I almost fell for it

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You know, there is a saying…  if something sounds too good to be true, it usually is.  Well, I almost lost out by falling for something that just sounded way better than it should.  Have you heard about the Legacy Group, or investing in various Rural Banks in the Philippines?  The rates that they paid were fantastic!  Really, one of the lower end products paid 20% on your investment.  Other plans paid 25%, even more.  There was one plan that offered you ten times your money in six years!  Wow!  Talk about a great rate of return… if you actually got it!

Money Down the Drain?

Money Down the Drain?

I had been hearing about these Rural Bank Investments for years.  There is an expat who lives in Cebu who got involved in these investments, as an agent.  Actually, on paper, I believe that it was his wife who was doing the selling, but the fellow was heavily involved himself too.  I am not going to name his name, because that is not too important at this point, and I honestly do not believe that he was unethical or dishonest in the whole scheme of things, he lost out himself, most likely.

Rural Bank

Rural Bank

You see, over the holidays, all of the banks affiliated with Legacy were closed down (at least temporarily) by Philippine regulators.  During the month of December, the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) put thirteen different Rural Banks into receivership.  The word was that they were involved in unsafe banking practices.  And, after all, how could it possibly be safe to offer ten times your money in 6 years?  Well, these banks were always touted as having PDIC (Philippine Deposit Insurance Corporation) insurance on deposits.  The upper limit on PDIC was P250,000 until recently, it was increased to P500,000.  Well, in truth, not all of these investment vehicles were PDIC insured.  Even those that were insured are not guaranteed to be paid.  So far the PDIC has said they would pay those who lost money, but “they are not sure when.”  That is not a very comforting statement, if you ask me.

About this time last year (January 2008), when it was starting to become evident that bad economic times were facing us in the near future, a close friend and I were talking over drinks.  We were both looking for a vehicle where we could safely put some money, and have it earn a good rate of interest.  We discussed Legacy, and my friend told me that a friend of his had used Legacy Group in the past and always got his money as promised.  I was so close to putting some savings in there, but something in the back of my mind told me that it was too good to be true.

Well, I can’s say that it was not true, but I think Legacy did get in over their heads.  As soon as the financial crisis hit and money started getting tight, it appears that Legacy was overextended.

Learn Bisaya/Cebuano

I’m glad that I didn’t get into the whole Legacy/Rural Bank thing.

Post Author: MindanaoBob (328 Posts)

Bob Martin is the Publisher & Editor in Chief of the Live in the Philippines Web Magazine. Bob is an Internet Entrepreneur who is based in Davao. Bob is an American who has lived permanently in Mindanao since May 2000. Here in Mindanao, Bob has resided in General Santos City, and now in Davao City. Bob is the owner of this website and many others.


  1. gerry m says

    Hi Bob, I was never tempted by the rural banks even though the owner of a certain website was trying to get his readers involved with them. I realised that I did the right thing not only financially but especially when I was banned from the site for flaming !!!! ME flaming!!!!! I would rather not say anything than be rude to anyone !! It was simply because I didn't agree with the owner. Nothing as strange as folks :-)

  2. Tom Ramberg says

    The fact that you resisted a too good to be true oppurtuinity makes you a lot smarter than the victims of the 50 billion dollar pyramid type scam being prosecuted here in the US. Maybe they should make this Madoff guy the economic adviser for the next administration. He did after all produce 50 Billion dollars! :-) When my daughter was born we were sold an insurance policy that we were told would provide a large amount of cash for college. After about 12 years I actually read a statement and discovered the cash value was only 1/4 of the amount paid in. I questioned this and was told that poor investments were made. I stated that yeah it started with mine! I learned a lesson that I will not repeat.

  3. chasdv says

    Hi Bob,This just shows how important it is to do our homework and listen to our gut instinct.Investment scams,Ponzi,s,Pyramids,etc etc,these scams have been around for 100's of years,yet they still come around and people get conned as they pray on peoples greed.As the saying goes" Never invest in something you don't fully understand" regards Chas.

  4. brian says

    Chas your last sentance should be engraved on the forheads of investors!!

    Good on ya Bob, the vast majority of scams play on the greed factor, there are no legitamate investments that yeild those kinds of returns consistantly.And when the music stops…someone will be out a chair.

    Tom; yeah i think Madoff learned how to do his pyramid scheme by watching congress play the same game with Social Security…both a house of cards run by crooks.

