Bayu Marhaenjati & Farouk Arnaz
There was not a single mourner in sight as a lifeless body rolled into Cipto Mangunkusumo Hospital’s morgue at 10 a.m. on Thursday. A sign hung on the morgue room’s wall indicating its current occupants.
Among the list of names was that of Jaya Komara, a businessman alleged to have run a Ponzi scheme using a cooperative named Langit Biru or “Blue Sky.”
Jaya’s customers, thousands of them, never got the chance to see any blue sky as the cooperative’s name seems to suggest, nor did they receive the high return its owner had promised.
Instead, entire life savings, pension funds and hard-earned pay from customers who are mostly poor food vendors and farmers was embezzled by the man now laying in the Central Jakarta hospital’s morgue.
Police suspect that Jaya had defrauded his victims out of Rp 6 trillion ($631 million) since 2010.
Jakarta Police spokesman Sr. Comr. Rikwanto said Jaya died in his detention cell at the Tangerang City Police headquarters, which he shared with three other detainees.
“Jaya Komara was detained in one cell with Akbar, Nurul Fahmi and Pranto Siregar. At 6 a.m. his three cell mates tried to wake him up, but he wasn’t moving, his eyes were closed. And then [prison] officials were alerted,” Rikwanto said.
“After it was discovered that [Jaya] was dead, the suspect was then taken to RSCM for an autopsy,” he added, referring to Cipto Mangunkusumo.
National Police spokesman Brig. Gen. Boy Rafli Amar said autopsy results showed “no signs of violence and [Jaya] was still communicating with his friends as of 3:30 a.m. on Thursday.
“The autopsy result shows it was a heart attack. The volume of the heart was twice the normal size.”
The fact that no one has come to claim Jaya’s body or cry at his passing reveals just how much the man has been vilified.
Even police seemed to show little care at the man’s death, saying their investigation will now focus on his second wife Testiawati, who has also been arrested.
“The case is still under investigation and we are still tracking down assets belonging to Jaya and his wife. An investigative audit has not been done to determine where Langit Biru cooperative’s money was funneled,” Boy said.
Are victims to blame?
Jaya’s case underlines just how susceptible to Ponzi schemes people can be.
Even those who are wealthy and educated have fallen victim to Ponzi schemes, as the case against the modern age’s most notorious fraudster Bernie Madoff exemplified.
In an interview with The New York Times last month, Professor Tamar Frankel, author of “The Ponzi Scheme Puzzle: A History and Analysis of Con Artists and Victims,” blamed the victims for their gullibility and failing to “do their homework.”
“Gullibility is the tendency to believe without reasonable evidence. Every culture draws a line between trust and gullibility. And in the financial arena, the line between trust and gullibility may have to be more tightly drawn,” she said.
“A culture of risk-taking, the hope of making money, an insatiable appetite for more. These are all part of the culture in which Ponzi schemes arise and flourish.”
Jaya was known to have started out selling meat door-to-door in his neighborhood in Tangerang’s Solear subdistrict in 2003.
In 2010, with business booming, he set up a company, Transindo Jaya Komara, which he later renamed, in which he invited a limited number of residents to invest large sums of money to buy meat from producers to then sell to retailers, in exchange for hefty monthly dividends.
With word spreading from the initial investors about eye-popping returns of up to 240 percent in just 10 months, people from across the country began asking for a piece of the action.
The company grew larger, eventually reaching deals to work with 62 meat suppliers, and in January last year Jaya changed its name to Langit Biru. At last count, the company had 125,000 members.
The Ponzi scheme was revealed in June when Jaya disappeared after failing to pay out the dividends for that month. Four members reported him to the police for fraud, claiming they had lost a combined Rp 107 million.
Jaya was arrested in July in Purwakarta, West Java.
In August, police in Jakarta foiled another alleged Ponzi scheme. Husband and wife Bambang and Dwinar Hermawan reportedly also used a fake cooperative, Putra Pandawa, to dupe 1,300 people.
The pair told their victims that they would receive an interest rate of between 30 percent and 50 percent if they deposited their money with the fraudulent cooperative.
