Episode Transcript
[00:00:01] Speaker A: Welcome back to behind the Scams, where the fraudsters are clever, but never clever enough for us.
Today we're diving into one of the wildest crypto Ponzi schemes you'll ever hear about.
It's the story of Praetorian Group International, led by Ramil RV Palafox, a man who turned scamming into a bizarre kind of performance art.
Imagine attending an investment seminar where the highlight isn't financial advice, but a CEO blasting dollar bills into the air with a cash cannon. Add in yacht parties, desert safaris in Dubai, and a garage full of Ferraris and Lamborghinis. Sounds more like a reality TV show than an investment strategy.
Over 90,000 people from around the world were dazzled by the spectacle and handed over more than $200 million, all while being promised daily returns that made Warren Buffett look like an underachiever.
Nick and sue are about to break down. How Palafox pulled this circus off, how investors got swept up in the illusion, and why cash cannons might just be the tackiest investment strategy of all time.
[00:01:11] Speaker B: Welcome back to behind the Scams, where the fraudsters are clever but never clever enough for us. I'm Nick, and as always, I'm here with my wife, Sue.
[00:01:20] Speaker C: So what have you got lined up for us this time?
Please tell me it's not another romance scam. I can only take so much secondhand heartbreak. I think I'm ready to write country western songs at this point.
[00:01:34] Speaker B: No romance this time, but plenty of broken hearts and empty wallets. Today we're diving into one of the most audacious cryptocurrency Ponzi schemes I've seen. Praetorian Group International, run by a guy named Ramil Ventura. Palafox.
This case has everything.
Fake trading platforms, cash cannons, desert safaris in Dubai, and a forfeiture list that reads like a luxury shopping spree gone completely insane.
[00:02:05] Speaker C: I have to say, Nick, every time you tell me about these cases, I'm amazed by how elaborate they get. It's like they're putting Hollywood level production values into their scams.
[00:02:15] Speaker B: You're absolutely right. And that's part of what made this so dangerous. This wasn't some guy in his basement sending out mass emails.
Palafox understood that in the digital age, perception is everything.
He was operating during the height of the crypto boom. Remember, bitcoin hit nearly 65,000 in April 2021. Right in the middle of his operation.
People were seeing stories everywhere about crypto millionaires who got rich quick. And Palafox positioned himself Right in the middle of that narrative.
[00:02:52] Speaker C: Wait, cash cannons? Like literally shooting money into the air? Nick, can we get one of those for our game room?
[00:02:59] Speaker B: Sure, but you're loading it every time we use it. Anyways. Picture this, Sue. You're at a PGI investment event, probably already wondering if this is too good to be true, and suddenly the CEO brings out a device that literally shoots cash into the air for dramatic effect. It's like something out of a movie, except it's real life and it's your money he's shooting around.
[00:03:25] Speaker C: Oh my God, that's so tacky, it's almost brilliant. I mean, from a psychological manipulation standpoint.
[00:03:31] Speaker B: Exactly.
And that's just the tip of the iceberg.
Before we get into the wild details, let me set the stage. Rommel Palafox goes by RV Palafox is a dual citizen of the US And Philippines who was living it up in Las Vegas between December 2019 and October 2021. He ran PGI as what he claimed was an international bitcoin investment platform.
But here's the kicker. It was structured as a multi level marketing scheme.
[00:04:04] Speaker C: Oh no. Bitcoin plus mlm. That's like combining two of the biggest red flags in investing.
[00:04:11] Speaker B: And the international scope of this thing was staggering.
We're talking about investors from the United States, obviously, but also the Philippines, Australia, Canada, parts of Europe. Palafox had set up this whole network of promoters and distributors across multiple countries.
The indictment shows wire transfers flowing between accounts in Las Vegas, the Philippines and other locations.
This wasn't just a local scam that got out of hand.
This was a carefully planned international operation from day one. Right.
And the scale of this thing was massive. We're talking about over 90,000 investors worldwide over who put in at least $200 million.
The promises were your classic too good to be true setup. Daily returns of 0.5% to 3% daily returns.
[00:05:08] Speaker C: Let me just do some quick math here. Even at the low end, 0.5% daily would be like 180% per year. Let me put that in even starker perspective. The S&P 500, which tracks the biggest companies in America, averages about 10% per year. Over the long term, these people were promising 180% to over 1,000% annually.
That means they claim they could consistently outperform the entire American stock market by more than 10 times every single day. It's mind boggling when you put it that way. How could anyone believe that was sustainable? I mean, if you could really generate those kinds of returns, why would you need other people's money at all.
[00:05:57] Speaker B: That's exactly the right question to ask, and it's one that Palafox had rehearsed answers for.
He would tell people that they needed to aggregate investor funds to meet minimum trading requirements on major exchanges, or that they needed capital to scale their proprietary trading algorithms. It sounds technical and believable enough that most people don't dig deeper, but you're absolutely right.
