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Investment scams pop up like mushrooms

Dubious investment schemes emerge faster than the authorities can close them down.

The Financial Services Conduct Authority (FSCA) has issued a string of press releases during the last few weeks, to warn the public against suspicious and fraudulent investment schemes and financial advisors. The flurry of warnings created the impression that operators think up scams faster than the authorities can close them down.

One of the schemes the FSCA flagged, Tradefarm, sold itself as a supplier of livestock and plants to farms worldwide and offered investors returns of 35% every 30 days. But further investigation found little evidence that Tradefarm was anything more than a Ponzi scheme, where the investments from new members were used to pay the unrealistically high returns to members who joined earlier.

It seemed that Tradefarm failed before the FSCA issued its warning. These schemes eventually run out of new members, usually when authorities start asking questions and potential victims are warned. Scheme promoters and members then usually blame authorities for the failure.

Read: When high returns raise suspicions

But gullible ‘investors’ will always have many more schemes to choose from.

An online portal that promoted Tradefarm, Global Course Light TeamSA, seems to specialise in introducing dubious investment opportunities to SA, with a list of several similar schemes and links to websites where people can join.

Most operate in a similar manner to Tradefarm, requiring a payment to join as well as an investment into whatever promoters think people will see as a lucrative ‘investment’ opportunity.

Tradefarm charged a R250 joining fee. Once received, the new member could choose from different agricultural products and invest different amounts. “Now you are on your way to success,” it promised.

‘Proven method’

According to an advertisement on the abovementioned portal: “Tradefarm has a proven method to acquire wealth from farming. All wealth comes from the soil!”

The portal also lists six other schemes: Horizon Life, Taxicab, Karatbars, Divinity Unleashed, Money Exchanger and Internet Shares. They all try to harness the effectiveness of the internet and social media platforms to spread their messages as far as possible.

Read: Karatbars swims in murky waters  
Ponzi participants ‘more likely’ to defraud their employers 

A look at Money Exchanger shows how these schemes work. It offers members different options, and there are different levels within each option, each with its own “matrix”. The matrix is nothing but a table that sets out the different levels in the schemes and regulates the flow of money.

Money Exchanger pushes the idea that your friends will be grateful if you introduce them to the opportunity to improve their lives and pushes the slogan ‘Love My Friends’.

All you need to get started is R100 and two friends.

Here are the steps that outline ‘how to grow R100 to R32 000’ with what the Money Exchanger website terms a forced matrix, meaning that it forces members to reinvest in a higher matrix to earn more money:

  • Level 1
    Join with R100 and recruit two members under you. Then you get R200. Upgrade with R150 to Level 2 and keep R50 profit.
  • Level 2
    After you have upgraded, your four downlines will pay you R150 each to upgrade too (R150 x four = R600). Keep R200 profit and upgrade with R400 to Level 3.
  • Level 3
    After you have upgraded to Level 3, your eight downlines will pay you R400 x eight = R3 200 to upgrade as well. Keep R1 200 and upgrade with R2 000 to Level 4.
  • Level 4
    After you have upgraded to Level 4, 16 downlines will pay you R2 000 each when they move to Level 4, which means you’re entitled to receive R32 000.

It is immediately obvious that every person who joins must enrol two others who must enrol two more who must enrol two more who must enrol two more … into infinity.

In this case, for just the first ten people to cash out the maximum of R32 000 each, a total of more than 500 ‘investors’ will be needed.

The original investors in the scheme could make millions, while the hundreds who join when it reaches its apex will end up poorer.

Money Exchanger even posts a warning to this effect on its website.

“Money Exchanger will continue to do profit sharing with you as long as people keep on investing in the system, either through reinvestment of their earned money, or by buying new packages. This is your responsibility as a member of Money Exchanger, we are not liable for any lost monies due to the slowing of the influx of new members.”

Interestingly, Money Exchanger refers to donations rather than investments, probably in an effort to avoid the attention of authorities such as the FSCA. Other schemes deny that they need to register or say that they do comply with regulations.

A new scheme, Cash FX, lists financials regulators as brokers and partners, including SA’s FSCA and Britain’s Financial Conduct Authority. In reality, the latter has issued a warning against Cash FX.

Cash Forex Group

Moneyweb contacted four people who actively promoted Tradefarm, three of whom responded with the news that Tradefarm no longer exists.

“I’m in Cash FX now, friend,” said one of the previous promoters of Tradefarm. “Legit and paying,” she said, and immediately sent an invitation to join as well.

Cash FX, or Cash Foreign Exchange Group, describes itself as a trading company specialising in trading foreign exchange on international currency markets from its base in Panama City. It supposedly sells courses to teach people how to invest in foreign exchange markets, but the course is only sold as part of an investment in the scheme.

Cash FX says it employs a team of specialised and experienced traders and uses its own algorithms and artificial intelligence to profit consistently on the foreign exchange markets. The course material is supposed to teach everybody to trade for themselves, but looks more like a disguised form of the usual membership fee – and is perhaps intended to lend credibility to the idea that the promoters are selling a product rather than an investment.

