admin
Trust Freddy
Herald Correspondent
The Reserve Bank of Zimbabwe (RBZ)’s Financial Intelligence Unit (FIU) has warned the public against investing in fraudulent pyramid or Ponzi schemes that promise rapid hefty profits and unrealistic incentives.
This comes barely a week after the spectacular collapse of an online pyramid scheme called e-creator, which left hundreds of people, including small businesspersons and individuals, counting their losses.
Police have since arrested the suspected mastermind of the online Ponzi scheme, Zhao Jiaotong (39), and he appeared in court yesterday facing fraud related charges.
The RBZ has in the past issued warnings to the public against investing in such schemes.
In light of the recent surge in the activities of such schemes, the FIU yesterday issued a statement warning against investing in the schemes, saying they were illegal and inevitably doomed to fail.
“The Financial Intelligence Unit (FIU) notes with concern the proliferation of Ponzi and pyramid schemes in the country,” said the FIU. “These schemes come in various forms and guises, designed to mask their fraudulent nature and lure people into parting with their hard-earned money.”
In addition, the FIU said such schemes shared certain common characteristics which members of the public should always be on the lookout for.
“Under such schemes, people are typically asked to invest a sum of money and are promised unrealistic returns or profits, either without being asked to do anything else (Ponzi schemes) or being required to actively recruit new members or investors (pyramid schemes),” it said.
“In either case, funds from new investors or 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 or 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.”
Members of the public, the FIU said, should be wary of such fraudulent schemes and, in particular, should 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 or 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.”
In 2021, at least 10 000 people fell prey to fly-by-night pyramid schemes after they were swindled of over US$30 million by scammers, who snatched the cash and skipped the border.
Gullibility has seen some families selling houses, vehicles and other properties to invest in pyramid schemes, an old trick used by scammers as far back as the 1920s.
Online Reporter