Anyone with a legitimate system generating 3% daily returns would be the richest person on earth within a few years. And that's being conservative.
At 3% daily, you're looking at returns that would make you richer than Warren Buffett in about six months.
Palafox told investors they could double their money within six months, that the investments were completely secure, and that they could withdraw their funds weekly with no problems.
[00:06:53] Speaker C: I'm guessing that last part about easy withdrawals didn't age well.
[00:06:57] Speaker B: Oh, we'll get to that. But first let me paint you a picture of how this guy operated.
Palafox had this whole network of promoters he called Master Distributors. He'd recruit and train these people to present his marketing materials and and generate excitement about PGI's supposed trading profits. The primary job of these promoters was to recruit more investors who would then be encouraged to recruit even more investors themselves.
[00:07:27] Speaker C: So it's a classic pyramid scheme structure, but dressed up as cryptocurrency trading.
[00:07:32] Speaker B: Exactly. And the events these people put on were absolutely over the top. We're talking about lavish spectacles in glamorous locations.
Dubai penthouses, Las Vegas high roller suites, yacht parties. The indictment specifically mentions yacht outings and desert safaris in Dubai. Can you imagine? You're thinking about investing your life savings and they take you on a freaking desert safari to convince you.
[00:08:00] Speaker C: I have to admit, if someone took me on a desert safari, I might be a little more inclined to listen to their pitch. That sounds amazing.
[00:08:08] Speaker B: And that's exactly what they were counting on.
These weren't just investment seminars. They were psychological operations designed to make potential investors feel like they were already part of an exclusive, successful group.
Palafox would frequently display luxury cars at these events, showing off Ferraris and Lamborghinis as proof of how successful the company was.
[00:08:33] Speaker C: Let me guess, those luxury cars were actually bought with investor money.
[00:08:37] Speaker B: Oh, absolutely. And sue, when I tell you about this guy's shopping habits, you're not going to believe it. The forfeiture list in this indictment is like a catalog of everything expensive you could possibly imagine. We're talking about over 20 high end vehicles and I mean high end. A 2014 Ferrari Special, a 2016 Lamborghini Aventador, a 2016 Rolls Royce Ghost, a 2020 McLaren. Lets just say this Kia did not make this list.
[00:09:07] Speaker C: 20 cars. Who needs 20 cars?
[00:09:09] Speaker B: Someone who's spending other people's money. And that's just the cars. The handbag collection alone is insane. We're talking hundreds of designer bags, Hermes, Birkin bags, Chanel flaps, Louis Vuitton everything.
There are so many luxury handbags in this forfeiture list that they had to use a lettering system that goes all the way through multiple alphabets.
[00:09:35] Speaker C: Wait, multiple alphabets? Like they went A through Z and then had to start over.
[00:09:40] Speaker B: They go from single letters to double letters to triple letters and beyond.
There are Valentino bags, Versace purses, Goyard luggage, Christian Louboutin everything.
One Birkin bag made of alligator and ostrich with a protective cover and matching scarf.
You can just imagine how much this was worth.
[00:10:03] Speaker C: That sounds like it costs more than most people's cars.
[00:10:06] Speaker B: Probably more than most people's houses. And it gets worse. There's jewelry, watches, multiple Rolexes, Cartier pieces, a Hublot Spirit of Big Bang watch.
We're talking about gold chains, diamond bracelets, designer eyeglasses, even the shoes. There are designer sneakers, Yves Saint Laurent platforms, Manolo Blahnik heels.
This guy was living like a rap star.
[00:10:33] Speaker C: But all of this was being funded by people who thought they were making legitimate investments in bitcoin trading.
[00:10:40] Speaker B: That's exactly right. And here's the thing that really gets me.
Palafox went to great lengths to make this look legitimate. He created fake credentials claiming that PGI had licenses to trade cryptocurrency in Estonia.
The indictment shows that PGI's Estonian affiliate, Praetorian Group International OU did not actually have the virtual currency trading license they claim to have.
[00:11:07] Speaker C: So they were lying about being properly licensed. That's a huge red flag that probably flew right over most investors heads. Let me make sure I understand this correctly. Palafox was essentially creating fake business credentials and counting on the fact that most people wouldn't know how to verify them, especially for overseas licenses like the Estonia example.
[00:11:29] Speaker B: That's exactly right. And here's the thing. Most regulatory bodies actually make it pretty easy to verify licenses if you know where to look. For example, Estonia's Financial Intelligence Unit has a public database of licensed virtual currency service providers. It would have taken someone about five minutes to check whether PGI actually had the license they claimed. But Palafox was betting that investors would either assume he was telling the truth or wouldn't know how to verify it themselves.
Most people don't even think to check because they assume that lying about official licenses would be too risky for a scammer to do. But for someone already committing massive fraud, what's one more lie? Absolutely. And he had this whole elaborate story about how their expert traders could make money whether Bitcoin went up or down. He claimed PGI had a diverse product line and that some investors funds were even insured by a UK insurance company.