  5. says

    Hi Bob! Maybe that's the reason a local rural bank was closed since dec 24. hmmm… poor depositors, they were only allowed to withdraw 1,000. yeah, i have heard of legacy but I did not give it any attention immediately.

  6. John Miele says

    Bob: a good friend of ours (Filipino), had her business account there… Now gone (Though she'll get part of it back through PDIC…. takes Months, or, possibly years). God-awful mess.

  7. says

    Hi Bob;
    I am wondering was there any actual warning of impending receivership of these banks? Or none, as to prevent a 'run' for deposits?
    Pretty sad for those who have lost their dough; especially those locals who were simply using their local bank in good faith. I hope as the auditors go through the accounts they can prioritise paying out small depositors first; there must be a lot of battlers really suffering because of this.

  8. says

    Well Bob it may not be long until that happens in the states. Did you know that the FDIC changed the amount of money they will insure in US banks? It is $250,000 vice $100,000.

  9. Justin says


    Im not sure if its same guy your talking about or not but was a Brit fellow named David Whittal and his filipina wife Salome who got mixxed up in this Legacy scam as agents and in fact are still pushing off other ponzi schemes to unsuspecting clients. I think they are guilty although I feal also that greed lead them to push clients into this scams despite fully knowing that cease and desist orders had been issued years ago. Also, Was rather ironic how this same Brit routinelt threatened ppl with libel cases for pointing out that these where ponzi scam. It isnt libelous at all as he wasnt beeing libeled but was rather trying to protect the goose with golden egg from being slaughtered,

    I think your right that they lost some money but would be willing to bet that most money lost was their investors money and not their own as fellow as per his own blog was selling sausages to survive before stumbling across the golden goose. Was article in sunstar that mentioned his name yesterday and went on to say that he and his wife had gotten investors to invest more than 33million pesos, now legacy paid out a 10% commission rate so thats roughly 3.3million worth of kickbacks from this ponzi scheme. That said Id be willing to state that 100% he profited more than he loss from this ponzi scheme.

    BTW, If its same fellow and he isnt defrauding anyone he should remove the other ponzi schemes from his blog such as the one called v8 that is alledgedly paying out at 100% and gonna double your interest in 1yr. Sorry but doesnt take a genious to see that such interest rates are tottally unsustainable.

    I think class action suit is rather strange idea in PI as seems it could possibly just set those investors up to all be tossed aside with 1 bribe. Also, Make no sense to sue broke business as they are broke and folks cant get blood from turnip. Also would be truly hard to attach future earnings as business will have no future earnings after this fiasco. Would had made more sense to go after the individuals involved as well as the agents by filing individual cases.


  10. Michael says

    Gordon Gekko said "Greed is good".
    What he should have said is greed is good if you are running the scam but not if you are the bozo who thinks a legitimate investment will return your money tenfold in 6 years!
    A fool and his money will always be parted … that is nature's way.

  11. Phil n Jess R. says

    I've been scammed for a couple of hundred dollars a couple of times in my life ..Now I can see them a mile away ….

  12. neil says

    Hi Bob
    I know one individual who was promoting Legacy group to people on another website. He only put enough that would be covered by PDIC. Anyone with common sense can realize no one can guarantee 20% or more per year in this relatively low interest rate environment and now going much lower. The BSP tried to shut this group down in late 2007 but was stopped by a Manila court judge (who I believe should be charged with economic sabotage/treason along with the Court of Appeals who handled this case). It was the Supreme court who allowed the BSP to shut down these banks. How much more money does PDIC have to pay out since Legacy group's closure was delayed by one year. The reason I say this is that it is very clear that this type of promised return was bogus and fraudulent. People put money into this because this was PDIC insured. PDIC gets its money from banks who pay them an insurance. The higher the guarantee the higher the insurance these banks have to pay. That in effect makes the good banks support the bad banks. That is the danger of raising the PDIC coverage to such a high amount. I really hope that people who put money into these instruments get nothing back. Just like some Madoff investors who pulled all their money or the returns on their original investment have actually made money because of their such high returns. Actually some Madoff investors may have to return some of their profits. I think many of these rural banks must be better scrutinized and regulated so these pyramid schemes do not hurt the Philippines economy.

