Too good to be true ...
PONZI WORLD: ‘INVESTORS’ WARNED ABOUT FALLING FOR PYRAMID SCHEMES
WhatsApp stokvel promises a return of R1 000 in a day when you invest R200.
As soon as one Ponzi scheme is dried up, the purveyors of Ponzi schemes step up and “investors” hand in their hard-earned money. They fall victim to being fleeced of their life savings and some take the very little they have, in hope of a better future by investing in these schemes.
The latest scheme to hit the headlines in the “Ponzi world” is the WhatsApp stokvel group. Moneyweb has been following two of these groups for the past week and it has been a strange and unsettling experience easier to shrink from than describe.
You are sent a WhatsApp group link, and instantaneously it’s as if you have stepped into Wall Street. The investors are excited that a new member has joined the group. “Let’s make money,” they say. It promises a return of R1 000 in a day when you invest R200, with a claim it is secure; but there is no real investment.
The group administrators who recruit, group members, send texts and WhatsApp voice notes simultaneously throughout the day, encouraging 200 members to do the same if they want to receive their investment returns sooner.
There is also a list of the names of the members that show how far they are moving up the ladder. The aim is to be the first person on the list so that the next six new members could deposit money into your account.
Almost every member is usually in more than one group. Their hunting ground is the workplace.
The groups disguise themselves as stokvels but, in fact, they are Ponzi schemes, said forensic auditor Ekhad Volker.
According to Volker, the workplace is the most seamless place to recruit new investors because the members rely on the constant introduction of new investors.
“The workplace provides a perfect hunting ground from a recruitment perspective,” he said.
A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organisation, but from their own money or money paid by subsequent investors.
Johannesburg-based Mpumie Maniga, who works for an engineering company, is somebody who knows much about this.
She is in three WhatsApp stokvel groups and has not made any money. For her to ensure she sees her return on investment, she needs to ensure that she recruits more people to join the group – even if it means recruiting employees, and her friends.
The fraud triangle is a theory based on a ’50s study by Donald Ray Cressey, on how employees might commit fraud when they have unshareable pressures (usually in the form of dire financial needs), they have opportunities to commit the offence and they can motivate their actions to themselves.
Volker, however, does not en
courage this behaviour because employees are more prone to commit fraud.
South Africans have in the past felt the wrath of MMM which collapsed in 2016 and Travel Ventures International (TVI).
The South African Reserve Bank deals with 10 to 20 schemes annually and it says that this year it has been trying to clamp down
11 schemes that are operating in the country.
The latest victory is that of TVI, where two of the perpetrators have been convicted.
Unathi Kamlana, the head of department of prudential policy, stats and support at the South African Reserve Bank, said Ponzi schemes cost the economy anything from R500 000 to billions.