None of it was true, but it sounded professional and legitimate enough to convince tens of thousands of people.
[00:12:45] Speaker C: I'm starting to see how people got pulled in. It wasn't just some obvious scam email. This was a sophisticated operation with fake documentation and everything.
[00:12:55] Speaker B: Exactly. And Palafox used technology to make it even more convincing.
PGI had an online investor portal where people could supposedly monitor their investments. From 2020 through 2021. This portal consistently showed that investors accounts were gaining value.
People would log in and see their balances going up every day, thinking their Bitcoin trading was working perfectly.
[00:13:22] Speaker C: This online portal thing is particularly insidious. People could log in every day and literally watch their money supposedly growing. That must have been incredibly convincing psychological validation that the system was working.
[00:13:38] Speaker B: Absolutely. And this is where modern technology becomes a double edged sword.
It's incredibly easy today to create a professional looking website that mimics legitimate investment platforms.
Palafox's portal probably looked just as sophisticated as something you'd see from Fidelity or Charles Schwab.
It would show daily balance increases, transaction histories, performance charts, all completely fabricated, but visually indistinguishable from the real thing.
And every time someone logged in and saw their account balance going up, it reinforced their belief that they'd made a smart investment.
It's psychological conditioning through technology.
[00:14:26] Speaker C: But I'm guessing those numbers on the screen weren't backed by any real trading activity.
[00:14:30] Speaker B: Not at all. According to the indictment, PGI wasn't engaged in extensive trading on the cryptocurrency exchanges they claimed to be using.
The whole thing was just numbers on a screen.
Meanwhile, Palafox was using new investor money to pay returns to existing investors. Textbook Ponzi scheme mechanics. While siphoning off millions for his luxury lifestyle.
[00:14:57] Speaker C: So when did it all start to fall apart? Because obviously it did fall apart by.
[00:15:02] Speaker B: February 2021, if not earlier.
Investors started having trouble withdrawing their money. And this is where Palafox's lies became really obvious.
Instead of admitting there was a problem, he claimed that PGI was having Technical difficulties with its payment processors.
[00:15:23] Speaker C: Technical difficulties. The universal excuse for we don't have your money, right?
[00:15:29] Speaker B: And then between February and June 2021, he made what the indictment calls lulling statements. He told investors that PGI had formed relationships with two new payment processing companies and that these companies would soon facilitate withdrawals. He kept promising that everyone would eventually get paid.
[00:15:51] Speaker C: I'm curious about the specific timeline here. How long was he able to keep people believing these excuses? Were we talking weeks, months?
[00:15:59] Speaker B: According to the indictment, he managed to keep this going for about four months from February through June 2021.
That might not sound like a lot, but think about it from an investor's perspective. You've been getting returns for over a year. You trust the system, and then suddenly there are withdrawal issues.
When the CEO tells you it's just temporary payment processor problems and shows you documentation about new partnerships, most people are inclined to believe him rather than assume they've been victims of a massive fraud. He was very strategic about it. He'd give specific dates when withdrawals would resume, and then when those dates passed, he'd have new excuses with new dates.
Classic delay tactics.
[00:16:51] Speaker C: Lulling statements. I like that term. It perfectly describes how scammers keep victims calm while continuing to take their money.
[00:17:00] Speaker B: That's exactly what they were. The whole time he was making these promises, Palafox knew he didn't have funds sufficient to support investors withdrawal requests. He was just buying time while continuing to live large off investor money.
The indictment shows transactions right up until the very end, where he's buying luxury items and transferring money to personal accounts.
[00:17:25] Speaker C: It's almost sociopathic, isn't it, to keep spending people's life savings on handbags while telling them their money is safe?
[00:17:32] Speaker B: It really is. And the charges reflect just how serious this was.
Palafox is facing eight counts of wire fraud, five counts of inducing interstate travel with intent to defraud, one count of money laundering, and nine counts of unlawful monetary transactions. We're talking about potential decades in prison if he's convicted on all counts.
[00:17:57] Speaker C: That's a lot of different charges. I know our listeners might not be familiar with all the legal terminology.
Can you break down what wire fraud means specifically and why there are eight separate counts?
[00:18:10] Speaker B: Great question.
Wire fraud is essentially using electronic communications.
Emails, websites, wire transfers, phone calls to carry out a scheme to defraud people of money or property.
Each separate communication can potentially be its own count, which is why you see multiple charges.
So if Palafox sent fraudulent emails to investors on eight different occasions, that could be eight Separate wire fraud counts.
The prosecutors are basically building a comprehensive case that shows a pattern of deceptive communications over time rather than treating this as a single incident.
[00:18:54] Speaker C: What's that charge about inducing interstate travel? That's an interesting one.
[00:18:58] Speaker B: Great question.
That's when you convince someone to travel from one state to another as part of your fraud scheme. The indictment shows specific instances where investors traveled from Virginia to Texas, Virginia to Nevada, and even from Washington, D.C. to Virginia for PGI events. Palafox was luring people across state lines with the promise of exclusive investment opportunities.
