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huge and easy profits as “investors”.
The schemes have collapsed with the owners having been the only beneficiaries.
Superintendent Ndabezinhle Moyo of Criminal Investigations Department Serious Frauds Squad said they were some people who were duped under these pyramid schemes but have not yet reported their cases and urged them to do so.
He said the major culprits churning out these pyramid schemes were micro-finance institutions.
“It has to be taken into consideration that most pyramid schemers first register and operate legally and licensed to conduct money lending business in terms of the Money-lending and Rates of Interest Act (Chapter 14:14).
“During the course of their operations, they engage in illegal activities where investments by one person would be used to pay off another and so on,” he said.
Supt Moyo said the institutions licenced under the Act were not permitted to mobilise deposits from members of the public.
He said that was a preserve of banking institutions registered under the Banking Act.
Supt Moyo said people should be careful of any investment opportunity that makes exaggerated earning claims.
“Members of the public are warned to desist from participating in any get-rich quick schemes as they risk losing their funds. People should exercise due diligence in selecting investments,” Supt Moyo said.
He said most fraud cases involve opaque transactions, which he urged the public to verify with relevant offices before engaging in such.
“We are also encouraging people to quickly report the matter to the police the moment they realise they have been duped. They can contact the CID Serious Fraud Squad on 04-753543-6,” Supt Moyo said.
He said when the crumbling “pyramid disaster” becomes imminent, the beneficiaries are determined by the shape of the pyramid.
“In short, it is only a few that will benefit through their closeness to the fraudsters. The base of the pyramid represents the majority who are usually the losers in these schemes,” Supt Moyo said.
Last month, the illegal money pyramids that promised huge and easy profits to “investors”, swept the country resulting in thousands of people losing their cash.
The schemes issue membership cards to people who usually pay joining fees of about US$20.
Investigations revealed that most of them have raised joining fees, urging people to pay US$40 to get US$250 after six weeks.
Contributors who pay US$80 are promised US$500 in six weeks.
These contributors are also “assured” that they would get US$1 000 for US$160 joining fees. The cards have the club names, members’ names and other details.
Legal experts warned people not to deal with unregistered investment schemes that operate as money pyramids because they would have little recourse as the schemes eventually collapse.
Police said investigations showed that most people who joined these schemes range from civil servants to office workers, foreign currency dealers and vendors.
The schemes were using Econet’s Ecocash facility as a medium for prospective members to deposit US$5 into each account of five existing members listed on a card and have to pay another US$5 administration fee to the scheme operators.
Econet distanced itself from the money pyramid schemes and sent an SMS to its customers — warning them of the illegal activities.
Online Reporter