Thou­sands lose money to pyra­mid scheme

Chronicle (Zimbabwe) - - National News - Felex Share and Rea­son Razao

THOU­SANDS of peo­ple, among them civil ser­vants and ven­dors, have lost thou­sands of dol­lars to fraud­u­lent on­line pyra­mid scheme MMM Global Zim­babwe af­ter it col­lapsed re­cently.

The so­cial fi­nan­cial net­work, which re­lied on an ac­cel­er­at­ing num­ber of new mem­bers to pay off the old, abruptly ter­mi­nated its ser­vices last week leav­ing par­tic­i­pants stranded.

This comes as Econet’s mo­bile fi­nan­cial ser­vice plat­form, EcoCash, yes­ter­day dis­tanced it­self from the pyra­mid scheme.

Par­tic­i­pants claimed they were us­ing EcoCash for their trans­ac­tions.

Zim­bab­weans have in the past months been join­ing the on­line in­vest­ment scheme in droves in a bid “to get rich quickly”.

The Re­serve Bank of Zim­babwe has since warned the pub­lic that the scheme was fraud­u­lent and peo­ple had no le­gal re­course in the event they lost their money.

The RBZ said MMM, which ad­ver­tises its op­er­a­tions through a web­site and re­cruit­ing agents, was not a reg­is­tered or reg­u­lated en­tity.

EcoCash yes­ter­day said: “We have noted that some of th­ese pyra­mid schemes are al­legedly ad­ver­tis­ing in a man­ner that sug­gests that the Ecocash fa­cil­ity is a medium for prospec­tive mem­bers to de­posit their money. This is not cor­rect.

“We ad­vise our val­ued cus­tomers and all stake­hold­ers that Ecocash is a li­censed mo­bile pay­ment plat­form that en­ables cus­tomers to make fi­nan­cial trans­ac­tions such as send­ing money, buy­ing pre­paid air­time as well as pay­ing for goods and ser­vices within the con­fines of the law of Zim­babwe. EcoCash pro­motes safe and le­gal trans­ac­tions but will not be held li­able for any losses aris­ing from the use of EcoCash to en­gage in il­le­gal ac­tiv­i­ties such as Ponzi schemes.”

The scheme ad­ver­tises it­self as a mu­tual aid fund un­der which re­cruited mem­bers con­trib­ute money to as­sist oth­ers and are promised in­vest­ment re­turns of 30 per­cent per month.

Some of the peo­ple left count­ing their losses told our Harare Bureau that they re­ceived emails that the scheme had been sus­pended un­til Septem­ber 15.

“All along things were mov­ing in the right di­rec­tion and we now have nowhere to claim our in­vest­ments,” said Mr Ti­nashe Muza of Harare.

“When we started putting our funds in the scheme one could get as­sis­tance within seven days but things later changed to 14 days and when we were shut out the wait­ing pe­riod was 21 days. What it sim­ply means is that the num­ber of peo­ple in need of help has out­num­bered the num­ber of peo­ple join­ing. Right now we have nowhere to get our money which we in­vested.”

MMM stands for Mavrodi Mon­dial Money­box and takes its name from its founder, Sergei Pan­telee­vich Mavrodi of Rus­sia.

He founded MMM in 1989 and the scheme was de­clared bank­rupt three years later, lead­ing to the dis­ap­pear­ance of Mavrodi un­til his ar­rest in 2003.

An­other vic­tim, Mrs Rose­mary Ma­wonde, said: “We never thought the scheme would end this way as we be­lieved that by us­ing EcoCash to do the trans­ac­tions, things were in or­der. I am sur­prised that EcoCash is also dis­tanc­ing it­self from the scheme and it’s clear that I will never re­cover the $300 that I in­vested.”

While some peo­ple who were skep­ti­cal about the scheme started with small amounts, it is be­lieved some poured in thou­sands of dol­lars an­tic­i­pat­ing higher re­turns.

The RBZ said the schemes were fraud­u­lent as ex­ist­ing in­vestors were “paid money not from gen­uine mar­ket in­vest­ment of their funds, but from con­tri­bu­tions made by new in­vestors, un­til a point when the scheme can no longer at­tract new in­vestors”.

“The par­tic­i­pants are made aware that they make their money by re­cruit­ing new mem­bers who in turn must re­cruit more mem­bers,” warned the cen­tral bank.

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