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Pyramid schemes: It's greed, you think you stand a better chance than the others

8 August 2020 2:44 PM
Tags:
Pyramid schemes
National Consumer Commission
Upmoney Pyramid Scheme
Joseph Selolo

National Consumer Commission director of prosecutions Joseph Selolo says you can't be naive or claim to be duped.

The National Consumer Commission and the Asset Forfeiture Unit, as well as the Financial Intelligence Centre, announced on Tuesday that they had frozen the accounts of the "Up money" investigation and cautioning citizens to not get caught up in pyramid schemes during the COVID-19 pandemic.

The group recruited via social media and made millions before the AFU froze more than R18-million from the scheme's accounts and seized some assets

Refiloe Mpakanyane speaks to National Consumer Commission director of prosecutions Joseph Selolo for more on the WhatsApp gifting operation and how to spot a pyramid scheme.

If the compensation that the people in the scheme receive is primarily based on recruiting of others, that is one of the signs of a pyramid scheme.

Joseph Selolo, Director of prosecutions - National Consumer Commission

Also read: How the National Consumer Commission busted a grocery pyramid scheme

The others are various levels of participation. When you join you are assigned the lowest level and your joining fee is then used to compensate those that are already in the scheme. If you recruit and people join after you've joined then you move up a level and so on.

Joseph Selolo, Director of prosecutions - National Consumer Commission

The amounts are then used to compensate you and those that were there before you. But in reality, everyone understands and knows very well what is a pyramid scheme, it's just that because of greed everyone thinks they stand a better chance than the other person.

Joseph Selolo, Director of prosecutions - National Consumer Commission

On how more than 200,000 people were defrauded, Selolo says there has to be some semblance of legitimacy.

There are some amounts that were used to buy some of these grocery packs and meat packs the Up Money scheme was peddling. Some did receive these things but the majority didn't receive them.

Joseph Selolo, Director of prosecutions - National Consumer Commission

What we found out was that there was another company owned by the same director and some money was transferred to that account to the tune of R4-million. That was the account that was used to purchase vehicles and so on. The other money was dissipated at the points of sale, where things were purchased.

Joseph Selolo, Director of prosecutions - National Consumer Commission

Normally victims will be able to claim compensation and the state would be in a position to impose fines on the perpetrators. But that will not be the case in this specific matter.

Joseph Selolo, Director of prosecutions - National Consumer Commission

You can't be naive or duped because there are two criteria: the first one is that you pay your own R180; the second one is that you go and find five people and bring them in. Now, I don't understand how you can be asleep and somehow be dreaming, sleepwalking and recruiting people, and then say: 'I was asleep, I didn't see myself walking around.' It will be a miracle and I don't think anyone can achieve it.

Joseph Selolo, Director of prosecutions - National Consumer Commission

Listen below for the full interview ...


8 August 2020 2:44 PM
Tags:
Pyramid schemes
National Consumer Commission
Upmoney Pyramid Scheme
Joseph Selolo

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