Monday, October 09, 2006

Nyramids

Nyarmid: (defn) Nairobi pyramids are not physical structures, but they are everywhere, some in classy buildings, and some in run down ones where they do business, spread the word, and churn the money.

They are known as investments schemes, savings plans, multi-level, merry go rounds, revolving funds, savings plans, investments. No one calls them ponzi's or pyramid's.

They are unregulated and their exclusivity and exteremely attractive returns make them too enticing for many. They spread virally, by word of mouth from people eager to share their good fortune, to others who have not seen the light.

One group is associated with an up-coming communications company. Maybe the company wanted to tap a cheap source of unlimited funds for expansion instead of going to a bank – but it has worked for the company which still runs one of the better established funds.

The wars between funds are vicious with some bad mouthing their competitors. One allegedly leaked information to the CBK - leading to the swoop on a competing group last week.

They are untouched by any authorities, even though the Central Bank of Kenya (CBK tried to shut down one last week. They will not be affected even by the micro-finance bill scheduled to pass though parliament later this year.
Since they don’t lend money, and are not accepting deposits, I can’t see how they can be regulated by the CBK. But many rely on the banking system, giving some oversight to accounts that have high volumes of transactions and values. Even bank tellers are curious enough about people banking multiple checks into their accounts to ask about how/where they can sign up!

The shocking thing is they actually work - or have worked for some people. I have never joined one, but know many who have – friends more accustomed to risk, some who have invested as little as 2,000 to as much as 100,000 shillings in more than one of these, with money doubled in a year. Some have provided a steady monthly income that supplements or even doubles their monthly income. Maybe because of their better contacts and networks, they are at the top of the pyramids, the early investors who get paid by the later investors, but they have all done very well.

I almost feel stupid for not joining any. Am I any better for buying shares in Uchumi or leaving money in the bank earning almost nothing from a savings account?

My problem is I am too cautious, too curious, ask too many questions. Questions the backers of these never want to answer. You’re either in or you’re not, you want to get paid or you don’t. Still I rely on the conventional wisdom that nothing is free and anything that sounds too good to be true, probably is.

24 comments:

coldtusker said...

You know, I know... most of these are scams! When the Albanian government stopped a huge Ponzi scheme... bam... there were riots!

BTW, the last guy loses SO if you are not on top then watch from the sidelines while the bottom guys/folks suffer!

Please provide more info on this "up & coming" communications firm.

Which one is it?
What do they offer?

If the info is "private"... please send it to my e-mail!

Thanx!

Anonymous said...

Bankelele

Banks you are better off investing your money elsewhere.like coldtusker says,the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers.

of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves. to legitimise the act, most such scams will have fake referrals, testimonials, and some fake merchandise or buusiness.any way you look at it,its all a SCAM.

i know of one pyramid scam that made its rounds in states earlier this year. they did not even pretend to be selling some worthless product, but guess what, they stull suckered poor kenyans.

manze this scam left buddies and relas pissed off at each other,broken relationships, people calling immigration cops on each other and a few perpetrators even going to jail.

and coldtusker, any 'business' people have to hush in 'private' is a SCAM. so its a matter of being the fraudster or the defrauded, i choose to be neither.

Anonymous said...

what's with TPS trading 7.4 million shares,anyone knows what's up with all that?

gathinga said...

while the is is hot, i've heard stories from buddies and colleagues about sasanet and another scheme kings scprit

Kngs script was later exposed in one of the weekend magazines few months ago.

but sasanet continues to rule paying as much as 10% monthly. i know someone eho has ut in 1m.

Can anyone tell us the catch?

mwasjd said...

Nyramids means that if you are at the top, you make the money. I thought that is the whole essence of capitalism. Stay at the bottom, make nothing and spend everything, but at the top, make everything and recover what you spent earlier.

I don't think it is a scam because the deal is spelt out clearly for you. If you recruit, you earn. If you don't, you lose. People just need to learn how to make the right decisions. I agree with mashatall that investing is a risk, but when it pays off, nobody remembers the risk part.

Despite all this, I'm not one to join a pyramid scheme.

Girl in the Meadow said...

I have managed to keep away from these schemes fortunately.

The National Centre for Research on White Collar Crime said...

The general consensus is that this is a scam. The National Centre for Research on White Collar Crime (NCRWCC) Nairobi endorses that view.

bankelele said...

coldtusker: That's what's shocking - THEY WORK (or for earlier/better infomed investors)
- comm. company has been ferreted by Gathinga & Mashatall

Kudrinketh: Don't worry, am not biting any
- TPS bulk trade should have shown up on the bulk trade list. I think TPS were offloading some shares to comply with the NSE 75% rule. Kenol is also doing the same.

Ntwiga: No way to tell, but if someone tries to sell it to you (and you're already in), maybe it's time to jump

gathinga: Sasanet seems more legit than the others like kingscript (which was fronted by a chuch group)

Mashatall: Good point, some of them use the SACCO mode since they are very established and saleable
- Oh and a few of them tout "offshore investments" as the source of their great returns - which is highly unlikely

Mitzy: I think they are more sophisitcared in the states, but here even simple things like selling lists of names (and banking in each other's accounts) is good enough for marketing purposes

toiyoi: the base is ever expanding thanks to good word of mouth marketing from one's good freinds and colleagues. i.e. "it's good enough for them, so i can do it too." The one you desribed allows early investors, to dip in & then cash out, while the wave they created will pull in many more for a long time long afterwards

mwasjd: They are working, and there were some very angry people on TV when one office was shut down saying that "the rich don't want the poor to suceed"

Shiroh: Me to, but I have been tempted and people around me are making (very) good money from them.

ncrwcc: Is the NCRWCC for real? you shoudl give advice to KACA

coldtusker said...

