and urged the public to stay vigilant and avoid investing in any promising plans for high returns without due care. The committee continues to remind citizens that such fraudulent plans are illegal, and investors must be cautious about the offers that seem very good so that they cannot be real.
SECP also strongly encourages individuals to report any suspicious activities related to real estate investment plans for law enforcement agencies immediately to prevent further financial losses and accountability for the perpetrators.
