More than 500 Vietnamese have been duped into joining and losing a hefty amount of money to a fraudulent ‘how to get rich’ scheme run by an unsuccessful businessman who claimed to hold a PhD.

Pham Thanh Hai, 52, managed to swindle more than VND476 billion (US$20.97 million) from 508 people by encouraging them to invest in ‘lucrative businesses’ that would yield easy money, according to the Hanoi People’s Procuracy.

Prosecutors have finished their probe into the case and decide to file charges against Hai for “swindling and appropriating assets” as per the Penal Code.

Failed businessman turn ‘teacher for rich-wannabes’

Hai used to be the chairman and CEO of a private company called IDT, registered and headquartered in Hanoi.

The company had been struggling with its internet-based business until 2008, when Hai decided to take advantage of its legal entity to mobilize investment from individuals for his personal purpose.

He then set up a website and social media page called 'hoclamgiau.vn' (Learn to get rich), and organized different conferences on the theme to lure people into investing in his bogus projects.

Hai then introduced himself as a PhD with extensive experience in doing business in the former Soviet Union, encouraging people to pour money in several highly remunerative investments run by IDT.

Even though IDT did not conduct any real business, Hai promised to pay his ‘investors’ interest rates of 40-50 percent a year, and offered high commissions of up to 10 percent to those who introduced new members to the network.

The network structure of the fraudulent scheme in the name of IDT

Hai, in the name of IDT chairman and CEO, used the company’s seal in the investment authorization contracts he signed with investors to win their trust.

The trick enabled him to mobilize more than VND2,725 billion (S$120.04 million) in only a year from October 2014 to October 2015.

Hai only used a meager sum of VND114 billion ($5.02 million) from this to put into real investment projects, with the remainders spent on his personal uses, paid interests and commissions to the investors and funded the ‘hoclamgiau.vn’ activities to expand its network.

According to investigation results, none of the investment projects Hai channeled his money to were as profitable as he promised to investors. None of these projects were run by IDT as Hai claimed with his victims.

As the network expanded, Hai had to spend a few hundred billion dong a month to afford payments to his investors, and had to try hard not to let the network collapse as investors would realize they were fooled and notify authorities.

Hanoi prosecutors said Hai is now incapable of paying his investors, with 508 people demanding that he compensated them a total of VND594 billion ($26.17 million) for the VND476 billion he swindled of them.