A New Breed of Scammer Is Targeting Asia's Ultra-Rich

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There's been an explosion in the number of family offices opening up in Asian financial hubs like Singapore and Hong Kong. These are companies set up to help ultra rich families manage their wealth.

You have everyone from James Dyson, the vacuum billionaire and tycoon, to even Ray Dahlio, the hedge fund billionaire whose ship was docked here in Singapore not too long ago.

David Ramley is Bloomberg's investing reporter based in Singapore, and he says, along with all this growth, something strange is happening in the family office world. He told us about an encounter that happened a couple of years ago at a conference in Singapore. It involved Eduardo Kolovekio, who is

He was just having small talk, as you do with other panelists. One of the panelists was from a firm whose name he recognized because he'd done business with them before. So he asked them some very innocuous questions about the family principles, how they were doing, how are things, and the guy's face just drew a complete blank. He couldn't answer very simple questions about the principles about the family.

So Kolovikio did some quick digging around and it turned out that this person who was supposed to be representing this family office had never even worked directly with the family office that he claimed to be a part of.

In other words, the person had exaggerated and managed to get so far with that exaggeration that they were about to go on stage at a conference in Singapore and speak on behalf of the Family Office.

And David said, as the legitimate people who work in this industry say, they are seeing this kind of thing happen a lot lately.

They're encountering more and more of these sort of fake or exaggerated family offices. They go out into the world and attend conferences and events, and in some cases they're even meeting people at government hosted events. That turned out to be a little bit not quite right.

And while it's hard to say how many impostors are out there, given the secretive nature of this industry. There is a lot of money at stake. Family offices manage trillions of dollars globally and just recently in Singapore, ten people were convicted in relation to a two billion dollar money laundring case and one structure some of them used to hide the money family offices. Welcome to the Big

So a family office essentially is any kind of organization set up by a family or a person to look after their wealth or even their just life affairs. Some people use the family offices to run assets like private jets or properties around the world. I know one family office that was responsible for everything from the philanthropy to the food, the restaurants that people would go to and get booked into.

How much money do you actually need to set up a family office?

So this is a problem that we faced. The definition of a family office doesn't necessarily encompass a set amount

And this type of office is booming in Asia, David tells us. Part of the reason that's happening is that governments in this region are ruling out the red carpet for family offices, dishing out tax benefits to attract them.

What you're seeing is it being used as almost as a buzzword for governments from Hong Kong to Singapore and even in the Middle East in the UAE to draw super wealthy families and their businesses. Because as hedge funds and other investors start looking for family office money, governments also want family officers to come so that other investors in other parts of the finance sector also want a

And so far this courting seems to be working.

Family officers have traditionally been this very sleepy, boring part of the finance sector. It's not cool like hedge funds, right, you don't get TV shows on family officers. But recently, thanks to the rapid growth in Asia and thanks to the popularization of the term, it's suddenly become one of the hottest spaces to be in globally, but especially in

And so it's not hard to imagine why some people would be looking to lie or fake their way into a growing industry like that.

When you have something that is suddenly so cool, you see it as this jewel on the hill, and you really want to run towards it. You want to be part of it. You want to say, yes, I also work at a family office, or I have a family office. You know, one person compared it to joining a prestigious golf club. Now you might not even really enjoy golf, but you join up because you want to have some of that magic rub off onto you.

And David says, one place where you can clearly see the advantages of being part of this exclusive circle is on the conference circuit.

If you go to any of the conference is nowadays that are held in Singapore, Hong Kong and other places. There's always this differentiation in class, right, So if you say you're from a family office, or you say you're

The conferences are one way for those who want access to the family office world to get their foot in the door. And that's because this world is so hard to crack. It's long been known for its secrecy.

We're talking about in industry that while it has certain circles and certain groups of people, you very rarely start getting put up on your LinkedIn as a workplace. You know. One example I have in this store is that Marie Young, who's the very highly regarded chief investment officer for the family Office of Sergey Brinn, who obviously co founded at Google, her LinkedIn has simply said that she's from a Californian

But all this secrecy also means it can be really difficult to figure out who's legit.

And who's not because there is no definition for family office technically speaking, are these people even lying if they're exaggerating, that's a sort of definitionue right, But it makes the job of trying to ferret out exaggerators and fake is quite difficult when combined with the fact that even the real players in family office are often so vague and vacuous in their LinkedIn profiles and their public personas.

