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Pak Man Telo : The Originator of the 'Ponzi' Scheme in Malaysia

I have a keen interest in anything related to Ponzi and pyramid scheme like investment and various frauds which had taken place in Malaysia.

Nowadays, there are lots of get-quick-rich or Multi-Level Marketing (MLM) schemes in Malaysia. Most of them use fraudulent techniques which are the hallmark of pyramid schemes. Most people who were hungry for easy money easily get duped by Ponzi schemes and lose their life savings due to being influenced by persuasive tactics and over the moon dreams as told by the perpetrators

However, this issue is not something new in our country. Get quick rich schemes or MLM had existed for many years in Malaysia and not many may have heard of the individual known as " Pak Man Telo" who is the originator of this scheme as early as the 1980s


Pak Man Telo is the most famous scammer in Malaysia. He had allegedly swindled more than RM 90 million from almost 50,000 people.

Pak Man Telo or his original name Osman Hamzah hailed from Taiping, Perak is the originator of the most infamous get rich quick scheme in Malaysia at one point of time.

Pak Man Telo formerly worked as a journalist in Warta Harian daily in the 1960s before becoming a part-time reporter with Bernama in the 1970s. At the end of the 70s, he formed a company which ran get quick rich scheme called Skim Pertama Berhad or better known as the "Pak Man Telo" scheme.


Picture above shows many investors waiting in front of Pak Man Telo's office to collect their dividents

Although many people knew that this scheme lacks a conventional "business model" which didn't have a policy statement, many were influenced by this scheme as it never failed to pay high dividends to its investors.

As time passes, the Pak Man Telo scheme became more popular and gained the trust of people as it never defaulted in paying off dividends for quite some years. In addition to that, several early investors became millionaires in a very short time.

Many people became blindsided by the fact that Pak Man Telo's scheme offered dividends ranging from 10% to 12% per month.


However, the smooth operation of Pak Man Telo's scheme came to a halt in the late 1980s. On 1 October 1989, several officers from the National Bank of Malaysia (BNM) raided Pak Man Telo's home in Taiping to investigate his scheme.

BNM subsequently conducted a second raid on the 23rd of November 1989 and confiscated RM 1.7 million worth of cash from his house. At that time, Pak Man Telo together with his wife Maimunah Taib and son (Abdul Rahman Osman) was arrested by the authorities from collecting money from people without a valid license.

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On the 11th of January 1990, Pak Man Telo was brought before a court on charges of violating the Banking and Financial Institutions Act 1989. His wife and son were also charged for conspiring. All three pleaded not guilty on the charges slapped against them.


Pak Man Telo was released on a RM 1 million bail with his passport withdrawn while his wife and son were both released on RM 200,000 bail each with one surety. All the bail charges were paid in cash.

Pak Man Telo together with his spouse and son attended a hearing in court on the 13th of March 1990. Pak Man Telo pleaded guilty on charges of taking deposits without a license. Court sentenced him to pay RM 250,000 on fines or accept a 1- year imprisonment while both his wife and son were released. The Judge also ordered that the RM 1.7 million cash found in Pak Man Telo's by the authorities to be returned to him as there is no provision under BNM for its officers to confiscate items found in a suspect's home.

Pak Man Telo was hoisted by supporters after his release from court


Pak Man Telo paid the RM 250,000 fine by cash. Despite being found guilty, his supporters who waited outside the court after the verdict was delivered celebrated Pak Man Telo's freedom and shouted " Long Live Pak Man Telo".

Pak Man Telo's scheme operated as usual. At this time, his popularity skyrocketed and his scheme reached its peak and became well known throughout the country. Dividends amounting to 10% were paid without fail and it was also increased to 12% after that.

Signs of Trouble


In September of 1990, investors began to realize that their dividends were not being deposited to their bank accounts like before. Pak Man Telo then announced the decrement of dividend rate from 12% to just 5%.

Many investors barged into the man's house to ask for an explanation. Pak Man Telo argued that the Gulf War being fought in Kuwait had caused a worldwide economic downturn which caused him to pay lower dividends than usual. He also claimed that several of his agents were swindling money.

In January 1991, things took a turn for worse when Pak Man Telo failed to pay any dividends at all as promised. A crowd began to gather around his house to demand their invested money and chaos soon erupted. Pak Man Telo's car was damaged in the process.

A month after this incident, the situation became even more critical after a group consisting of 6 men kidnapped Pak Man Telo's son (Abdul Razak Effendi) and held him at Tropicana Hotel, Kuala Lumpur for 1 week. The kidnappers demanded that Pak Man Telo pay them damages worth RM 430,000. However, police managed to track them down and arrested them.


In April 1991, Pak Man Telo was arrested for several weeks by policemen from Bukit Aman after several get rich quick scheme investors lodged a police report against him for alleged fraud.

After a detailed investigation, BNM charged Pak Man Telo in court on charges involving taking deposits illegally from people (numbering 50,000) worth RM 99.09 million without a license. Pak Man Telo himself admitted he didn't know how much money his company had raked in all these years they didn't record any transaction while the company was in operation.

He pleaded not guilty and asked for a trial. Pak Man Telo was allowed bail worth RM 2 million while waiting for his court dates scheduled in early 1992. On the 2nd of March 1992, Pak Man Telo was found guilty and was sentenced to a year jail plus a fine of RM 500,000.


Pak Man Telo finally underwent his prison sentence for a year starting from the date of his arrest on the 17th of July 1991. After failing to pay RM 500,000 in fine, he was sentenced to another year in jail starting from the 2nd of March 1992. He underwent his sentences in the Taiping Prison.

After his release, Pak Man Telo was sent to Kuala Berang, Terengganu under a Banishment order. Pak Man Telo laid low with his second wife and a son there. He started a new life to feed his family by repairing televisions and radios.

On the 22nd of December 1997, 70 years old Pak Man Telo breathed his last due to old age. That brought to an end the life of one of the most infamous "scammer" in Malaysia.

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