[00:19:23] Speaker C: So he was literally flying people around the country to convince them to invest.
That shows a level of premeditation that's pretty chilling.
[00:19:32] Speaker B: Absolutely. And the money laundering charge is particularly interesting.
In September 2021, Palafox transferred 200,000 from his son's bank account to his own account in the Philippines. The government alleges this was designed to conceal and disguise the nature and source of the funds which came from the wire fraud scheme.
[00:19:58] Speaker C: Wait, he involved his son in this? That's awful.
[00:20:01] Speaker B: It appears so.
Whether his son knew what was going on, we don't know from the indictment. But using family members accounts is a classic money laundering technique. It's another layer of the sophisticated planning that went into this scheme.
This wasn't some spur of the moment scam. It was carefully orchestrated fraud that went on for nearly two years.
[00:20:24] Speaker C: Speaking of investigation, I'm curious about how cases like this typically come to light.
Do they usually start with investor complaints? Or do financial regulators catch these things through their own monitoring?
[00:20:37] Speaker B: Usually it's a combination of both. But investor complaints are often the starting point.
What typically happens is that individual investors start filing complaints with the sec, state regulators, or local law enforcement when they can't get their money out.
Initially, these might seem like isolated incidents, but investigators start seeing patterns. They'll notice multiple complaints about the same company or individual. Similar stories about promised returns, similar excuses about withdrawal delays.
That's when they start connecting the dots and realize they're looking at a larger scheme.
In this case, once investigators started following the money trails and examining bank records, the scope of the fraud became clear.
[00:21:28] Speaker C: You know what really gets me about cases like this? It's not just the money that people lost. It's the betrayal of trust. These investors believed they were securing their financial futures, maybe their retirements, their kids, college funds.
[00:21:44] Speaker B: You're absolutely right.
And that's what makes these financial crimes so devastating. It's not just about dollars and cents. It's about dreams and plans and trust.
When I look at Cases like this.
I always think about the 90,000 people who got caught up in this scheme.
That's not just a number, that's 90,000 individuals who thought they were making smart investment decisions.
[00:22:11] Speaker C: So for our listeners who might be tempted by similar opportunities or what are the red flags they should watch out for?
[00:22:17] Speaker B: First and biggest red flag, guaranteed daily returns.
I cannot stress this enough. Legitimate investments do not promise daily returns, especially not returns of 0.5% to 3% per day.
If someone promises you can double your money in six months with no risk, run away immediately.
Warren Buffett averages about 20% per year and he's considered one of the greatest investors of all time.
[00:22:50] Speaker C: That puts it in perspective. What about the MLM structure? Should that have been a warning sign?
[00:22:55] Speaker B: Absolutely. When investment opportunities require you to recruit other people to make money, that's a huge red flag.
Legitimate investment returns come from the actual performance of the underlying assets, not from bringing in new investors.
If your investment looks suspiciously like a pyramid scheme, it probably is one.
[00:23:17] Speaker C: And what about those lavish events? I could see how someone might think, wow, these people are so successful, they must be legitimate.
[00:23:26] Speaker B: That's exactly the psychological trap they're setting. Here's the thing.
Legitimate investment companies don't need to impress you with cash cannons and desert safaris. Their track record and regulatory compliance should speak for themselves.
When someone is spending more effort on theatrics than on explaining their actual investment strategy, that's a massive red flag.
[00:23:52] Speaker C: The psychology of it is fascinating in a really dark way. These events weren't just about showing off wealth. They were carefully designed to make people feel like they were being let into an exclusive club. Right?
[00:24:05] Speaker B: Exactly. It's what psychologists call the halo effect combined with social proof. When you're invited to an exclusive event in a Dubai penthouse, surrounded by luxury cars and successful looking people, your brain starts associating all of that success with the investment opportunity. You feel special chosen, like you're getting access to something that regular people don't know about.
And then when the presenter starts talking about returns, those returns seem more believable because they're coming from someone who's obviously successful.
[00:24:42] Speaker C: So the fancier the presentation, the more suspicious we should be.
[00:24:46] Speaker B: In a lot of cases, yes.
Scammers invest heavily in looking successful because that's their product. They're selling the image of success, not actual returns.
Ask yourself, if this investment is so profitable, why do they need my money?
Why aren't they just quietly getting rich off their own amazing trading system?
[00:25:09] Speaker C: That's a really good point. What about the licensing claims. How could someone verify something like that?
[00:25:15] Speaker B: Great question.
Any legitimate financial company should be registered with appropriate regulatory bodies.
In the US that might be the sec, finra, or state securities regulators.
For cryptocurrency businesses, there are specific licensing requirements in many jurisdictions.
You can and should verify these licenses independently.
Don't just take their word for it.
[00:25:42] Speaker C: Just.
[00:25:42] Speaker B: And don't rely on certificates they show you, because those can be faked.
[00:25:47] Speaker C: So do your own research. Don't just trust what they tell you.