  13. justin says


    I suspected that was who you where talking about as he has since about 2004 been a very vocal Legacy mouthpiece. Ive emailed with him in past and he seemed to be a decent guy but then again most con-men are also decent acting while hustling folks out of their money, the must build trust. Truly though I suspect he got carried away by greed as greed is powerful force. I meen it even caused 100's of conquistodors to die not from aztec weapomry but for reason of beeing weighted down by the stolen gold and choosing to drown rather than drop it. Very powerful greed must be.

    I just feel sorry for the filipino people and others who invested in this scam as a way to generate more money during their retirement years. I hope they get paid via PDIC and havent seen any case where PDIC has ever neglected to pay but do believe this may be first time a ponzi scheme has ever been PDIC insured. This makes it interesting as PDIC only covers money used in real business and not pyramiding, very interesting if consider 2 PDIC presidents have called Legacy a ponzi. Anyway will be very interesting to read what happens as PDIC is in no way obligated to pay if guidelines wherent followed and they do investigate claims before paying.

    On scary note, Ive read some articles stating Legacy holds enough accounts to wipe out half of PDIC , not to mention the other non Legacy rural bank failures as well. Kinda scary as wouldnt really take much to bankrupt PDIC after and if they decide to pay out on these scams. One major bank failure and the system may well not be able to pay and wouldnt even take a large bank, just a bank run on the rurals, which is possible as folks may get spooked due to the Legacy fiasco.


  14. Graham says

    Im thinking of joining the Philippine Retirement Program next year for my SRR Visa, i will be 50! years old. Part of the requirements is to deposit $20k in an accredited bank here in the Philippines(under 50 yrs old you have to put in $50k). i hope the banking crisis will be settled by then as i dont feel confortable right now putting any money in a Philippine Bank.

  15. Klaus says

    Hi Bob, Legacy tried to involve also Rose and me many years ago. We didn't understand everything. THANK YOU CHAS!!!! Now we met some people (Filipinos and aliens), who lost millions and millions. As I said, Rose and I didn't understand everything – but we understood, that no institution can quarantee such huge interest rates…

  16. hill roberts says

    Maayong buntag, Bob,

    A similar scheme was also hatched out by a certain group in the UK called Barlow Clowes, named after the man who developed this very skillful way of taking money out of wealthy British and other nationalities living in Spain. Some very good friends of ours also got hooked on the idea and joined this scheme, poured an awful lot of money…eventually, the money supply supposely due them dried up—-and our friends kept waiting and waiting for the "returns" but never came. This man was sued, sent to jail—and a few years ago, was released, still with his "loot" intact. He is a very very rich man and still living the life of luxury somewhere in the Caribbean. As for his victims, the British government ended up rescuing those who were badly conned by this man. In the 80's, it was very common to find people luring them to invest in their financial scheme—and how easy for people to go for it, hook, line and sinker—just too many gullible well-to-do Brits prepared to invest in shady deals. I'm just glad my husband is not easily persuaded by smooth-talking thieves in smart business suits. Time share was another scheme that also took hold and many investors also lost money. Just as well the British government is always on standby to rescue their citizens. Hmmm. I wonder if the Philippine government would do the same?

  17. Obei says

    I just recently received an e-mail that seem like it was testing my math skills and towards the end it was actually sorting me out from the pack… it either made me part of the 98% of the population or the other 2% who think differently. Well, I belong to the latter. My point here is that, there is 98% of the population that will always try a product before making a decision instead of thinking it through then make the decision to try the product hence these businesses (or schemes as we know them) flourish.

    I’ve been scammed many times and I kept saying to myself “why didn’t I see the signs?”… I guess I saw the signs but ignored them, I am the perfect “victim” so to speak. But the last one didn’t seem like a scam from the beginning… ACN Communications, because they didn’t ask for money, they just wanted me to be a representative, and when I make my earnings, I can move up to the next level… but I have to surrender my starting earnings to move up ( I guess that was the sign). The returns were not vey outrageous too so I was really having a hard time, plus the person that recruited me was somebody I know from work who has a good reputation and business sense and makes a lot of money… anyway, I am getting carried away by my emotions because I know I set myself up to be a victim hence I cannot call myself a victim, I was a willing participant who was stupid.

    Well, like a person dear to me always says “charge it to experience”.

  18. brian says

    BETH YOUR 100% CORRECT !! If everyone knew the history and control they exert over regulation, policy and control of our government they would easily realize they have been ripping ALL of us off for decades.

  19. brian says

    Amstel Rothchild once said: " I care not who makes the laws, give me control of the money and I will control the Country" …one of the forefathers of the federal reserve.

