A few years ago we had a visitor to our office. A tearful woman, an intelligent professional in a large organization, had been abused. Could we help?
It turned out that she had been approached by some people who encouraged her to join TVI Express, a company that they said sold travel discount vouchers to their members. In fact the real business of TVI Express was recruiting other people into multiple layers of recruits. It was a pyramid scheme.
Fortunately for her (and unwisely for the people who recruited her) they offered her a written contract to sign. This contract, which she signed in January 2011 when she “invested” P30,500, offered her: “the promise to reap an amount of P84,000 on or before the 10th March 2011 and another P84,000 on the 31st April 2011.”
As you can imagine there was actually no “reaping” of anything and she got precisely nothing from her membership of this pyramid scheme. Are you surprised? What sort of scheme can take P30,500 and turn it into P164,000 in just three months?
You’re right, no scheme can do this.
TVI Express, which was subsequently banned in Namibia, Lesotho, Indonesia and the US State of Georgia, very quickly collapsed but only after it had taken a lot of money from a lot of people. Almost all of them got nothing in return. Our tearful visitor was one of the lucky ones, all because of that contract the foolish people offered her. She didn’t get the riches they had promised her but we were able to force them to give her the P30,500 back. Eventually.
But, you’ll say, we learned our lesson from that scheme, didn’t we? No, unfortunately we didn’t. TVI Express was very quickly followed by WorldVentures, an almost identical pyramid scheme that also claimed to trade in travel discounts. WorldVentures still exists today.
Pyramid schemes like these are very good ways to lose money.
Then there was the big one. The one that we should have learned from: Eurextrade. I suspect that more people lost money in the Eurextrade Ponzi scheme than any other scam Botswana has ever seen. Certainly some people lost a lot of money. We heard of one victim who sold two houses and a Range Rover so he could “invest” in the scheme, hoping to earn the 2.9% daily interest they promised. Needless to say he lost it all. While we were doing our best to alert people about the scam I received a very angry call from one investor who told me about how he was making a lot of money from it. He told me that so far, he’d received P3,000 in profits. So I asked him how much he had invested so far. P10,000, he said. We then had a lengthy argument where he tried to persuade me that he was up by 30% and I tried to persuade him that in fact so far he’d lost 70% of his investment. I never heard from him again.
Some of the other victims were less wealthy. A reader contacted us shortly after a public holiday when she had returned to her home village, telling us that “all the Grannies” in the village had given their entire life savings to a guy who recruited them into the scheme. They are the one I feel sorry for, not the guy with (but now without) the houses and the car.
Ponzi schemes like Eurextrade are also very efficient ways of losing large quantities of money.
While the stock market can be a very good place to invest your money, it’s surrounded by some dubious characters who are keen to help you part with your hard-earned money. Do you remember Stock Market Direct, the supposed stocks and shares training company whose founder ended up skipping the country with the millions he’d taken from the people he’d persuaded to let him invest for them?
Then there are all the little scams that come and go (often with your money).
Karatbars was a German scheme that involved buying minute quantities of gold and which promised riches as a result. In fact the price you paid to buy this gold was much higher than the real gold price and besides, the price of gold has been steadily dropping since 2012 so it’s hardly a great investment. What was more interesting was how they marketed their business in Botswana. One of their local representatives claimed that the German Embassy, the Department of Mines and BURS had all endorsed their scheme. This wasn’t true and I know this because I asked them and they all denied it. Then came an even bigger lie. They said that the “doubting thomases then went to consumer watch dog. They also gave us a thumbs up.”
That was a complete lie. Not only had we never given then “a thumbs up”, in fact we’ve been saying that they’re a pyramid scheme and that people shouldn’t ever, under any circumstances, join their ridiculous scheme.
Karatbars was just another way to lose money.
These are just a few examples of the ways unscrupulous people will help you lose money but there are many, many more out there. You and I really have to be increasingly skeptical of almost everything someone tells us, particularly if the person wants us to hand over our hard-earned cash and particularly if they claim they can make us rich.
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