Too Good to Be True?
One day, I was surfing the net looking for a hot new investment opportunity—a place to park a few thousand dollars and earn more money than I’d get in a term deposit or a savings account. I came across the website of a company called Pacific Tycoon.
The idea behind it is that you enter a booming industry by leasing high-yield shipping containers to industries in Asia and elsewhere tax-free. You buy the shipping container for USD $4,100, and Pacific Tycoon organises transport of the container around in order for people to lease it. You can earn 12% of the container purchase price per year. The container belongs to you and has an individual number plate for tracking. It is registered in your name and is insured, and you can sell your containers at any time.
Sounds really good, doesn’t it? Shipping containers can last a long time (e.g., 20+ years), so you would effectively be earning $9840 (more than double) your initial investment over 20 years while holding insurance and some sort of asset equity. The idea is to build up a shipping container empire and rake it in! I was all set to go and was pretty revved, but I had to check a few more facts first. What I found was quite surprising . . .
Of course, the first thing I did in January 2013 was Google “Pacific Tycoon scam” and up came 30+ search results, from Facebook accounts to forum posts, where some very strange things were mentioned.
Upon revisiting the same search again in September 2014, there seems to have been a number of remarkable changes made by Pacific Tycoon in response to the questions posed in the original search results for "scam".
For a start, there are far fewer of the original "scam" results featuring in Google search now, and the extensive Facebook page devoted to the nuts and bolts of the alleged PT scam (with photos of CEO Ted Mallory and the pretend office) has been shut down. These have been replaced with company spin and infomercial articles on various different blogs and forums, which are usually the tactics employed for reputation management.
PT Website Changes
The logo has changed, and the company has added some new credentials. There's also a new additional video ("Client Testimonials" and a photo stream has been added to the website. The impressive-looking original video ("A Bit More About Us") has remained and is probably their best advertisement, though full of general industry-selling statements.
In the "A Bit More About Us" video, it states the cost to begin as $3900 USD, when the price is now $4100 USD, according to the "Your Lease" page. Obviously, whoever edited the original video to put in the new logo was not paying attention . . . and neither was anyone else, as this video is 10 months old, according to the date on Vimeo.
The new video, "Client Testimonials", has the correct price in it and revolves around a “Patrick Thorp” who strangely has no online profile (there is no Patrick Thorp anywhere in the world, according to Google), and a Mr. David Waterhouse-Taylor, a company director from Bulgaria with two inactive companies and no active one. David Waterhouse-Taylor could also be a Suffolk native, according to a Google search, or someone who once posted an Amazon review for men’s shoes. Or maybe he’s all the same person.
Mr. Mohandas Gunasaram has a nursing home named after him, though he might have climbed out of the grave to write a testimonial for Pacific Tycoon in 2013. Two testimonials actually make sense and may actually be real people on LinkedIn, though I didn't bother contacting them to find out more. All testimonials are geared towards saying that the clients were satisfied with the communication of the team and that they all received payments quickly.
The Customer Dissatisfaction Diagram
The Customer Satisfaction Diagram on the original site is now part of the "Client Testimonials" video. This was what first alerted me to the fact that all was not right with this investment opportunity (then, later, I found out the other stuff).
The customer service diagram shows that a clear 61% of customers rated the "overall quality of investment" as excellent and were reaping the rewards. But I was shocked to see that only 43% of customers were happy with their level of returns and only 81% were happy with their payments. These figures have not changed from one year ago.
I just cannot understand the discrepancy—if it is as good as it seems, why aren’t 99.9% of customers satisfied with all parts? Or, if some people had gotten their knickers in a knot over some small fees, why did 57% of customers rate their ROI as less than excellent?
I think it’s given me even more pause as to why a company would continue to publish this diagram with such controversial feedback in the first place.
One Dedicated 24/7 Account Director Per Client
OK, so Pacific Tycoon boasts “a dedicated 24/7 account director per client” who “assume all container operational duties” and "service your account in . . . all key international markets".