But it’s all about investing and using social media to get new members to join, they say. My invitation to join Cash FX included a video of one of the promoters, who apparently visited the Cash FX operation in Panama.

“Take a look at this wall, this wall of computer[s] that is trading real-time for you and I,” says a man in the below video clip, sitting in what looks like bait shop in rural America. “This is a business that these gentlemen have been doing for years and they just decided to share it with the rest of us and allow us to get a piece of it. This is your chance right here,” he says, referring viewers to a link under the video to join the scheme.

WATCH: ‘Here’s your proof right here … ‘

Similar videos are posted on Youtube, including one made in SA promoting the scheme in Afrikaans. Other clips on Youtube conclude it is a scam.

This ‘investment opportunity’ has all the ingredients of previous and similar Ponzi schemes – a joining fee, different options (or matrixes) designed so that a member is compelled to increase their exposure, and big incentives in the form of ongoing commissions and profit sharing to convince other people to join.

In this instance, the joining fee equals 30% of the investment amount. A minimum investment of $300 is required, thus $90 goes towards the training material and the rest towards investment in trading.

Profit is credited to members’ accounts daily, but members are charged a 20% fee for withdrawing profits.

Members share in the joining and withdrawal fees of the members they enlist as well, as an incentive to keep enlisting more people.

The scheme is designed to lure members into joining higher levels of investment, all the way up to the maximum of $100 000.

Alternatively, they can invest $100 000 to join and enter the higher level immediately. Yes, R1.5 million. And the ‘joining fee’ will still be 30%, meaning the investor will be paying a cool R500 000 for the training manual.

It looks like these schemes are becoming more difficult to close down. Cash FX says the company is registered in Panama City, but the owners and shareholders are unknown. Investments into the scheme as well as returns and commissions are paid into unregulated and largely anonymous cryptocurrency accounts, which makes it more difficult for the authorities to trace.

In addition, many victims of such scams would choose not to believe regulators’ warnings, if they even see them at all.

NUI Investment

“Come to NUI Investment,” said another of the old Farmtrade promoters, followed by a video clip of a man explaining that a return of 500% is possible within 200 days. “The aim is to connect as many people as possible,” he said while apparently speaking to a group of people.

“You are investing your money. Every day you get paid up to 2.5% of what you invest. You also get 2.5% of the profit of everybody who you introduce. Our aim is to collect as many people as possible, then you make 500%. A whole lot of money. What is important is to invest and get more people to invest.”

NUI Investments says it earns its profits from trading and mining cryptocurrencies. Its business model is similar to all the other schemes with a joining fee, daily profits and incentives for members to canvass new victims.

The website explains that if a person just invests, their total return will average 200-300% in 200 days. “To get up to 500% means he has to leverage on the power of the uni-level matrix and the universal forced matrix, as well as the matching bonuses from the uni-level matrix,” according to the website.

In short, the promoters offer commissions on the underlying members’ contributions to entice existing members into recruiting.

Says one promoter: “For me, with 50 000 affiliates in my team, I won’t earn less than $300 000. If I sign up 100 affiliates directly under me and each works with ten affiliates, I will have a minimum of 100 000 affiliates in six months and that’s minimum of $500 000 monthly return for me in income,” says he, urging people to contact him on his cellphone.

Read: Investors in illegal schemes get R368m back

While ignorance and greed seem to know no limits, the authorities’ ability to investigate dubious investments schemes is limited.

In addition, the decline in the rand from R14 per dollar a few months ago to the current R15 per dollar has increased returns for older members in rand terms, which makes these schemes even more attractive and more difficult to shut down.

Listen to Nompu Siziba’s interview with Nancy Bambo of Momentum Securities:

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Why are the various brainchilds of these ponzi schemes never arrested?
1) No recommendations from FSB?
2) Useless NPA?
3) Police are paid off to delay the investigation?

for example – Willie Botha from Sharemax is still living is luxury +/- 10 years… Shameful and a disgrace to justice!

NPA – Never Prosecute Anyone

One of my favorite quotes from the movie “Wall Street” — “money is neither made nor lost, it is merely transferred”, in this case from the people looking for a ‘get rich quick’ scheme into the hands of the people who create these fraudulent schemes.

I received this on an e-mail about two days ago. Email went into the bin.

Join The Tender Funder Club

DO YOU HAVE MONEY BUT DON’T HAVE A GOOD PROJECT TO INVEST IN?

MAKE MONEY FUNDING OTHER SMMEs/STARTUPS WHO ALREADY BEEN AWARDED SIMPLE DELIVERY PROJECTS BY NATIONAL COMPANIES/GOVERNMENT!

The Problem:
It is very clear that banks do not not fund most SMMEs/Startups with projects from national companies and government, this is due to their requirements that an SMME/Startup must show a good history of paying its creditors, must have made certain amount of revenue per year, usually millions, and in some cases must have asserts as collateral, the problem with this is that SMMEs/Startups do not qualify even when they have been awarded projects, and startups basically can never be able startup their businesses, and furthermore government finance agencies like SEFA take too long to even respond to a funding request from an SMME/Startup.