What about when things started going wrong with the withdrawals? Were there warning signs there?
[00:25:57] Speaker B: Oh, absolutely. When a financial company starts having technical difficulties with payments, that's usually code for we don't have your money.
Legitimate financial institutions have robust systems for processing payments. They don't suddenly develop technical problems that prevent withdrawals for months at a time.
And when they do have genuine technical issues, they're resolved quickly and with full transparency.
[00:26:27] Speaker C: Right. And your bank doesn't tell you they're switching to new payment processors when you want to make a withdrawal.
[00:26:32] Speaker B: Exactly.
Those lulling statements about new payment companies were just ways to buy time and keep investors from panicking.
Anytime someone starts making excuses about why you can't access your own money, that should trigger immediate alarm bells. Your money should be available to you when you want it. Period.
[00:26:55] Speaker C: Let's talk about the psychology for a minute. How do smart people get caught up in schemes like this? I mean, 90,000 people isn't a small number. Those can't all be naive investors.
[00:27:07] Speaker B: You're absolutely right, and this is something I see all the time in my work. Intelligent, successful people fall for these schemes because scammers are really good at exploiting basic human psychology.
First, there's the fear of missing out fomo.
When someone tells you that this exclusive opportunity is only available for a limited time, your brain starts making decisions based on emotion rather than logic.
[00:27:36] Speaker C: And I imagine the MLM structure makes that worse because you're not just hearing about it from some stranger. You're hearing about it from someone you know and trust who's already invested.
[00:27:49] Speaker B: That's the genius of the MLM structure. From the scammer's perspective, social proof is incredibly powerful.
When your friend or colleague tells you they're making money with this system, it carries way more weight than any advertisement.
Plus, these promoters genuinely believed in what they were selling because they were seeing returns on their own investments, at least initially.
[00:28:17] Speaker C: So the early investors really were getting paid, which made them enthusiastic recruiters.
[00:28:22] Speaker B: Exactly that. That's how Ponzi schemes work. Early investors get paid with money from later investors, so they become genuine believers and testimonials.
The online portal showing increasing account balances reinforced this belief. People would log in, see their money growing, and think, this is amazing. I have to tell my friends about this.
[00:28:45] Speaker C: It's almost like a virus spreading through social networks. And I bet the cryptocurrency angle made it seem more legitimate somehow.
[00:28:54] Speaker B: Absolutely.
During the time frame of this scheme, late 2019-2021, cryptocurrency was having massive growth spurts. Bitcoin was hitting all time highs. People were hearing stories about crypto millionaires, and there was this sense that if you weren't getting into crypto, you were missing out on the future of money.
Scammers love to piggyback on legitimate trends and technologies.
[00:29:22] Speaker C: So they took something that was genuinely exciting and profitable, cryptocurrency, and used it as a cover for an old fashioned Ponzi scheme.
[00:29:31] Speaker B: That's exactly right. And the complexity of cryptocurrency trading made it easier for victims to believe that these incredible returns were possible.
Most people don't understand the technical aspects of crypto trading. So when someone claims to have developed sophisticated algorithms that can guarantee profits, it sounds plausible enough.
[00:29:54] Speaker C: That brings up an important point about cryptocurrency specifically. Since this is such a new and complex field, what should people look for when evaluating legitimate crypto investment opportunities versus scams like pgi?
[00:30:10] Speaker B: Excellent question.
First, be extremely wary of anyone claiming they can beat the market consistently in crypto trading.
Cryptocurrency markets are notoriously volatile and unpredictable. If someone claims they have a system that generates reliable daily profits, that's a huge red flag. Legitimate cryptocurrency investments are typically long term holds or investments in established platforms, not day trading schemes. Second, legitimate crypto companies are transparent about their operations. They'll show you exactly what they're doing with your money, what exchanges they're using, what their trading strategy is.
If someone's being vague about their methodology or claiming it's proprietary and secret, run away.
[00:31:00] Speaker C: What's really heartbreaking is thinking about how this affected families. $200 million. That's not just rich people's play money. That's retirement savings, college funds, emergency funds that people needed.
[00:31:14] Speaker B: That's what keeps me up at night when I work on these cases.
I've seen people who invested their entire life savings because they believe they were securing their family's future future.
I've seen retirees who thought they'd found a way to make their nest egg last longer.
The human cost of these schemes goes far beyond just the dollar amounts in the indictment.
[00:31:37] Speaker C: I think about the different types of people who got caught up in this. Retirees trying to make their savings last longer, young families trying to build wealth for their children's future, Maybe even people who had already been struggling financially and saw this as their one chance to get ahead. The betrayal of trust cuts across all demographics.
[00:32:00] Speaker B: That's exactly right. And what makes it even more tragic is that Palafox specifically targeted people's hopes and dreams. The marketing materials talked about financial freedom, early retirement, providing for your family's future.
