News / National
Money pyramid schemes resurfaces in Harare
09 Feb 2013 at 05:24hrs | Views
ILLEGAL money pyramids, promising huge and easy profits to "investors", though they eventually collapse after the owners have benefitted, have resurfaced in Harare with hundreds of people thronging offices hosting the schemes to register.
Investigations by The Herald revealed that there are two most popular organisations (names supplied) that administer such schemes along Kwame Nkrumah Avenue and Central Avenue.
People who throng the offices to register are cosmopolitan and range from civil servants to office workers, foreign currency dealers and vendors.
The schemes use Econet's Ecocash facility as a medium for prospective members to deposit US$5 into each account of five existing members listed on a card and have to pay another US$5 administration fee to the scheme operators.
Those registered for the scheme would have to recruit more members for them to start benefiting.
The pyramid operators say one would be removed from the list after realising US$15 000 and this can be done within a short time.
After registration, one is subjected to a verification process, where representatives of the club check the cash transfers code numbers to ascertain authenticity.
Once endorsed with a signature, the prospective member takes the names of the five members he/she would have deposited the money together with a US$5 administration fee to the owners of the scheme.
After completing the initial process, the prospective member would have to wait for at least two days to receive five cards bearing the member's name and the four existing people who would have received the money desposited through Ecocash.
Those who operate the scheme say that members would continue to benefit as long as their names appear on the cards of new members.
There are some who now spend time chasing after potential recruits and those affiliated to them to ensure that they are also recruiting more so that they quickly benefit.
"It is obvious that this thing is too good to last longer, that is why I have to make sure that my recruits work hard so that I benefit before it blows off," said one of the members of the scheme at the Kwame Nkrumah offices.
A mother of five, who refused to divulge her name, said she recruited her children to ensure she spreads her chances.
"I have joined two of my sons, and this means I have used close to US$100, but this does not worry me because I am told each one of us will get at least US$15 000 at the end of the cycle," she said.
Police yesterday said they had begun carrying out investigations into the operations of the schemes.
"Some years back several people lost their hard earned cash through such a scam with only those benefiting being those who started the schemes," said a senior police officer.
"It is more like running a financial institution and such people must be registered by the Reserve Bank of Zimbabwe and have a licence from the Ministry of Finance."
Those behind the pyramid plan go to great measures to help make the system appear to be genuine through multi-level marketing plans.
The money pyramids crazy once hit Zimbabwe in the 1990s and resulted in people thronging police stations with inquiries on how they could recover their money after such schemes collapsed.
In 1996, hundreds of prospective "money makers", swindled out of millions of dollars by dozens of bogus savings clubs, beseiged Harare Central Police Station demanding refunds from officials who had taken refuge there, in the sixth such incident to occur countrywide.
In 1997, scores of pupils at a high school in Seke, Chitungwiza, were allegedly swindled of hundreds of dollars by some teachers at the school who were running money clubs that eventually collapsed.
The pupils were asked to pay money to the teachers with promises that they would "harvest" three times their initial "investment" in a month.
Police in Beitbridge fought running battles with a riotous crowd of about 400 people in 1996 which had raided the office of a money club to demand their investment back.
The director of the scheme had sought refuge in the offices.
Regardless of their claims to possess genuine services or products to sell, the money pyramid fraudsters simply use money coming in from new recruits to repay a few investors.
According to legal experts, a pyramid scheme is a fraudulent investing plan that has unfortunately cost a lot of people worldwide their hard-earned savings.
Pyramid marketers are known to seek out brand new victims almost from any place - at work, at churches and even by means of social groups or clubs.
But the pyramid schemes will ultimately fall without fail because the profits rely on signing up new members to the scheme and, eventually, every scheme runs out of fresh recruits.
The only people who may profit in a pyramid scheme are those at the very top of the actual pyramid.
Investigations by The Herald revealed that there are two most popular organisations (names supplied) that administer such schemes along Kwame Nkrumah Avenue and Central Avenue.
People who throng the offices to register are cosmopolitan and range from civil servants to office workers, foreign currency dealers and vendors.
The schemes use Econet's Ecocash facility as a medium for prospective members to deposit US$5 into each account of five existing members listed on a card and have to pay another US$5 administration fee to the scheme operators.
Those registered for the scheme would have to recruit more members for them to start benefiting.
The pyramid operators say one would be removed from the list after realising US$15 000 and this can be done within a short time.
After registration, one is subjected to a verification process, where representatives of the club check the cash transfers code numbers to ascertain authenticity.
Once endorsed with a signature, the prospective member takes the names of the five members he/she would have deposited the money together with a US$5 administration fee to the owners of the scheme.
After completing the initial process, the prospective member would have to wait for at least two days to receive five cards bearing the member's name and the four existing people who would have received the money desposited through Ecocash.
Those who operate the scheme say that members would continue to benefit as long as their names appear on the cards of new members.
There are some who now spend time chasing after potential recruits and those affiliated to them to ensure that they are also recruiting more so that they quickly benefit.
"It is obvious that this thing is too good to last longer, that is why I have to make sure that my recruits work hard so that I benefit before it blows off," said one of the members of the scheme at the Kwame Nkrumah offices.
A mother of five, who refused to divulge her name, said she recruited her children to ensure she spreads her chances.
"I have joined two of my sons, and this means I have used close to US$100, but this does not worry me because I am told each one of us will get at least US$15 000 at the end of the cycle," she said.
"Some years back several people lost their hard earned cash through such a scam with only those benefiting being those who started the schemes," said a senior police officer.
"It is more like running a financial institution and such people must be registered by the Reserve Bank of Zimbabwe and have a licence from the Ministry of Finance."
Those behind the pyramid plan go to great measures to help make the system appear to be genuine through multi-level marketing plans.
The money pyramids crazy once hit Zimbabwe in the 1990s and resulted in people thronging police stations with inquiries on how they could recover their money after such schemes collapsed.
In 1996, hundreds of prospective "money makers", swindled out of millions of dollars by dozens of bogus savings clubs, beseiged Harare Central Police Station demanding refunds from officials who had taken refuge there, in the sixth such incident to occur countrywide.
In 1997, scores of pupils at a high school in Seke, Chitungwiza, were allegedly swindled of hundreds of dollars by some teachers at the school who were running money clubs that eventually collapsed.
The pupils were asked to pay money to the teachers with promises that they would "harvest" three times their initial "investment" in a month.
Police in Beitbridge fought running battles with a riotous crowd of about 400 people in 1996 which had raided the office of a money club to demand their investment back.
The director of the scheme had sought refuge in the offices.
Regardless of their claims to possess genuine services or products to sell, the money pyramid fraudsters simply use money coming in from new recruits to repay a few investors.
According to legal experts, a pyramid scheme is a fraudulent investing plan that has unfortunately cost a lot of people worldwide their hard-earned savings.
Pyramid marketers are known to seek out brand new victims almost from any place - at work, at churches and even by means of social groups or clubs.
But the pyramid schemes will ultimately fall without fail because the profits rely on signing up new members to the scheme and, eventually, every scheme runs out of fresh recruits.
The only people who may profit in a pyramid scheme are those at the very top of the actual pyramid.
Source - TH