Your Investment Opportunity And Secret Of Compound Interest:
Make your money work for you! Get 10-15% per month return funding SMMEs who have projects from national companies and government. That is certainly better than 8% per year you get from most investment instruments like bank’s money markets.

Super Compound Returns: Did you know R100 000 with just a minimum 10% return per month becomes R313,842.84 in a year?
Find below the two scenarios showcasing what returns you should expect, the average for the whole year of returns per month you should expect is around 15% because in many projects we negotiate more than 10% for you.
10% Minimum Return Per Month
Future Value: R313,842.84

PV (Present Value) R100,000.00
N (Number of Periods) 12.000
I/Y (Interest Rate) 10.000
PMT (Periodic Deposit) R0.00
Starting Amount R100,000.00
Total Periodic Deposits R0.00
Total Interest R213,842.84
15% Return Per Month
Future Value: R535,025.012

PV (Present Value) R100,000.00
N (Number of Periods) 12.000
I/Y (Interest Rate) 15.000
PMT (Periodic Deposit) R0.00
Starting Amount R100,000.00
Total Periodic Deposits R0.00
Total Interest R435,025.01
Other Benefits of using MarketDirect Tender Funder Club:
We Source Good Projects: In 2019 we had R1,1 Billion worth of projects from which you can invest in.
Project Management: you do not have the time and/or skills to run projects, you work a 9-5pm job, we run them for you.
Free Business Lawyers: these kind of business deals one needs an advocate (charges R3000 per hour) and a lawyer to present a case in court in case things go wrong. We provide you free representation in case things go wrong.
National Credit Act: We make sure you comply. Should you provide illegal lending you can’t then go to court when the borrower decides to not pay you. Your contracts or legal documents must be legal and continuously updated.
Profit Share Model As A Solution To Lark Of Tender Funding:
MarketDirect facilitates temporal profit share agreements between SMME and Funder, you pay for the goods being delivered directly to the verified supplier of the SMME needing funding for the verified purchase order, you will be exposed to same risks like everyone who does government tenders and RFQs, however our experience based on real transactions we have facilitated, informs us that government does pay in 30 days especially for low value purchase orders of say R200 000.

Requirements for Funding Projects:
We seek for you good projects that pay back in 30 days from delivery.
R100 000 is the minimum investment, because most basic of the projects that come to MarketDirect need around that figure.
EME: You must be an EME or South African company that makes less than R10 million per year.
Please do not invest your last money in a project such that if you invest it, and wait longer your lifestyle is disrupted.
You must have the money now to join, because a project when presented to you need to be funded within 48 hours.
To apply to join the Tender Funder Club click the following button:

Thousands of schemes going round.one of the best one’s i saw was invest R50k and from the next month receive R10k for 5 years.
Also pay R2000 and in 2 weeks receive R8000

Loads of people looking for silent business partners

Yip, i’m one except my project is an approved development property 32hain extent. Investors are protected as the property is unbonded. Fair to say, not all business people are scammers

its as simple as that: when the promised return on an investment is just too good to be true, one can be 100% sure it is some sort of scam – just stay out of it to prevent crocodile tears later on.

Gov. institutions, regulators and financial institutions really should do more to educate the gullible and the ignorant. We have such a huge social media nnetwork and soapies that can be utilised.
I know that these scams are not under the ambit of the regulators and fraud can only be proven when they collapse and charges are laid by the scammed, which is too late for the suckers.
This is no excuse for inertia or blaming the ‘investors’ for being greedy, most are actually totally clueless.

Well it appears that Escponent has finally ran out of new members so will the FSCA investigate here one wonders. I read on these pages an informed reader used the words Ponzi with regard to ECS. Today’s SENS gives little comfort to those invested.

warned about it 2 years ago…but the FSCA only investigate when theS#%t hits the fan….and then try to look like heroes warning everyone about the danger of Ponzi schemes.
Now lets think about it….if they were warned but ignored can there be a claim against them for not doing their job….the answer is no

Ecsponent…watch this one Adriaan

Look at the net asset value!
Market cap: 86,364,429
EPS: 0
P/E ratio: -0.63
Forward P/E: 0
Dividend yield: 0 %
Last dividend: 0.00
Date of last dividend: 12:00:00 AM
Return on equity: 416.86 %
Return on assets: -7.88 %
Net asset value: -5.73
Authorised shares: 1,000,000,000,000

My bliksem!!! now I think I have seen it all.

https://www.gclteamsa.com/

This has to be comedy hour, I especially enjoyed the pictures of rolls of cash and the memes, check it out for a good laugh.

Seriously though, a website specialising in the dirty dozen. Some of us may think this is funny and wonder how people get involved in this stuff and although we would not like to admit it, people we know closely either in the community or at work will get involved with this which affects us all when they get scammed and get into trouble, they will either need to loan or steal money to get out of it. it is obvious what needs to be done and quickly.

I wonder where the Karatbars trolls are as they also get a mention here.

By the way Adriaan, thank you for such an article to make targets aware of this. Not enough of this reporting is being done (by others).

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