Did the people recruited into Eurextrade know that it was a Ponzi scheme that would eventually collapse, leaving the victims penniless? Or were they all convinced that it was something genuine?
During the Eurextrade fiasco I came back to the office from a radio appearance when I’d mentioned Eurextrade and had warned people about the dangers it posed. Before I even sat down the phone rang and a call was put through to me from someone who had already “invested” in the scheme. He was very angry with me because of what I’d said. It wasn’t true, he said. He’d made a profit from the money he’d given them. How much, I asked? P3,000.
So I asked him how much he had deposited in order to make that amount. P10,000, he told me.
For the next fifteen minutes we argued about whether he was P3,000 in profit, as he claimed, or whether he had just lost P7,000, as I suggested.
I think I was right. He certainly didn’t call again to correct me after the scheme collapsed, taking almost everyone’s money with it.
The same happened with Stock Market Direct, the stock market training program run by the sharp-suited and smooth-tongued Tony Samuels. Lots of people thought they were getting a great deal by paying vast amounts to SMD every month for training and trading tips, even though the tips actually came from a (legitimate) South African company who sold them for a quarter of the price SMD offered them for. I heard from many people who felt they were on to a good thing and were going to make lots of money.
But that wasn’t true either. Tony Samuels was last seen heading for the border with several million Pula from his victims. Incidentally, even though many people met him, there’s no evidence that Tony Samuels actually existed. Yes, someone with a nice suit existed, but nobody knows his real name and it doesn’t seem to have been Tony or Antonio Samuels.
But how many of the people involved knew what was really going on with Stock Market Direct, Eurextrade and all the other scams like TVI Express and Success University? Certainly the organizers were the guilty ones and they knew they were running a scam. But what about the people they’d recruited?
Some clearly had no idea. They’d been seduced by the offers of riches and a better lifestyle. A lot of them genuinely believed what they’d been told was true. Gullible, naïve, perhaps even foolish but innocent nevertheless.
But then there’s are groups between the guilty and innocent. There’s a number of people who aren’t sure it’s a scam but they think that they’re special cases. A small number are convinced that if they join early enough they might be part of that very small proportion who make a little profit. Another group feel that they possess some superior knowledge about how these schemes work, often because they fell victim to an earlier scheme and now think they’re wiser and more learned as a result of that experience.
And then there’s the group that are in denial. This group have persuaded themselves that even though reason, logic and common sense say it’s a scam, they can’t face up to that fact and convince themselves that there’s still hope.
Last week I heard about perhaps the greatest case of denial I’ve encountered in a long time. Someone called our office to ask for advice about a younger relative. The younger guy’s mother had recently died and he had inherited not only her house but money as well. That was the source of the older relative’s concern. Apparently the younger guy had transferred the bulk of the inheritance overseas, claiming he’d been told about a remarkably lucrative investment opportunity. He’d shown some documents that had immediately worried the older guy. They didn’t look legitimate and he’d told the victim this. Nonsense, he was told, all I have to do is transfer some more money and they’ll give me vast returns.
So how much had he handed over so far? A few thousand Pula? Maybe more? Maybe tens of thousands? No. So far he had handed over eight hundred thousand Pula and he was about to hand over another three hundred thousand as well. The relative was even concerned that he might try and sell the house as well to raise further capital.
Tragically, the younger guy seems to be in complete denial. Of source it IS possible that he has invested the money wisely, but if that’s the case why is he keeping all the paperwork under lock and key and why won’t he discuss it any longer? What uncomfortable truth is he afraid to face?
In many ways the people in denial are harder to persuade that the gullible and naïve. The deniers have invested so much emotional energy and commitment into justifying their decision to themselves that they face what psychologists call cognitive dissonance, the intense mental discomfort involved in hold two contradictory positions. They simply can’t face the trauma of acknowledging that a smart person like them has made such an unwise decision. So they deny it completely. Like the guy who had lost P7,000, he had convinced himself that he was in profit by P3,000. Like the people who are currently “investing” in Billcoin, a Ponzi scheme that promises 80%, many of whom must realize that 80% per month is utterly impossible. They know it really, deep down, but they’re not prepared to admit that they might have made a mistake.
Which they most certainly have. The real tragedy is that they’ll refuse to acknowledge their mistake until it’s way too late and probably after they’ve thrown even more money, time and emotion into a large hole in the ground.
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