    Sorry to muck up the thread Bob..I'll try to contain myself from here onout.!!

  20. Spencer says

    I'm afraid would-be investors in this thread that believe a 20% return/yr. on an investment is "too good to be true" might indeed pass up viable opportunities. Indeed, those promised 10-fold increase in 6 years might want to be circumspect investing in that, but a 20% ROR on an investment does NOT return 10 times over 6 yrs. ($1000 investment @ 20% for 6 yrs. gives about $3287 return). There are investments making a 20% annual return that are solid, if nonetheless not so easy to find; although in the current world wide market enviroment, one should always be very cautious of any investment opportunity.

    The axiom still remains: one MUST understand what one is investing in, be it fish hooks or tiddly wink sets before jumping in. At the very, very least, an investment through someone you know & trust completely (like Madoff??) should STILL be looked at carefully.

    Greed propels all towards ruination at some point, including those poor investors being promised a 10 fold return in 6 years.

  21. says

    Good Day Bob
    This was a deal that looked to good to be true but there are deals like this all over. Take the Fanny Freddie mess. There was some very good creative book work done in this company for years and the stock holders paid the price. Most people that had investments in Fanny Freddie thought they had secure, low risk investments. You will find scams all over when there is money involved. But for the most part, when it looks to good to be true do not walk away, RUN AWAY.

  22. neil says

    Hi Bob
    I liked your comment on keeping your money under the mattress because I just read an article in the Philstar recently about how a family who sold a piece of property in Cavite for 1.5m. The couple did not trust banks so put the money under the mattress and sometime later checked on the money and what they saw was bugs eating at the pesos bills. I think they lost between 300-500k.

  23. says

    Hi Bob,

    John and I were offered by a Legacy agent a "double your money back in 3 yrs". :) I computed infront of the agent and said: that's more or less 33% per annum interest. Plus of course, their overhead cost, agent's commission and other expenses. I asked him, where do you invest the money for you to be able to pay that kind of interest? He was very vague about his answer.

    I used to be a Currency Broker and a Money Market Trader. Therefore these types of investments would not fool me. It's like – "the higher the return , the higher the risk."

    So when my clients asked me about it, I said there's too much risk involved. I, personally , do not believe it. Some listened. Some went ahead and played. Then lost millions. :( Really sad but it taught them a lesson. Some were kinda ok about it because it's just like losing in a casino.

    I have another client who said she gained at least Php300,000.00 because she played and took her money after getting the "interest" checks. Good for her. But most don't think. They got hooked instead and invested more. Now, they're all paying for their greediness. Tsk..tsk.. I really feel bad for those old folks who invested their retirement money . Gee.. that's a big no-no for a risky investment. The rule is: investment in a high-risk business should only be 10% of a person's net worth. That way, if he looses, it won't kill him.

    In trading, we call it calculated risk. But with pyramiding, I can't say the word here or Bob might ban me. lol

    As for PDIC, they will only refund those investments (max of P250,000.00) that have been invested in Rural Banks. But those investments that were invested somewhere else, I am not sure if they can still get anything at all. Such a mess huh!

    I hope this will help those who plan on investing in the near future.

    Thank you Bob. And Happy new year to all!

    Lea C. Walker

  24. athena says

    hello bob… im from cebu and friends and a relative of mine was also offerd by some agents from the legacy group here in cebu but it was only double your money in 6 years..and other banks are also offering this too.. not ten times….
    and also my cousin had an interest out option .. meaning he gets the interest every month… all in all.. from the interest money he did receive every month.. he lost only half of his money… for those who put their money few years earlier.. they are not in total lost coz they already receive something out of it… its the guys who put in money a year ago or just recently are the ones who lost their money big time..

  25. says

    I think you are right on the massive inflation from all the bailouts. This looks like gold and silver to be one of the best investments. Problem is there will be pressure put on gold and silver to curb inflation. This leaves property and land that ironically is what got us in this mess in the first place. Looks like the only thing to do in this mess is to keep your head low and hang on.
    On a side note here in South Dakota the average unemployment is still below 3% even after some layoffs and with a cold winter that has slowed construction. In South Dakota we do not get the booms like they do in California and Florida but we also do not get the bust.