These weren't random victims. These were people who were actively trying to improve their financial situations and and secure their futures. Some probably depleted their 401ks, cashed out life insurance policies, or took second mortgages on their homes. The emotional trauma of realizing you've not only lost your life savings, but that someone deliberately took advantage of your trust and aspirations, that's something that takes years to recover from, if ever.
[00:32:45] Speaker C: And meanwhile, Palafox is buying his fourth Ferrari and his 100th Chanel handbag with the contrast is just obscene.
[00:32:52] Speaker B: It really is. And that forfeiture list tells a story, doesn't it? When you see items like one Louis Vuitton light pink, giant monogram and raffia by the pool. Hawaii edition on the go, 16.5 inches wide. That's not just a handbag. That's probably someone's mortgage payment. Every luxury item on that list represents money that should have been in investors accounts.
[00:33:19] Speaker C: Do the victims ever get their money back in cases like this?
[00:33:22] Speaker B: That's always the difficult question.
The government will liquidate all these seized assets and distribute the proceeds to victims. But it's rarely anywhere close to full recovery.
A lot of the money has already been spent and is gone forever. The cars and luxury goods will help somewhat, but many victims will only get cents on the dollar, if anything at all.
[00:33:47] Speaker C: Can you walk us through how that recovery process actually works? I imagine it's not as simple as just selling the cars and handbags and cutting checks to victims.
[00:33:57] Speaker B: You're absolutely right. It's an incredibly complex process.
First, everything has to go through forfeiture proceedings, which can take months or even years.
The government has to prove in court that each asset was purchased with proceeds from the fraud.
Then they have to find buyers for hundreds of luxury items. And let's be honest, the market for used Ferraris and $50,000 handbags isn't huge.
The assets often sell for less than their original value. Then there are legal fees, storage costs, and administrative expenses that get deducted.
Finally, whatever money is left gets distributed to victims based on a formula that considers how much each person lost, but there's never enough to make everyone whole. It's a process that can take three to five years, and even then victims might see 10 to 30 cents on the dollar if they're lucky.
[00:34:54] Speaker C: That's so frustrating. So prevention really is the only effective protection?
[00:34:59] Speaker B: Exactly, and that's why we do this show. The best defense against these schemes is education and awareness. If people know what to look for, they can protect themselves and their families.
Let me share a few more practical tips for our listeners. I feel I have some expertise in this area since I was in federal law enforcement for 25 years.
In fact, I was involved in numerous asset seizures during my career.
I can tell you this Fraudsters hate it when you take their toys. Asset forfeiture is a powerful weapon in crime fighting.
[00:35:38] Speaker C: That's true. Nick, I've heard some of your stories and they are fascinating. But Nick, please do share some practical advice for our listeners. What should someone do if they're approached with an investment opportunity that seems too good to be true?
[00:35:55] Speaker B: First, slow down scammers create artificial urgency to prevent you from thinking clearly.
Any legitimate investment opportunity will still be there after you've had time to research it thoroughly.
Second, never invest more than you can afford to lose completely.
Even legitimate investments carry risk, so you should never put money you need for essentials into any investment.
[00:36:23] Speaker C: What about doing research? Where should people start?
[00:36:26] Speaker B: Start with regulatory databases. Check the SEC's EDGAR database. Look up the company on FINRA's broker. Check search your state securities regulator's website.
If someone claims to have licenses or registrations, verify them independently. Also, do Internet searches with terms like scam, fraud, or complaints along with the company name.
[00:36:48] Speaker C: And I'm guessing you should be skeptical of testimonials and success stories.
[00:36:53] Speaker B: Absolutely. Testimonials can be faked, and even real testimonials might come from early investors who genuinely believed they were making money.
Remember, in a Ponzi scheme, some people do get paid, at least initially. Don't let other people's apparent success override your own critical thinking.
[00:37:14] Speaker C: What if a friend or family member is trying to recruit you? That seems like it would be the hardest situation to navigate.
[00:37:21] Speaker B: That is tough, and it's by design.
Scammers love using social relationships to overcome people's natural skepticism. But remember, your friend or family member is likely a victim too. They genuinely believe in the opportunity. You can say something like this sounds interesting, but I have A policy of never investing in anything without doing my own research first.
Let me look into it and get back to you.
[00:37:51] Speaker C: That's diplomatic. And if they push back or try.
[00:37:54] Speaker B: To pressure you, any pressure to invest immediately is a red flag, even from people you trust.
Legitimate opportunities don't require you to make instant decisions.
If someone gets upset because you want to do due diligence on an investment that tells you everything you need to know about whether it's legitimate, what about.
[00:38:17] Speaker C: People who might already be invested in something that's showing these warning signs? What should they do?
[00:38:22] Speaker B: If you're in an investment that's showing red flags, try to withdraw your money immediately. Don't worry about missing out on future gains. If it's a scam, those gains aren't real anyway. Document everything.
Save emails. Take screenshots of your account, keep records of all transactions and consider reporting it to authorities, even if you're not sure it's a scam.
