G-SPOT

Scammers use meat, veg as pyramid scheme bait

Ponzi scheme are taking advantage of the desperation to rob people blind

In Summary

• People with no scruples are trying to get every last cent from you by all means 

Scam alert
Scam alert
Image: COURTESY

As a result of the coronavirus, the accompanying lockdowns and economic chaos, many people have lost their livelihoods and even for those who haven’t, money is generally tight.

For the ordinary person, this is not really the time to spend money on “nice to haves”, it is the time to save for “need to haves”, like food.

At the same time, this is also the time that a bunch of people with no scruples are trying to get every last cent from you and will use any means to achieve their goal.

 

For once, I'm not referring to the prosperity gospel mongers, but to their very close cousins, the pyramid scheme or multi-level marketing scam artists.

This past week in South Africa, I had a front-row seat experience of a takedown by government agencies of a ponzi scheme that had taken full advantage of the financial misery and desperation caused by the lockdown to rob people blind.

Over 230,000 investors were swindled in the Up Money “grocery stokvel” (similar to what Kenyans call a chama or merry-go-round) that the SA National Consumer Commission (NCC) has now declared a pyramid scheme.

They were aware that the most important thing for most people right now is food, so they used cash-plus-grocery packs of vegetables, maize meal and meat as the bait. Totally irresistible.

Working together with the Asset Forfeiture Unit of the National Prosecution Authority (NPA) and the Financial Intelligence Centre (FIC), the NCC managed to get bank accounts belonging to the pyramid scheme, holding more than R18 million (Sh110 million), frozen.

The modus operandi of Up Money was to use social media to solicit members of the public to participate in the scheme. In order to receive the promised meat and/or grocery packs, participants were required to pay a once-off joining fee of R180 (Sh1,100) and to recruit five new participants.

The guy behind the scheme had a website on which he recorded a video explaining how it works: “At Up Money, we optimise on the opportunity presented by grocery bulk buying. Simply put, the more buyers we have, the higher the discounts we’ll receive from commercial grocery stores, and therefore the cheaper the groceries,” he said, without even trying to look embarrassed at the lie.

 

Meanwhile, as the poor and the desperate were gathering up every coin they had to join up and convincing their friends and relatives to follow them, the big boss at the top of the pyramid was living the lush life.

It was found that he had received an amount of R42.7 million between May 4 and July 2. Of this amount, more than R14.5 million was dissipated through point-of-sale purchases at various retail stores, and in addition, three luxury cars, namely a Hummer, a Jaguar and an Audi TT, were bought with the money.

Of course as the wheels of justice turn excessively slowly, by the end of the week, no arrests had been made as investigations were continuing. This also meant that none of the directors of Up Money had been officially barred or declared unfit as directors, and as such, they could start fresh scams if they so wished.

Sure enough, days after the bust, I visited their Facebook page after receiving an alert that the page had changed its name and was now scouting for people wanting to put up houses. 

This was a new MLM, where interested parties were asked to part with R200, recruit six people and as an added sweetener, there was, you guessed it, a meat and veg grocery pack.