  26. Gracy says

    We almost been one of the victim to this scam. two years ago,we went to Philippines to visit,then we had few friends who are also fil-westernian couple tell us about Legacy.they said they invest their money there coz the return is quite good.I was almost convince but my husband is not convince at all….
    I wonder what happened to them now,since they put most of thier money to Legacy!

  27. says

    Hi gerry m – You are a bad boy, gerry! Imagine, getting banned like that! :shock:

    Yep, the group you are talking about is the same person that I am talking about too.

  28. says

    Hi Tom Ramberg – Ha ha.. yeah, maybe Madoff would make a good economic advisor! It would be like the fraudsters who go to work for the FBI and such. Who could be better than a person who has been there and then become reformed. Problem is, I doubt that Madoff has done much in the way of reforming himself!

  29. says

    Hi brian – Remember the old movie, "Wall Street" with Michael Douglas? Greed is good, he said. I guess some 20 years later, greed has lead to a lot of downfalls!

  30. says

    Hi John Miele – I feel for your friend who lost her money (even if it turns out to be temporarily lost). I am happy that I did not end up like that. I hope your friend's money is repaid by the PDIC in a shorter time.

  31. says

    Hi Chris – There was not a warning per se. However, regulators tried to close the banks weeks earlier, but the banks went to court. This should have served as a sign.

  32. says

    Hi Dan Mihaliak – Yes, I did hear about that, a few months ago, as I recall. Do you think it is a warning sign? Or, just something to instill more confidence in the system?

  33. says

    Hi Justin – Yep, you hit the nail on the head. David Whittal is the person that I was talking about. I didn't realize that he was peddling other schemes now. I have had contact with him in the past, and he seemed like a nice guy. It would be interesting to have a face to face conversation with him now, because he really did tie himself very closely to Legacy, and I think it damaged his reputation.

  34. says

    Hi Michael – Yep, Gordon Gekko. I just saw that movie a few days ago too, after years.

    In Australia they don't have investments that give you a 10 times return in 6 years? :shock: That shocks me! :lol:

  35. says

    Hi Beth – Personally, I don't think that the Federal Reserve System is a scam. I know of nobody who has lost money because of it.

  36. says

    Hi Justin – I have a suspicion that PDIC is not going to cover this, or at least all of it. Like you say, they don't have to cover it if it did not follow the proper guidelines, and this seemingly did not. Also, it is most likely that no interest will be covered – principal only! Also, many of the products that Whittal was pushing were not PDIC insured, and those will certainly lead to losses for the investors.

  37. says

    Hi Graham – I understand your concern. I'd be concerned about that too. The good thing, though, is that you can convert your deposit to a condo or something else (out of the bank) only a month after your SRRV is approved.

  38. says

    Hi Klaus – Yes, you have to be careful, because I am also aware of other such investment vehicles here that offer such returns. I can never be fully trusted, even if it is a big name backing it, when the returns are this high.

  39. says

    Hi Hill Roberts – I am not surprised that something like this hapened in the UK, I feel certain that it happens in almost any country. It's sad to see when people who cannot afford it lose so much money like this!

  40. says

    Hi brian – You didn't muck up the thread… the post is on topic for what I wrote about, and it's your opinion. Just because it is different from my opinion, there is no problem. That's kind of what I've been trying to say on another article thread on the site, I commented a different opinion from the author, and was basically berated for that. My thing is, we can all have our own opinions, and anybody can share their opinion. We don't need unanimity on the comment threads… that's boring.

    Keep commenting! No problem.

  41. says

    Hi Spencer – I want to be clear. I never said that 20% would bring you 10 times your money in 6 years. I said that they had one investment vehicle that paid 20% per annum. I then said that another investment that they offered paid 10 times your money in 6 years. This was two different products. I thought I was pretty clear on that, maybe I wasn't. Sorry if that is the case.

  42. says

    Hi Obei – I think that when a deal sounds so good, we tend to overlook the obvious things that we should see. It happens to all of us at one time or another, I think.

  43. says

    Hi Larry – Yes, some people lost in the whole housing crunch – be it Freddie, Fannie or others – But,they were not offering outlandish deals like 20%, or especially 10 times your money in 6 years. :shock:

    Right now is a good time to put your money under the mattress it seems! :shock: oops, take that back. When the massive inflation hits from all the bailout packages, the money won't be worth anything anyway! :lol:

  44. says

    Hi Athena – To check out what Legacy was offering that would pay 10 times your money in 6 years, read here.

    This is the same person that we have been talking about on this comment thread.

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