[00:38:47] Speaker C: What if someone realizes they're in a situation like this, but they're embarrassed or afraid to admit they might have been scammed? That psychological barrier must prevent a lot of people from getting help early, when they still might be able to recover something.
[00:39:05] Speaker B: That's such an important point, and you're absolutely right.
Shame and embarrassment are major factors that prevent people from seeking help.
I always tell people there is no shame in being the victim of a sophisticated fraud. These scammers are professionals who spend all their time figuring out how to manipulate people.
They study psychology, they use cutting edge technology, they create elaborate false narratives. Getting fooled by them doesn't make you stupid. It makes you human. The sooner you recognize what's happening and take action, the better your chances of minimizing the damage. And remember, by reporting it, you're not just helping yourself, you're potentially helping investigators stop the scammer before they can victimize more people.
[00:39:57] Speaker C: Where would someone report something like this?
[00:40:00] Speaker B: The SEC has an online complaint form, the FBI's Internet Crime Complaint center accepts reports, and most states have securities regulators who investigate fraud.
Even if your individual case doesn't result in action, your report might be the piece that helps investigators see a larger pattern. The PGI case likely started with individual investor complaints.
[00:40:26] Speaker C: Speaking of this case, where does it stand now? Has Palafox been convicted yet?
[00:40:30] Speaker B: The indictment we're discussing was filed in March 2025, so this is very recent.
Palafox has been charged but not yet convicted. He's still entitled to his presumption of innocence until proven guilty in court.
However, the level of detail in this indictment suggests prosecutors have a substantial amount of evidence. We'll have to follow the case to see how it plays out.
[00:40:57] Speaker C: Given the international nature of this scheme, I'm curious about the jurisdictional challenges. How do prosecutors handle a case where the fraud crosses multiple countries and involves victims from around the world?
[00:41:12] Speaker B: It's incredibly complex, and frankly, it's one of the reasons why international financial fraud has become so attractive to criminals. In Palafox case, prosecutors can bring charges in the US because he was operating from Las Vegas and targeting US Investors, even though he also had victims worldwide.
But think about this. If he had been operating from a country without an extradition treaty with the United States, or if he had fled to such a country, this prosecution might not have been possible at all.
The global nature of the Internet makes it easy for scammers to reach victims anywhere in the world. But law enforcement is still largely constrained by national boundaries. That's why international cooperation between financial intelligence units and law enforcement agencies is so critical.
[00:42:09] Speaker C: If he is convicted, what kind of sentence might he be looking at?
[00:42:12] Speaker B: Wire fraud carries up to 20 years per count, and he's facing eight wire fraud counts. Money laundering can add another 20 years. The unlawful monetary transaction charges carry up to 10 years each.
So theoretically, he could be looking at centuries in prison if convicted on all counts and sentenced consecutively.
Realistically, sentences usually run concurrently. But we're still talking about the potential for decades behind bars.
[00:42:45] Speaker C: And that's appropriate for the scale of harm he allegedly caused.
Before we wrap up, is there anything else our listeners should know about protecting themselves from schemes like this?
[00:42:56] Speaker B: I want to emphasize that the sophistication of these scams is always increasing.
The days of obvious Nigerian prince emails are largely behind us. Modern financial fraudsters use professional websites, fake regulatory documents, sophisticated marketing materials, and elaborate psychological manipulation techniques.
They're not targeting only naive or elderly people. They're coming after everyone.
[00:43:25] Speaker C: So skepticism isn't paranoia, it's prudence.
[00:43:27] Speaker B: That's right, Sue. Trust but verify.
And when someone is promising returns that seem too good to be true, remember that they probably are.
The fundamental rule of investing hasn't changed. Higher returns come with higher risk. And if someone claims to have eliminated the risk while maintaining the returns, they're either lying or deluding themselves.
[00:43:51] Speaker C: Before we wrap up, Nick, I want to ask about the broader implications here. This. This case seems to represent something of an evolution in financial fraud, combining traditional Ponzi scheme mechanics with modern technology, cryptocurrency trends, and sophisticated marketing. Are we seeing more schemes like this?
[00:44:12] Speaker B: Unfortunately, yes. The PGI case is really a perfect example of what I call Fraud 2.0.
Traditional criminal schemes enhanced by digital technology and modern marketing techniques. We're seeing scammers who understand that today's consumers are more sophisticated, so they create more sophisticated fraud to match.
They use professional web design, social media marketing, influencer partnerships, and even fake regulatory compliance to build credibility.
They exploit trending topics.
First it was real estate, then it was forex trading. Now it's cryptocurrency and NFTs. Tomorrow it'll be AI trading or quantum computing or whatever the next big thing is.
The underlying mechanics are the same old Ponzi schemes and pyramid schemes we've seen for a century. But the packaging gets more sophisticated every year.
[00:45:12] Speaker C: Before we close Nick, I want to make sure we've given our listeners every tool they need to protect themselves.
Can you walk through what someone should do step by step if they're approached by what might be a scheme like pgi?
