A Ponzi scheme is a Ponzi scheme is a Ponzi scheme, no matter what it is called
YOU HAVE to be careful where you invest your money when there are so many schemes promising easy cash. We all know someone who knows someone who has fallen victim to a Ponzi scheme. A pyramid scheme. It’s easy enough to do: you’re hard up for cash (aren’t we all?) and the scheme offers rates of return that beat anything else. As the mantra goes, if it’s too good to be true… it is.
Sadly, there are so many desperate people out there that will invest in anything that looks like a good idea with great returns. That’s why MMM has done so well. And why people have lost their hardearned savings.
Sure, there are those who will call into Radio 702 and hype up Ponzi schemes. In fact, many people called the station to push MMM in particular.
And then there are those who have lost it all. People who can ill afford to gamble and lose on a sure bet. Just this week, there was a story about thousands of investors who may well have lost it all when they invested in a pyramid scheme run by a convicted Russian fraudster.
As The Independent reports: “MMM Global has swept across Africa, with branches promising returns on investment of 30 percent a month in South Africa, Zimbabwe, Nigeria and some east African states.”
Sound familiar? Thirty percent a month sounds awesome. My best investments pull me 12 percent a year. I’d love to put R10 away and get R3 back a month. Except… I’d lose it all if I went that route.
Mastermind
That particular scheme is masterminded by former Russian politician Sergey Mavrodi, who went on the run when the original MMM – which stands for Mavrodi Mondial Moneybox – collapsed in the late 1990s, losing investors an estimated R1.4 billion (based on current exchange rates), The Independent reports. And yet, people will still invest in these schemes. Because, heck, 30 percent a month, right?
The Independent again: “On its website, MMM Global unashamedly advertises itself as a scheme whereby new members assist” older members by paying a fee to join. Older members are allowed to withdraw money after a certain period of time, and receive bonuses for encouraging others to sign up.
“Mavrodi himself is reported to have gone into hiding after a separate entity designed to reward investors with the cryptocurrency bitcoin – dubbed the Republic of Bitcoin – folded in April this year. And since then, a criminal investigation has been launched into MMM Global’s branch in South Africa, after a probe by the National Consumer Commission found “something to suggest the scheme was acting illegally”. Warning bells much? Except it isn’t only MMM. Earlier this month it was reported that Ponzi scheme runner Pastor Colin Davids, the director of Platinum Forex Group, has been at the centre of a legal battle with the asset and forfeiture unit over allegations that he is running a Ponzi scheme.
The SA Reserve Bank is investigating 19 new suspected illegal deposit-taking schemes after last year investigating 41 similar schemes, 28 of which were carried over from previous years. It has launched a new initiative, aimed at tackling the scourge of illegal deposit-taking schemes in South Africa, including 419 scams, pyramid and Ponzi schemes and other related illegal schemes.
I’ll take you a bet there are many more such schemes out there – all preying on those who are battling. Those who have garnishee orders against them. People who just want to put food on the table, and clothe their children. People like you and me.
Times are hard. Despite what Statistics SA says, inflation is rampant. Whatever you have borrowed will cost more… much more (my bond is up by almost 10 percent in two years). Petrol is going up, again. And that’s what these people prey on.
Please don’t take a gamble on what looks like easy money. It just isn’t all that.
I’ll let Eckhard Volker, the managing director of Integrated Forensic Accounting Services, have the last word on this: “The bottom line is that everyone will lose. It’s a mathematical assurance. It’s guaranteed that the bubble will burst and everyone will lose.”