After the break, well here the lengths that the wealth industry is going to to ferret out the fakes.

And when he started to share some stipulets about the mismatch of information, each of us were also having interaction with that same individual. And then it started to then, oh, yes, now I'd understand why it's only info was somewhat on the gray area.

A growing industry with secrecy at its foundation makes it tough to catch impostors and hard to know just how many bad actors there might be in the family office space. Another reason a lack of regulation.

If I were to open up a hedge fund or a venture capital firm, I would need to get a license and be regulated. But because family offices are theoretically

So without clear ways to know who's legitimate and who's not, those working in the family office space have resorted to figuring it out for themselves. And one place where this kind of amateur detective work is happening is on messaging groups like we Chat and WhatsApp set up by the community hither Eric, can you hear me?

Yes allowing too?

Eric sewey Neo is a member of one of these groups. He's board director of a family office called Midway Investments, and he told us of an experience he had with someone who said they represented a family office.

So however, first got acquainted with this person who was through LinkedIn, and subsequently we corresponded. You know, it was very cordial, it was it looks so normal, right, They talked like a family office. You know, they would have similar mention of GP names conferences that we do get invited to attend, they would have the same access or even know the same organizer.

Neil says. Several members had interactions with this individual, and then a member of the group shared a photo that raised a lot of questions.

So one of the one of the community member shared a screenshot of all name cards that he had our dad individual representing different companies of family officers. I think it's a boat one, two, three, three, four name cards. And it was all within less than a year. And if you come from a family office or you work for a family right, it's quite rare that you change to different family offices representing different families within in the less than a year.

And there were other things that didn't add up. Digging into their past, members of the group learned the individual had lied about their education and that some of the firms they claimed to have worked for didn't even.

Exist, and that's where you know. I started to ask which family office do you represent and who is the principal and the individual couldn't even give a name.

Eric, it sounds like you guys all put on your detective hats to investigate this person.

Correct, yeah, or you can call it s a scientists of factual investigation.

Neo says the administrator kicked this individual out of the message in group, and he says if he and other family office professionals are tricked into sharing information with people who misrepresent their role, it could have a cost.

We don't want to run into a risk of exposing unnecessarily critical, sensitive private information to someone that we thought was legitimate right to a private banker. We also don't share a lot of things, but from a principle to principal perspective, we do.

Neo says. The community worries that the information they share in private could be used in unintended ways, and a recent high profile case in Singapore has presented a real threat to the wealth sector's reputation and put people like NEO more on guard. Unfolding scandal that have seen at least ten people arrested in connection with this alleged money laundering case. The ten people who were convicted with crimes in that massive money laundering scandal in Singapore had links

Matter, with many individuals that was caught with different passports and everything. So it's self titlished the wealth industry to some extent. And so I think the interested parties that's really going full cs on these basically with the best interest to say, look, we want to maintain the integrity of the industry. We want to maintain the integrity of the family office people, whether you're professionals or principles yourself, let's help protect one another.

Of course, one path to possibly preventing fraud in this industry is regulation. I asked a reporter David if more regulation could help weed out the bad actors.

So, needless to say, the people in this industry, both real and fake, are very wary of regulation. It's something that they don't think is necessary or welcomed. One point made by a gentleman from UBS is that the bigger the family office and the more money they have, the less these people would want to be on a register because they are so private in both the case a real family officers and the case of fake or exaggerated

A spokesperson from the Monetary Authority of Singapore told Bloomberg that potential money laundering is the key risk linked to wealth inflows from family offices, and to address that, Singapore and authorities are ramping up scrutiny of family offices and demanding more disclosures from them. But David says the secrecy that makes it easier for bad actors to operate isn't going away anytime. Soon.

I think any industry where you have limited regulation and you have maximum interest combined with huge fun flows is always going to be ripe for good and bad actors, and this is no different from that. To be Rich's glorious. Part of that glory comes with being quiet when you want to be quiet, and loud when you want to be loud.

This is The Big Take Asia from Bloomberg News. I'm wanh. This episode was produced by Young Young Jessica Beck, Thomas Lou and Naomi Um. It was mixed by Blake Maples and fact checked by Adriana Tapia. It was edited by Caitlin Kenny, Claire Ballentine, and Brian Chapada, additional reporting from Lulu E. Lun Chen and Claire Balentine. Our senior producers are named Shaven and Kim Gettleson. Our senior editor is Elizabeth Ponso, Nicole Beemster Bower is our executive producer, and