PT admits to having 70 employees (according to the Dun & Bradstreet Credibility Corp Report - see below) and over 400,000 containers. So let’s assume, on average, each client has 10 containers (though that's optimistic at best, at $41,000 for 10).
400,000 containers / 10 = 40,000 customers
40,000 customers / 70 employees = 571 customers per employee. Does that sound reasonable for account directors to assume all container operations duties (i.e., organising moving containers around, leasing and selling them)?
Even if all of Pacific Tycoon’s staff (including the global contractors) were not involved in anything else but customer service, then:
40,000 customers / 168 global professionals = 238 customers per employee.
But wait, there’s more. Apparently, there are only 7,200 container owners, according to PT's website. So this means that if every person in the company was a customer service rep, there would be over 43 customers per employee and growing. And each client would own, on average, about 55 containers each (valued at $225,500 per person).
That is 43 customers that need paperwork organising and regular transportation of containers. So if we get rid of the CEO, the videographer, the web developer and the miscellaneous amount of telemarketers, then each employee is going to be kept rather busy.
What are your thoughts on this?
There were no credentials on the original website when I viewed it in early 2013, but today there are. Pacific Tycoon is apparently a “Member of the Hong Kong Shipowners Association” (though they do not own or manage any ships to my knowledge) and a “Member of The International Association of Ports and Harbors (IAPH)” as well as being a credible corporation as rated by Dun & Bradstreet. If you click on the links in the footer on the PT website, it takes you to pages showing their membership.
Hong Kong Shipowners Association
The Hong Kong Shipowners Association has the purpose of “creating a forum for shipowners resident in Hong Kong” and welcomes “resident companies supplying services to the shipping industry”. They like to talk about marine equipment, ship managers, ship repairers, maritime laws and ship brokers. To gain membership, the requirements are that you must be a business registered with the government in Hong Kong, connected with shipping.
Business Registration With the Hong Kong Government
To register a business in Hong Kong, if you are not a sole proprietor or partnership, you must register within one month of business commencement. Pacific Tycoon may have done this, though not sure of their timeframe. For a start, you need to provide details of an eTAX account and make a payment; this means you would pay tax after registering.
Within the government Hong Kong database, they are listed as registering on 3 June 2011. Yet, their Dun & Bradstreet Credibility Report states that Pacific Tycoon has “been in the business of Shipping Container Leasing since 2003”. There is also a print screen (right) of a video from PT stating profit margins for clients since 2003.
International Association of Ports and Harbours
The IAPH membership for PT was established in April 2013, noticeably after some forum comments about PT not being an official member of any organisation. It seems that to join the IAPH, all you need to do is provide contact details, estimate how many tonnes are handled in order to calculate your own membership fee, nominate a port, pay and join. There don’t appear to be any other checks required by the organisation for membership.
Dun & Bradstreet Credibility Corp
The Dun & Bradstreet Credibility Corp report shows that the annual revenue for "managing well over 400,000 containers" is not known and that there are 70 employees. Since it also says that Pacific Tycoon has “been in the business of Shipping Container Leasing since 2003”, I am curious as to why the business was registered with the government of Hong Kong on 3 June 2011. Does this mean they weren’t paying tax for eight years? Shame, shame.
On the same page, Dun & Bradstreet state that Pacific Tycoon has been in business for less than four years. Dun & Bradstreet advocate ”claim[ing] your profile” by getting a “D&B® Credibility Review™” to “enhance your online presence and credibility”, along with getting a “trusted D&B Credibility Badge on your website that links directly to your directory profile”.
Of course, registration is tax-deductible, and you get to add a description, logo, photos, videos and more. Kinda like an online telephone book listing that any business can register for as long as they’re prepared to pay. Seriously, how many real shipping companies need to have the Dun & Bradstreet credibility logo on their website to be considered “credible”?