It appears that the ‘rash’ of so-called pyramid schemes proffering unsustainable ‘business models’ where a handful of ‘first in’ participants feed off those who enter lower down the chain and which appears to have been taking root in Guyana have attracted the attention of other countries in the region, triggering reports in sections of the regional media.
On Wednesday December 30 the Jamaica Gleaner reported that the Financial Intelligence Unit (FIU) here had been seeking to get on top of “more than a dozen pyramid schemes” currently active in Guyana, quoting local FIU Director Matthew Langevine as saying that the illegal rings are running various types of “unauthorized and unlicensed financial activities” which the newspaper says are essentially “intended to defraud persons.”
“In Guyana, we have had major pyramid schemes being identified, and so the FIU has been actively involved with other agencies in terms of getting an understanding and information regarding the amount of money involved, the persons involved, and supporting the investigations with financial data,” is what the Gleaner quotes Langevine as saying.
Local followers of this particular brand of financial scam assert, however, that the numbers of such schemes currently active here may be higher than the FIU Director’s estimate. Further, Stabroek Business has been told of “ugly confrontations” that have ensued in instances when some of the schemes have collapsed and “some parties” are left “out of pocket.”
One person with some knowledge of how the scam works told this newspaper that one of its strengths repose in the fact that victims of the pyramid scheme scams are frequently disinclined to report their losses to the authorities concerned that they may create “police problems” for themselves as well as for friends who may have been responsible for introducing them to the scheme. “In a lot of cases people find other ways of trying to get back the monies that they might have put into the scheme,” the source said.
The source explained that what makes pyramid schemes seemingly attractive is that many of them offer what appears to be quick and easy returns on what, in some cases are “not too large investments. You think it’s a quick in, quick out kind of thing and some people actually make a bit of money. It may sound like the kind of scheme that only attracts money people but you’d be surprised how many ordinary people get pulled in.”
The whole idea behind what is known as a Pyramid Scheme is that the people at the top make the real money and unfortunately those at the bottom who simply throw in their money in the hope of a quick return end up getting ripped off.
While The Gleaner quotes Langevine as saying that some of the financial gain enticements offered by the operators of pyramid schemes are “not practicable, not reasonable” and are essentially intended to “scam,” people, this newspaper’s source says that it is not a matter of the offers being made through pyramid schemes being practicable and reasonable but a matter of “what you can get people to believe.” He explained that in a number of cases the victims are not people “who understand how these things work” but ordinary people, with some savings, who see a way to increase those savings without too much hassle.”
Back in August last year the proliferation of Ponzi-type schemes triggered a cautionary public statement from the Consumer Affairs Commission, which operates under sections of the laws which address the issue of so-called “Pyramid selling,” and which stipulate that the promotion or operation of such schemes is an offence under the law.
Back in October last year the Guyana Police Force also announced that it was investigating several pyramid schemes, referred to locally as “The Blessings Circle” following reports by persons that they had been victims of scams.
Stabroek Business has also been briefed about one instance in which, seemingly concerned about the implications of reporting instances of Pyramid Scheme ‘scams’ to the authorities, victims have been working privately with the perpetrators and in some instances with go-betweens in an effort to recoup their losses. In one instance, a key operator in a Pyramid scheme has been engaged and detained by the police on several occasions in order to extract undertakings relating to reimbursement of monies.
Financial System Regulatory Authorities elsewhere in the region, including Trinidad and Tobago, have issued public warnings about entering into pyramid schemes.
