The Ponzi Scheme Craze: How Safe Is Your Money?

21 February, 2017

You really need to read my previous posts on this topic to follow this conversation. The aim of this post on Ponzi scheme is to give you enough info to be properly guided in your opinions and decisions regarding this subject matter.

There have been so many Ponzi Schemes in Nigeria dating back to the 90s however the most prominent of our time is perhaps the Mavrodi Mondial Moneybox MMM, launched in Nigeria in November 2015.

This scheme was said to have failed in South Africa, crashed in Zimbabwe and banned in China, yet it turned out to be the most popular Ponzi scheme in so much that the name MMM became a synonym for ponzi schemes in Nigeria. As at this moment, despite warning, many have lost life saving to MMM as this has ultimately crashed in Nigeria as well.

That is probably the most constant thing about these schemes, they crash at some point. To explain this better, check out the outcomes of the world’s most famous Ponzi scheme artists (for lack of better word to call them)

According to Amanda Lauren, below are the names of the men behind the biggest ponzi schemes on the planet.

         1. Charles Ponzi, the founder 

·       2. Barnie Madoff

·       3. Lou Pearlman

·       4. Michael Eugene Kelly

·       5. Pastor Gerald Payne

·       6. Scott Rothstein

·                                                                   7. Gary Gauthier

·                                                                   8. Adriaan Nieuwoudt

                                                                    9. Tom Peters

                                                                   10.  Reed Slatkin

Note however that of all of these men, two are dead (Charles Ponzi and Michael Eugene Kelly), six are serving jail terms (Barnie Madoff, Lou Pearlman, Gerald Payne, Scott Rothstein, Gary Gauthier, Tom Peters). As you are reading this piece, one - Adriaan Nieuwoudt is well and alive in South Africa, while Reed Slatkin was released from prison in 2013. Are you observing the trend?

Unfortunately in Nigeria, there seems to be no laws based upon which Ponzi schemes can be declared illegal or criminal. As scriptures put it, “where there is no law, there is no sin”. That means for everyone who has lost money in these schemes, it’s gone forever. This is probably the most important point to consider before you even think of getting involved with any Ponzi scheme in Nigeria

Before we move forward, here is a list of Ponzi schemes making rounds in the country at the moment:

·       MMM Nigeria (Crashed)

·       Ultimate Cycler (Crashed)

·       Givers forum

·       Zar fund

·       Icharity

·       Crowd Rising

·       Get Help Worldwide

·       E cooperative

·       NNN Nigeria

·       Pay cycler

·       Twinkas

·       Greenspeer

·       Donation Core

·       Smile2Charity

·       O-give

·       KayNation

·       AlwaysPays

·       Money Gram

·       Globalcash

·       Loopers

·       Double Cash

Its also important to note that new ones are coming out on daily basis with many crashing within 24 hours of being launched.

Ponzi schemes have become so much more innovative these days. Back in the day, there was no internet, so all the perils of a non internet driven business applied. Slow payment process, physical cash involvement, leg walk to grow members, length of time to wait before reaping dividends, localization of the business, etc. This is as opposed to today’s jet speed internet and e-payment world, plus cashless society realities in some climes.

The likes of MMM and Get Help Worldwide for instance have a 30-days payment period from when you register, but platforms like Loopers pay within a space of 2 to 3 days.

The former mentioned platforms pay 30% to 40% return on investment respectively while Loopers promise 100% return on investment. Whichever option you choose, apart from the fact that terms and conditions apply, you must understand that the higher the percentage profit payment in less time, the more risky the investment logically speaking.

So here are some questions we left unanswered in our first post

How do the investors earn?

How do the owners make money?

A close observation would reveal that the investors of old paid to the platform owners, who over time paid back to them on first come-first served basis with a percentage return on invest (PROI).

By implication, investors paid into a central account belonging and run by the platform owners, from where payments are also made back to investors. This made the business more untransparent and consequently raises the risk level. Lots of multilevel marketing platforms also run with this pattern even today.

However, there is tweak to that pattern in today’s Ponzi schemes, which is the genius member-to-member donation idea.

Here, there is no central account run by the owners of the platform, which makes the venture a little transparent and reduces the risk level. So what happens is that investors donate to pre-existing members, and get receive back money on request with a certain percentage in return, as promised. In this sense, money is just changing hands. 

If this is the case, one will invariably wonder then, how the platform owners earn, since no money supposedly goes to them, but cash simply moves from member to member. I have consulted with online experts who have reliably informed on the subject matter of how the owners of the platform earn and here are three ways by which the platform owners earn.

1.They earn from payments made to them as site owners for the traffic generated on their site, as investors throng the site to transact business. Question now becomes “who traffic epp?”, meaning who benefits from traffic, enough to want to pay someone for owning a site with significant traffic on it? Big Brands like Google.

2.The second way the business or platform owners earn is by advertorials. The simple analogy is wherever people gather, there is money. This time around, the money is paid by brands who have something to sell and as such want their products advertised on the site for the many people that come in there to see.

3.The third way is quite fishy. What happens is that the platform owners open classified accounts from the backend of the system, which qualifies them to be donated to by community members, even though they pay nobody. Meaning that these accounts that they open from the back end gives them access to receiving without giving. Get that.

Intriguing right? But that’s actually how Ponzi schemes in Nigeria work. Whatever you decide, these are the info about Ponzi schemes. Hopefully, you make the right decisions for you.


Written by Francis Uka

Edited by FabulosGloria

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