A total of Rp 600 million was collected from the victims, of which Rp 320 million was used by the couple to buy property, police said.
Professor Richard Taffler, a specialist in emotional economics at Warwick Business School, said emotions play a powerful role in driving investment decisions and market behavior, including those decisions that are too good to be true.
“Investment is not about greed, fear and hope, but excitement, anxiety and denial,” he said in a lecture available on the school’s website.
Many people invest because they fall in love with what they are investing in, Taffler said, which explains why, when things go wrong, they fail to do anything about it before it’s too late.
Madoff, whose Ponzi scheme has been deemed the largest fraud perpetrated by anyone in American history, damaged the finances of 8,000 clients to the tune $50 billion in losses.
Madoff, who was arrested in 2008, pleaded guilty to 11 federal offenses in 2009, and was sentenced to 150 years in prison shortly thereafter.
Indonesian law has been far more lenient to fraudsters, threatening them with a maximum jail term of just five years, quite possibly the reason the schemes flourish in the country.
In June, police in Depok, south of the capital, uncovered another fraudulent investment involving Gemilang Reksa Jaya, which is said to have defrauded 10,000 customers who invested Rp 10 million each.
The victims were promised that their Rp 10 million would grow to Rp 23 million in a matter of months. Despite being too good to be true, the scheme attracted people from as far away as South Sulawesi, Riau and Central Java.
Even bankers, who ought to know better, fall victim to fraudulent schemes.
In 2008, Bank Century depositors lost $1.14 billion through a fraudulent investment scheme in which an affiliated company, Antaboga Delta Sekuritas, persuaded Bank Century’s marketing division to advise customers to put their money into unregistered mutual funds offering artificially high returns.
The fraud caused the bank’s collapse before it was taken over by the government the following year.
Recovering stolen assets
So far police have only managed to recover Rp 680 million from Jaya and investigators have offered no promise that victims will be able to get their money back.
Frustrated, hundreds of victims trashed and looted Langit Biru’s old office last month.
“There was 600 tons of dried fish, 600 tons of garlic and 600 tons of coffee belonging to the cooperative, all looted by dissatisfied customers,” Boy said on Aug. 8.
But the number of victims actually filing a complaint and admitting that they were victims stands at just 324, although the cooperative’s records indicate that there have been at least 125,000 clients.
Police believe that the majority of the victims are too ashamed to come forward and admit that they were duped.
Out of the estimated 10,000 people defrauded by Depok-based Gemilang Reksa Jaya, only six have come forward.
Those who do acknowledge themselves as victims are often those most desperate to get their money back.
“I lost Rp 10 million. It is nothing compared to some of my friends who lost Rp 50 million and Rp 100 million. But I really need the money to pay for my autistic son’s tuition fee,” said one of Jaya’s victims, Suryani.
Suryani said Jaya employed a common Ponzi scheme tactic of using a pyramid-type model, which involves promising participants payment or services, primarily for enrolling other people in the scheme.
“I was introduced to a sponsor … his name was HFN. I didn’t know it was [Langit Biru]. I gave money to HFN and he deposited it to [Langit Biru’s] office in Tiga Raksa. I got a receipt, on it Jaya Komara’s name was written,” she said.
She was convinced that the fraud was genuine after she received Rp 2.6 million in cash after a couple of months investing in Langit Biru, before later finding out that Jaya had fled with his customers’ money.
The National Police have been handling the investigation of Jaya’s case because of the extent of his crimes, duping victims from across the country.
But with Jaya perhaps the sole person who knew firsthand where and how victims’ money was funneled, the chances of retrieving the embezzled funds looks slim.
National Police spokesman Boy said police are still trying to prosecute Jaya’s wife in order to get a much-needed conviction and court order for some of the money to be returned.
But Jaya’s wife Testiawati is accused of having enjoyed just a small fraction of the total money lost, reportedly funneling the money to a car rental company worth Rp 3.5 billion.
Bayu Marhaenjati & Farouk Arnaz