By Alois Vinga
THE Financial Intelligence Unit (FIU) has urged members of the public to be on the lookout for Ponzi/Pyramid schemes in order to avoid falling prey to scammers floating sugar-coated investment returns.
The remarks come in the wake of the recent arrest of Zhao Jiatong (39) in connection with a case of fraud in which unsuspecting people were duped through the E-Creator Ponzi scheme.
The suspect would collect cash from several investors who were promised a lucrative return on investment until the scheme collapsed with Zhao vanishing into thin air before his subsequent arrest.
Investors lost about US$1 million through the scheme.
In a statement Friday, FIU noted the developments with grave concern saying the proliferation of Ponzi and Pyramid Schemes in the country are coming in various forms and guises, designed to mask their fraudulent nature and lure people into parting with their hard-earned money .
“Under such schemes, people are typically asked to invest a sum of money and are promised unrealistic returns /profits either without being asked to do anything else or being required to actively recruit new investors.
“In either case funds from new investors are used to pay the earlier investors as well as the originators of the schemes.
“Sooner or later the scheme will run out of new investors and inevitably collapse, with the majority of investors being unable to recover their funds,” said FIU.
As such, the unit said, the schemes are illegal, unregulated and usually difficult for victims to recover their money.
The Reserve Bank of Zimbabwe has in the past issued warnings to the public against investing in such schemes.
The FIU said members of the public must be wary of such fraudulent schemes with an entity outlook of inviting investments when they are not a registered or regulated financial service provider or promises super profits /returns that cannot conceivably be earned through known legitimate economic activities.
“Such investments are predominantly offered on WhatsApp groups with no permanent offices,” FIU added.
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