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The Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) has warned the public over the proliferation of Ponzi and Pyramid schemes in the country.
FIU said Ponzi schemes are illegal and unregulated and when they collapse it is usually difficult for victims to get satisfactory recourse to recover their money.
The warning comes as the founder and suspected mastermind of an online Ponzi scheme called E-creator, Zhao Jiaotong (39), in which hundreds of people lost their hard-earned money in the pyramid scheme, was arrested this week.
He is assisting police with investigations and will appear in court soon.
Zhao Jiaotong facing fraud charges and police have since invited members of the public who could have lost their money through the Ponzi scheme to come forward and assist with investigations.
Hundreds of people, including small businesspersons and individuals, who invested their hard-earned money in an online pyramid scheme, recently lost all they scraped together as the massive Ponzi scheme went bust in Zimbabwe.
The online Ponzi scheme called E-creator hogged the limelight after its founder vanished, allegedly, with over US$1 million a few days ago.
Below is the FIU full statement :
“The Financial Intelligence Unit (FIU) notes with concern the proliferation of Ponzi and Pyramid schemes in the country.
“These schemes come in various forms and guises, designed to mask their fraudulent nature and lure people into parting with their hard-earned money.
“The schemes share certain common characteristics which members of the public are advised to look out for.
“Under such schemes, people are typically asked to invest a sum of money and are promised unrealistic returns/profits, either without being asked to do anything else (Ponzi schemes) or being required to actively recruit new members/investors (pyramid schemes).
“In either case, funds from new investors/recruits are used to pay the earlier investors as well as the originators of the scheme.
” Sooner or later, the scheme will run out of new investors/recruits and inevitably collapses, with the majority of the investors unable to recover their funds.
“As such schemes are illegal and unregulated, it is usually difficult for victims to get satisfactory recourse to recover their money.
“The Reserve Bank of Zimbabwe has in the past issued warnings to the public against investing in such schemes.
“In light of a recent surge in the activities of such schemes, the FIU wishes to reiterate the warnings.
” Members of the public are urged to be wary of such fraudulent schemes and, in particular, to look out for the following red flags: Any entity inviting investments when they are not a registered or regulated financial service provider; or Promises of super profits/returns that cannot conceivably be earned through known legitimate economic activities; or Investment schemes that predominately exist on WhatsApp groups and similar social media platforms but have little or no physical visibility in the form of permanent offices.
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