More than 35,000 victims have filed claims totaling over $386 million in losses stemming from the WCM777 Ponzi scheme. The Receiver for the collapsed operation faces a daunting task: only $86 million in actual invested funds has been accounted for, with just $30 million recovered for distribution.
The sheer volume of claims, many of which are unsubstantiated, has prompted the Receiver to propose a cost-effective Phase II plan for court approval. This plan aims to limit the review of dubious cash claims and those based on promised but non-existent returns. Many investors appear to be claiming funds that never reached WCM777’s official records, instead going to recruiters or affiliate marketers.
Sorting this financial tangle is a monumental undertaking. The proposed budget for Phase II alone is $374,866. This figure climbs because the number of transactions requiring testing has more than doubled the Receiver's initial estimate. Specifically, 72,253 transactions need scrutiny, far exceeding the 33,713 anticipated. The number of cash transactions requiring manual review also surged substantially to 58,481.
A primary source of this confusion stems from WCM777’s inadequate record-keeping. The company’s books and records did not include a centralized database of investors or their financial dealings. Instead, the Receiver must piece together investor claims by cross-referencing data from WCM777’s web host, bank statements, individual investor submissions, and information from undisclosed third parties.
While the number of investor transactions to be verified falls within the higher end of the Receiver's projected range, the Receiver believes it is still feasible to complete the process. The goal is to produce lists of allowed and disallowed claims that accurately reflect the victims’ losses from the WCM777 scheme. Verified losses are expected to be considerably less than the $386 million initially claimed.
The majority of claimants, accounting for 62% of all filings, are from China. These investors are collectively seeking $167 million. Many of these claims appear to include the value of promised "Kingdom points" alongside actual investments, amounts that do not align with supporting documentation. Some claimants have even inflated their claimed sums by adding extra zeroes. The issue of Kingdom points, which do not represent real monetary value, continues to be a point of confusion or deliberate misrepresentation for many.
US investors represent 18% of the claims, seeking $97 million. Taiwan follows with 3% of claims, totaling $28 million. The proposed schedule outlines analysis of claims and the issuance of deficiency notices to investors.
Phil Ming Xu, a key figure in the WCM777 scheme, was previously sentenced for his role in the fraud.