Glaring Ponzi Schemes In Ghana Now

The Author

What is investment?
“Investing is the act of committing money or capital to an endeavour with the expectation of obtaining an additional income or profit”. The successful invest Warren Buffet defines it as “… the process of laying out money now to receive more money in the future.” And perhaps this is what make people tend to think investment is always about making money. Perhaps quick money.

The kind of investment one ventures in depend on the individuals capital, maturity period required and one’s risk appetites. Now we have investment company’s like Data Bank who have mutual funds and other investment pages that give interest above the T Bills. If you’re risk averse then this and other banks which are regulated is where you should be putting your money.

The last quarter of 2016 saw hundreds of people if not thousands of regularly besieging the compound of DKM and God is Love Microfinance. Why? They had all gathered in front of these defunct institutions to demand their money back. Years before that, people were praising these institutions of being the best financial institutions. These institutions promised and were paying an unbelievable interest of 80% and above within the period of three months. They were able to achieve this within the short run not because they were some financial wizards who could scrutinize and invest these deposits into some brilliant opportunity; neither was they trading in some stock market with the deposits of these unsuspecting victims. Their plan was carefully orchestrated on the principles of a Ponzi scheme. A Ponzi scheme is a fraudulent investment scheme, where returns are paid out to existing investors not from actual investment returns, but from the money contributed by newer investors, creating a cycle of deception.

'Peer-To-Peer Lending
(P2P)' “Peer-to-peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary. Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios” source Investopedia ( retrieved 08/02/2018). So assuming I have $1000.00 I have no use for and would want to make a little interest on, All I have to do is go unto one of these platforms to match me with someone in need of $1000.00. These platforms because of the high risk they take (borrowers don’t provide tangible collaterals) usually charge higher interest and in return given higher interest to lenders than Treasury Bills will normally do. This idea is supposed to be easy and help people financially as there is gap between loans needed and financial institutions willing to give (“The two largest peer-to-peer (P2P) lending platforms, Prosper and LendingClub founded in 2005 and 2006 respectively, have originated over $6 Billion in loans to date. Although they have only begun to scratch the surface of the $3 trillion consumer debt market” Nav Athwal Cofounder and CEO of RealtyShares, a crowdfunding for real estate platform). Yet like most good things miscreants, hooligans and hoodlums find a way to make the system corrupt. For instance, Ezubao had a very huge lending platform where investors could lend money to fund various projects on the site. The problem was that over 95% of the projects didn’t exist, they were simply made up by Ezubao while legitimate investment money was pouring in. And this wasn’t some small-time operation. Ezubao had over 900,000 different investors on its platform.

Money Rotation
These swindlers promise up to a 100% interest rates within 5 working days. So they lure greedy but naïve people to roll in cash through mobile money. With a Minimal amount of GHC100.00 you get registered and paired with another person. You’re required to send the money to this person who they claim registered 5 days ago and the said day is the day of maturity. Now the beautiful thing about all Ponzi Schemes is that the pioneers are always paid. They are supposed to convince their friends and family members to come invest more. Now this is the most ridiculous Ponzi scheme idea I have come across. It is as ridiculous as it is unreasonable. It is dumbfounding how the people are lured to be victims. These companies’ presences are not only absent physically; they’re also not registered with the registrar General of any country. They are not controlled by any head institution as a financial service provider so I get amazed when people trust them with their money. It is only online platforms they have without any physical presence. So I am a bit surprised how people can trust an idea which too good to be true, that you can actually give someone an amount and receive an interest of 100% on it within 5 working days. How on earth is this possible? And how can they trust these online platforms? No physical presence and no control? Again how are they able to trust other users? No reviews, or ratings and money is exchanging hands. And how are they able to trust that they will get any form of redress if the system fails? The only legitimate money rotation scheme was the one our mothers used to carry out with friends and colleagues at the market places or offices. With this about 10 women come together and they all contribute an amount say GHC200.00 for one person on a market day, and they do same for another person on the next market day. The process is repeated until everyone is paid and if they so wish, they start a new cycle. People from different occupational backgrounds doctors, nurses, soldiers, masons, teachers, farmers etc in diverse forms.

Ways to spot financial scams and Ponzi schemes
1. If your interest is too good to be true, then its probably a lie. When you’re being offered an interest bigger than the T Bills in lending you should be wary and do due diligence.

2. They usually don’t tell the project in which your money will be invested.

3. Pressurised to respond quickly? 4. Are the contact details vague? Name: Torsu Alfred Email: [email protected]