[00:45:26] Speaker B: Absolutely.
Here's your fraud protection checklist.
Pause and breathe. Don't make any decisions in the moment, no matter how urgent they claim it is.
Step 2. Ask for everything in writing.
Legitimate companies will provide detailed prospectuses, regulatory filings, audited financial statements. STEP 3. Independently verify every claim. Check their licenses, look up their registration with regulators. Search for complaints online.
Step four. Calculate the math. If they're promising daily returns, compound those numbers out over a year and ask yourself if it makes sense.
Step 5. Consult with someone you trust who has financial expertise, a fee only financial advisor, an accountant, or even just a financially savvy friend who isn't emotionally invested in the opportunity.
[00:46:27] Speaker C: What about red flags and how these opportunities are presented to you? Are there warning signs in the actual sales pitch or communication style that people should watch for?
[00:46:37] Speaker B: Great question.
Watch out for pressure tactics. Phrases like limited time, offer exclusive opportunity, or act now before it's too late. Legitimate investments don't expire at midnight. Be suspicious of excessive secrecy. If they won't explain their strategy because it's proprietary or too complex for you to understand, that's a red flag.
Look for emotional manipulation.
They'll often start by asking about your financial struggles, your dreams for retirement, your children's future. And then position their opportunity as the solution to all your problems. And pay attention to guarantees.
No legitimate investment can guarantee returns, especially not the extraordinary returns these schemes promise. The moment someone guarantees you'll make money, you should be walking away.
[00:47:35] Speaker C: This case really highlights how important it is for all of us to look out for each other. If you see a friend or family Member getting involved in something that sounds like pgi. How do you approach that conversation without damaging the relationship?
[00:47:51] Speaker B: That's one of the hardest situations because people get very defensive when you question their financial decisions.
Approach it with genuine care and curiosity, not judgment. You might say something like this sounds really exciting and I want to make sure you're protected. Have you had a chance to verify their regulatory licenses? Have you run the numbers on what those daily returns would compound to annually?
Don't attack the opportunity directly. Instead, suggest doing the due diligence together.
Offer to help them research it.
Sometimes just the process of trying to verify the claims will reveal the problems. And remember, even if they don't listen immediately, you've planted seeds of doubt that might save them when the first red flags appear.
The goal isn't to win the argument. It's to give them tools to protect themselves.
[00:48:47] Speaker C: And remember that it's okay to say no.
[00:48:50] Speaker B: You.
[00:48:50] Speaker C: You don't have to justify not investing in something, even to friends and family.
[00:48:55] Speaker B: That's such an important point, Sue. You don't owe anyone an investment. And you don't have to provide detailed explanations for why you're not interested. No, thank you is a complete sentence. Your financial security is more important than avoiding an awkward conversation.
[00:49:12] Speaker C: This has been really eye opening. Nick. The sheer scale of the Praetorian Group scheme, the psychological manipulation, the lifestyle funded by other people's savings, it's both fascinating and horrifying.
[00:49:26] Speaker B: It really encapsulates everything that makes financial fraud so dangerous. The combination of sophisticated presentation, social pressure, technological tools, and basic human psychology creates a perfect storm that can trap even very smart people.
But knowledge is power, and the more people understand how these schemes work, the harder it becomes for fraudsters to find victims.
[00:49:55] Speaker C: And that's exactly why we do this show. Thank you for breaking this down for us. And thanks to all our listeners for staying informed about these scams.
[00:50:04] Speaker B: That's a wrap on another case where the scammers thought they were smarter than the system. But justice has a way of catching up. Until next time, stay skeptical, stay safe, and remember, if it sounds too good to be true, it probably is.
[00:50:19] Speaker C: And remember, your future self will. Thank you for asking the hard questions today. See you next time on behind the Scams.
[00:50:27] Speaker B: And to all our listeners, remember, your most important investment is in your own financial education.
Stay informed, stay vigilant, and never stop asking the hard questions.
Bye for now.
[00:50:44] Speaker A: That brings us to the end of today's deep dive into the world of Praetorian Group International.
We saw how RAMIL Palafox, mixed crypto hype, multi level marketing and a whole lot of smoke and mirrors to convince thousands of people they were on the fast track to riches.
Along the way, we unpacked the big red flags.
Promises of impossible daily returns, fake licenses from Estonia that probably required more imagination than paperwork, and of course, the universal excuse of technical difficulties when people wanted their money back.
We also got a look at the mind bending forfeiture list, filled with everything from Ferraris to handbags so expensive they should probably come with their own security detail at the heart of it.
This wasn't just about money.
It was about trust, dreams, and how even the smartest people can get fooled when cash is flying through the air.
So remember, no matter how many luxury cars someone parks in front of you, no legitimate investment strategy involves a desert safari or a confetti cannon of cash.
Stay skeptical, stay safe, and until next time, this has been behind the scams, where we'll keep exposing the fraudsters before they can turn your savings into their shopping spree.
