Monday, March 14, 2011

I know a Ponzi Scheme when I see one

So I got this message in my FB inbox from a girlfriend who I haven’t spoken to in awhile. It said:

What impact would an extra #27million make in your life?
This is one investment scheme that you don’t have to work so much, you don’t have to sell products and your start up funds is as little as #10,000.
Come let’s make some millions without stress and very low risk.
All you need do is register with a #10,000 which you pay into your 7 upliners account yourself and the remaining #3,000 into the coordinating company's account which is used for their admin. costs, staff welfare etc.
Then you're expected to bring in four persons who would equally register with #10,000 again and make the payments into their upliner accounts including yours, at that stage you're getting your #1,000 from the four persons giving you a total of #4,000 into your account instantly.

The 1st stage you're giving out #10,000
at the 2nd stage you're receiving #4,000 with your 4 persons
at the 3rd stage you receive #16,000 with your 4*4 downlines
4th stage you receive #64,000 with your 4*4*4 downlines
10th stage you receive #27 million with your 4*4*4*4*4*4*4*4*4 downlines etc etc

It’s simple mathematics, it’s very easy.
Its low risk because by the second stage you have made twice what you started with 4k + 16k.
Low risk of embezzlement cause you don’t pay in the lump sum of #10,000 into the company's account.
Low investment start up #10,000. This is what we use up on an average day.

Assuming it was a hacker or fraudster and seeing one or two names from my friend list on the thread, I responded to all with this …

Hi, I am hoping the originator of this mail is a hacker not friend XYZ. This is what is called a PYRAMID/PONZI SCHEME. It is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. PYRAMID SCHEMES ARE A FORM OF FRAUD.

Sadly the mail was actually from girlfriend XYZ and she wrote back to me with this

Ginger dear, How are you? Babes, I can never indulge in something ruthless or fraudulent coming from my background as an ex-financialist.
I verified who the owners and coordinators were before I joined, I also verified if they had EFCC and CBN approvals which all results came positive.
Their mission is to alleviate poverty, to help people start up or expand in their various businesses. You and I know how difficult it is for banks to give out loans easily for even genuine business men & women because its coming from an average man.
Unlike other schemes, this is so transparent. You are not giving any lump sum of money to any company who you may have fears would embezzle your money. You pay directly to your uplines account, so the money is coming to you there. No hanky panky. lastly all networking schemes are based on a pyramid model. It becomes fraudulent when a central point controls the funds in this instance it’s not the case.
I know a couple of people who have done this biz and succeeded immersely!!!

I do appreciate the fact that she did not take umbrage. After all I was literally pouring san-san in her garri (making her look bad) but I reserve my judgment. I know a Ponzi scheme when I see one.
One gullible friend brings in 4 gullible friends, 4 gullible friends bring in 16 gullible friends etc. Soon, new recruits become impossible, the bottom becomes saturated easily and new influx of money and gullible friends decreases rapidly. When that happens, the business is as good as closed down. Only those at the top who got in early have their money back + profits, while newer recruits lose even their capital. That is the weak link of Pyramid schemes, no matter how genuine or transparent it long as it is not based on actual exchange of goods and services, IT IS GUARANTEED TO FAIL. I am amazed that my friend an -ex banker is involved in this. I am also amazed that the EFCC and CBN approved of it. Anyway, knowing Nigeria, their approval doesn't mean much, cause they have never looked out for the common man. Anyway that's my humble opinion.
2007 witnessed the collapse of Pyramid Schemes in Nigeria a.k.a Wonder Banks -Nospecto, BlueAcres, TravelClub etc. I know a number of people who lost all their savings with these organisations when CBN and EFCC closed their shops - customers of the bank, my colleagues, even my Sister. I would have been a victim too if not that I ran the idea by my then Boss - Ali. This was his saving answer  - "A fool and his money are soon parted".
Do be careful people.

Read all about Pyramid schemes here


  1. i've heard about these pyramid schemes before. glad u were smart enough to not fall for it :)
    u say u hadnt heard from her in a while right?, so instead of her to even start with a " u doing?" inbox.. she went straight to business,lol.
    tsk tsk

  2. Pyramid biz? Count me out girlfriend! I no do. Even if World Bank verifies it. I'm just not into that pyramid schemes. I didn't fall for it when it was booming back in the days, then it is now. No way!

  3. My dear, Nne a beg enter house and leave your friend to the elements of the world. Thank God you are wiser. She will live to tell you the story later abi? Let's wait and watch.

  4. @Kitkat - You noticed the FFM (for friend for money) moves eh? Why hasn't she called me for a fun date all this while?..msheeeew.
    @Vyvyka- If World Bank is involved, at least they would have verified checks and balances or....... maybe not. Its just another form of advanced fee fraud!
    @Mamuje - I hear you my Sista. Experience is the best teacher abi?

  5. I am not surprised this has the backing of EFCC and CBN...all this pyramid scheme are just waste of money...even worse than the stock market.

    Thank God, you did not fall that crap

  6. i fell for this some time ago and never again ....
    glad you keep exposing them kinda tings and sharing knowledge ...

  7. chaiiiiiiiiiii!!!!!... they teach this in every first year economics class! as you have rightfully said Ginger, IT IS A PYRAMID SCHEME.I cant belief any educate person will fall for this. like for real, if it sounds too good to be true, it probably is!SMH 0_o

  8. Pity my MIL lost all her pension and savings with one of the wonder banks. It's a pity keep falling for this. One company takes 3k of each persons contribution, for doing what? FRAUD!

  9. Your instincts are right now. That's a total scam. I'd be a little wary of that particular friend if I were you. Good for you for being smart!

  10. If I had $10,000 lying around I'd use it differently than investing it in such a thing, that's for sure!

    Like you said unless it's a goods-for-services thing, I'm always wary.

  11. Pyra gini? Recently I was introduced to one in New Zealand they call ACN, I really thank God for the curiosity knack he's given me; if not ehn? What my eyes would have seen in the hands of those people by now...

    If you have anyone think of going in this direction Ginger, abeg, by force by fire, drag the person away! Like you said, IT IS GUARANTEED TO FAIL. The thing is, it takes a lot of work to get it done and it wastes time! It is not assured too. wo... too much issues and hassles!

    - LDP

  12. Ginger, I'm glad you are a smart girl. My sister contacted me about some stupid Bill Gates will send you $100 for every person you forward this email to scheme. Excuse me? People can be very gullible.

  13. In my 300 or 400 level there were these guys that tried to make my friend and I look like we were childish and didn't know whazzup when we refused to join the GNLD or is it Forever.. well I can't remember the name. Soon it all crashed, and that was that.

    really nice story about the man who yelled 'leave me alone, i'm married'! If only we could all speak the right words at the right time..

  14. Oh yeah! I've heard of this. In fact, someone once tried to get me into it, and i almost fell- it was the same 10,000 Naira.

    Poverty alleviation indeedy *rolling eye*


  15. Tell me about it!

    Ok in the interest of full disclosure: Clubfreedom, Nospetco, two other notorious ones in Ibadan..I guess am a fool!!!

    So yes its best to allow some of us to experience the bitter taste. :(

  16. They were doing a form of this at my mum's church - except they tried to legitimise it with a bunch of useless 'course modules'. The adults were falling for it but us kids were eyeing the parents like "¬_¬ Please don't spend my college tuition on this crap....."



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