AT LEAST 10 000 people who fell prey to fly-by-night pyramid schemes within the last year have filed police reports across the country after being swindled of over US$30 million by scammers, who snatched the cash and skipped the border.
Gullibility has seen families selling houses, vehicles and other properties to invest in pyramid schemes, an old trick used by scammers as far back as the 1920s.
Some marriages collapsed after the scammers vanished with the money, while others have ended up committing suicide since mid-last year.
In some cases, family ties broke down because people invested using funds that were sent from relatives in the Diaspora for other needs.
A pyramid scheme is an illegal and fraudulent investment based on a hierarchical set of network marketing.
New recruits make up the base of the pyramid and provide the funding for so-called returns to the earlier investors or recruits structured above them in the scheme.
A pyramid collapses once the entity running the scheme is unable to sustain itself by failing to attract enough new investors to pay off earlier investors.
In fact the collapse is automatic since the schemes require a growing number of new recruits at each level, usually a significant multiple of the number in the previous level.
While in theory, the scheme can continue until the next level requires more people than life on the planet, all obviously collapsing long before that point is reached.
Once a pyramid scheme becomes popular, they attract the attention of regulatory authorities such as the Reserve Bank of Zimbabwe, which regulates deposit takers, and investigations are opened.
Since they are normally not registered under the laws of the country, the founders abruptly shut down the business and disappear to other countries with investors’ money.
National police spokesperson Assistant Commissioner Paul Nyathi said police have since last year handled 892 cases across the country that involve pyramid schemes.
“At least 10 000 complainants reportedly lost over US$30 million between them. We have handled some 892 such cases involving thousands of complainants. The scammers quickly disappear after swindling the unsuspecting investors.
“Millions of dollars were lost, some lost houses while others committed suicide upon discovering they would have been duped. We have handled suicide cases related to Ponzi schemes,” Nyathi said.
He warned people against such schemes.
As police, urge people to desist from such dubious investments. Ponzi schemes start with lucrative interest rates but in the end, the investors will lose. People must not be that gullible and they should shun such illegal schemes,” he said.
In some cases, Nyathi said, the scammers create WhatsApp groups where the administrators and other agents are paid handsomely to be able to entice and convince more investors.
According to statistics from the police, at least 2 000 people reported Beven Capital for fraud involving US$17 823 000 and the chief suspects are still on the run.
Some small fish were picked up by the police but a manhunt is still on to arrest the organisers, who are believed to be outside Zimbabwe.
Some 43 people were left counting their losses after Bitcoin Interchange Zimbabwe Private Limited, represented by someone calling himself Paradzai Muchenga, swindled them of US$765 935.
Delight Credit is also under investigation after 500 people lost US$100 000 in an illegal investment scheme recently.
Elamante Global, which is led by Benson Ngwerume, allegedly swindled about 2 163 people of US$80 000 plus R150 000.
Police also handled a case in which Manifest Global Marketing is accused of swindling 902 people of US$1 500 000.
Some 400 people filed criminal reports against Crypto Shares, run by Martin Mhlanga (aka Boss Martin) after losing almost US$1 million in a pyramid scheme.
Six hundred people who invested US$843 000 in a scheme run by Eaul Peter Capital, a scheme run by Silas Chimuka, also reported their cases to the police and investigations are still in progress.
Another scheme known as Mudzimai Akarongeka, run by Gladys Nemhara reportedly swindled 43 people of US$23 330.
KDW Investments which operated along Borrowdale Road in Harare is also under investigation for allegedly defrauding 1 590 people of US$192 000 while Cryptal Shares allegedly swindled five people of US$5 000.
Police are also handling a case in which May Investments, run by Kelvin Nashe and John Murangari, reportedly swindled two people of US$3 400.
Credit, another entity under investigation, allegedly defrauded 16 people of US$24 500.
- The Herald