What is Sasanet?
What do they sell?
Are they junk bonds?

When the gov't closed down a Ponzi scam in Albania there were riots!

The authorities need to shut down Ponzi schemes before the spread gets too deep & wide.

Or warn them. If they don't listen coz of GREED, shauri yao!

moskeyto said...

Good grief, this is shocking to learn. I did not know these things exist in Kenya,that people actually use them and that the government does nothing to stop them.

coldtusker said...

Mashatall: Si u share some of this info as to how to invest in sasanet?

M said...

@Banks

What about these dodgy reselling businesses like GNLD, Tianshi, etc where you buy from some guys and then sell to others

I think these are just as dodgy!!!

Baltic Amber said...

m:
unless you are a manufacturer, most people have to buy "from someone" and "sell to others" -- so, that's not necesarily bad.

If you buy something "from someone" @ 2ksh and sell it to someone else @ 15ksh, you'll have made a profit of 13ksh. That's a legitimate business.

As for the other schemes - there is no such thing as easy, fast money (unless you steal it) or unless your the founder of a company like youtube, which was started one year ago and sold today for a billion dollars!

Those are your only choices: steal or start an internet company.

Baltic Amber said...

m:
unless you are a manufacturer, most people have to buy "from someone" and "sell to others" -- so, that's not necesarily bad.

If you buy something "from someone" @ 2ksh and sell it to someone else @ 15ksh, you'll have made a profit of 13ksh. That's a legitimate business.

As for the other schemes - there is no such thing as easy, fast money (unless you steal it) or unless your the founder of a company like youtube, which was started one year ago and sold today for a billion dollars!

Those are your only choices: steal or start an internet company.

bankelele said...

coldtusker: Authorities here not aware of mahy of them, nor would they have the teeth to do much. It is simply buyer beware

chumviKiasi: It's an appetite for making money, using the little you have to maximum benefit.

Ntwiga: That's the point. Thye work - you make money for doing nothing. ok 'investors' take a huge risk putting money into 'nothing' - but they get a huge return (if) out of nothing!

Mashatall: Thanks for the info about Sasanet. The people I know who invested in it, know jack about it.

coldtusker: I believe Sasanet has achieved most of its funding goals and the returns now as not as generous as they were a year ago

M: Ok those wowmen one have a product to sell, however tangible the products may be. I want to attend one of tehir award shows where they give their top sellers BMW's!

kenyanentrepreneur: Some of them have spread so much, that people around you each have product to sell.
PS: Is Mary Kay products still selling in the states? These are similar

69/\/\: True - viral marketing & greed. I woudl not be comfortable selling these to my freinds, but after a few cycles of good returns, i'd share thsi with them, with a warning!

Anonymous said...

You can get more on Sasanet here

Anonymous said...

If the deal seems to good.......

Anonymous said...

I always tell people that if banks-which are legitimased form of pyramid-i.e. the more depostis they get the more they can lend and make a killing on the margin-can collapse, then be very wary of pyramids. Kwa hivyo, I want to start a bank...

Anonymous said...

Anyone onthe Family Finance shares?Is Family Finance cashing in on money frozen from some of the investment schemes, then of course maybe they don't want to let go, so they are now offering shares to account holders!
Please help me on this one.

roughalmasis said...

Schemes
The architects of the schemes understand the mathematics. Pyramid schemes benefit the pioneers. If you are operating at a particular geographical area, say Nairobi, the collapse comes when you reach saturation point(when members reach all possible prospects). At that point those at the top jump out.

I doubt Kenya laws can protect anyone on this. When authorities take action it is reactive, and they cant go far. Organisers know that if you sell a product you are in MLM or Network Marketing and not Pyramid or Ponzi.

Have you heard of the latest, Amega Global which sells magnetic therapy products ? Anybody know anything about magnetic therapy and whether it works ?

To cheer you up sample this: “Men are so simple and yield so readily to the desires of the moment that he who will trick will always find another who will suffer to be tricked” by
Niccolo Machiavelli – from quotes and observations from wiser women and men than I.

The National Centre for Research on White Collar Crime said...

Well, pyramid schemes are white collar crimes, just like any other.

White collar crimes are difficult to prove and even tougher to obtain a conviction.

The best advice is prevention....learn how not to be a victime...and NCRWCC will teach you how to do this.

The National Centre for Research on White Collar Crime said...

Well, pyramid schemes are white collar crimes, just like any other.

White collar crimes are difficult to prove and even tougher to obtain a conviction.

The best advice is prevention....learn how not to be a victime...and NCRWCC will teach you how to do this.

Anonymous said...

About Amega Global,

One of the agent came and shown demonstration about the benefit of the bio-magnetic bracelet.

They claimed that it is made of titanium with 2000 gauss(magnetic strenght) that improves blood circulation.The Neodymium magnetic is claimed to last for 300 years.

They even did the physical demonstration by summoning audience to come forward to the stage.

I was one of the audience and its was hard not to disbelieve because I could feel the difference by wearing the bracelet while the agent did the demonstration to me.

Or is just a trick? Could anybody give your opinion about this matter?

I also have a video demonstration in .mpg files

I would be very much appreciated.

DHIRAJ KUMAR SAHU said...

I'm wearing the Bracelet of Amega Global for the last 6 months, and believe me after 25 or 26 days I never felt tiredness. I'm enjoying my energy level 24x7

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