Discover how Malaysians Lost Over RM 22 Million In The Incident Behind One Of The Oldest Ponzi Scandals in the country

Have you heard of a get rich quick scheme called Scheme Pestama Berhad back in the late 70s?

Pak Man Telo, also known Osman Hamzah, was the person behind this Scheme Pestama Berhad get rich quick scheme. The other name for it was Pak Man Telo scheme.

He was from Taiping, Perak. Before he started Scheme Pestama Berhad, he was a newspaper reporter in 1960s and become a freelance journalist for Bernama in 1970s.

At the end of 1970, the Scheme Pesta Berhad scheme became popular and gained the public’s trust because the company was able to pay out dividends consistently.

However, at the end of 1980, the scheme began to shake because several Bank Negara Malaysia officers raided Pak Man Telo’s house to investigate further on the get rich quick scheme. During the second raid, the officers confiscated RM1.7 million cash deposit. With the evidence on hand, the authorities then arrested Pak Man, his wife Maimunah Taib, and their son Abdul Rahman Osman.

Here are the brief sequences of what happened to Pak Man Telo Scheme

 

Discover How Bank Negara Lost RM 22 Million In The Incident Behind One Of The Oldest And Biggest Financial Scandals

January 11, 1990

The authorities brought Pak Man Telo to court and he faced charges of violating the Banking & Finance Industry in 1989 by taking RM20 million deposit from the public without having a legal license. The court accused Pak Man and his family of abetting and 3 of the family members pleaded not guilty.

The court released Pak Man on a RM1 million bail and the authorities seized his passport while they released his wife and son on RM200000 bail each. The court said they will try the case again.

March 13, 1990

Pak Man Telo, his wife, and their son went to court and the court tried their case again. During this trial, Pak Man Telo pleaded guilty to taking deposits from the public without having a proper license. The court said they will pass Pak Man Telo’s sentence tomorrow and released his wife and son. The judge then ordered the authorities to give back the confiscated RM1.7 million to Pak Man Telo because there was no provision to allow Bank Negara Malaysia to confiscate.

March 14, 1990

Pak Man Telo was given a choice of either paying RM250,000 fine or to face one-year imprisonment as his sentence. He chose to pay the fine in cash. Despite that Pak Man Telo was found guilty, his loyal supporters were still shouting Long Live Pak Man! Many observers thought that the get rich scheme will collapse after this legal case. Instead, it gained more exposure and became immensely popular.

April to August 1990

Pak Man Telo scheme continued to operate as normal and taking more deposits from the public. The scheme promised a dividend of 10 percent of the investment. Suddenly, the dividend rate increased to 12 percent and a lot of people were even happier.

September 1990

Things started to go bad again at this point in time. Several investors in the Pak Man Telo scheme reported that they did not receive their dividends this month while certain investors only received half of the promised dividend percentage.

September 19, 1990

Disgruntled investors then went to Pak Man Telo’s house in Taiping to seek for clarification on the status of their investments.

September 20, 1990

Pak Man Telo announced a cut in dividend rate from 12 percent to only 5 percent on the investment. His reason for the reduction was it was due to a global economic recession caused by the Gulf War and he also blamed the wrongdoings among the agents.

January 15, 1991

The situation began to get worse and Pak Man failed to pay even the promised 5 percent dividend on investment. This led to investors flocking to his house in Taiping to claim back their investment capital. There were a lot of commotion going on and these restless investors damaged his cars.

February 28 to March 5, 1991

I am not sure if this is a related to the case but six men apparently kidnapped Abdul Razak Affendi, Pak Man Telo’s son, and locked him up at the Tropicana Hotel in Kuala Lumpur. The police arrested all of the six men later on.

March 15, 1991

The authorities brought Pak Man Telo’s son kidnappers to court.

April 6, 1991

Another investor made a police report on the missing dividends. The Bukit Aman police then detained Pak Man Telo and kept him in the police station for several weeks. After that, they banished him to Kuala Terengganu, Terengganu.

July 17, 1991

After further investigations, Bank Negara Malaysia claimed that Pak Man Telo was guilty of taking RM99 million from the public that consisted of approximately 50000 people. Pak Man Telo pleaded not guilty and asked for a trial. The court granted him RM 2 million bail while he waits for the trial in early 1992.

March 2, 1992

Pak Man was found guilty again after the trial was over. The court sentenced him to a RM500,000 fine or one-year imprisonment. During this time, Pak Man Telo chose the one-year imprisonment sentence because he was unable to pay the RM500,000 fine.

It was said that Pak Man Telo’s get rich quick scheme is one of the biggest financial scandals in Malaysia and Malaysians lost more than RM 22 million because of it.

Besides Pestama Scheme Limited, there were also other get rich quick schemes that operated in Malaysia until early 1992 and they include:

  • 350 schemes (collect deposit RM70 million)
  • Tingcon Credit Scheme Development Sdn Bhd (RM60 million)
  • Gems scheme Bakti (RM30 million)
  • Scheme 120 (RM20 million)
  • Permata Pintar Scheme (RM19 million)
  • Sri Emas Enterprise Scheme (RM10 million)

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