Introduction

The Ponzi scheme! Ponzi scheme?! Hearing this group of words, one could either think of the famous pyramids erected by the kings of Egyptian civilization during antiquity and that Ponzi is a king of this distant and extinct civilization; or believe that the Ponzi pyramid is a complex geometric figure that bears the name of its genius designer. However, this is not the case! This pyramid does not evoke anything so worthy and contributory to human civilization. Rather, it is an ingeniously mean-spirited system whose sole purpose is to make a profit in a criminal and immoral manner. In the following lines, we will explore together the definition of the Ponzi pyramid, its origin and finally, the signs to recognize and avoid it.

Definition and origin of the Ponzi scheme

The Ponzi pyramid, also called Ponzi system, Ponzi chain, or Ponzi fraud, is a fraudulent financial arrangement which consists of remunerating clients’ investments essentially with funds provided by new entrants. If the scam is not discovered beforehand, the fraud comes to light when the system collapses, that is to say when the sums provided by the new entrants are no longer enough to cover the customers’ remuneration. . Indeed, this fraudulent financial system models its method of remuneration on the pyramid, whose base is wider and intrudes as one climbs to reach the top. Following this hierarchical image, the first “investors” or to be more correct the first pigeons are at the top of the pyramid and the new ones at the base. Thus, to respect the crazy returns promised to “investors”, the proponents of the fraudulent system use the capital of the “investors” at the base to remunerate those at the top, with the hope of attracting more “investors” into the trap. » to replenish the coffers and remunerate those located in a higher stratum of the pyramid. Although, it is the investors who generally recruit new investors because according to the owners of the system, the sponsorship of new members has a favorable impact through the granting of rewards. It should also be noted that in addition to being a system of high dishonesty, it is somewhat vicious because it transforms “investors” into passive accomplices.

This system is named after the Italian Charles Ponzi, who became famous for having set up this fraud in Boston, in the United States in the 1920s. In reality, it was set up for the first time by Adele Spitzeder in the Kingdom of Bavaria (Germany) between 1869 and 1872. Charles Ponzi simply used this system in 1920 in Boston, which made him, an anonymous person, a millionaire in six months. In addition to Europe, the use of fraudulent arrangements has been observed on the African continent and in Ivory Coast in particular (2010-2019). Several companies adopting the same mechanism, extracted significant sums from locals, who saw in these companies, often led by a charismatic leader, an investment opportunity not to be missed under penalty of regret. As was the case with the Bayta system” based on a mobile application.

How to recognize them and avoid getting caught!

Knowing how to recognize them means knowing how to avoid them. Below is the list of indices which cannot escape an objective and measured assessment.

−      If the investment promises very high rates of return with promises of guaranteed payouts, it is probably too good to be true.

−      An investment presented as being without any risk is not possible, the rate of return is always proportional to the risk incurred.

−      Scams often try to pressure individuals into investing quickly, telling them that the offer is limited in time or that returns will be lower if they do not commit quickly.

−      One of the main features of pyramid scams often involves a referral system in which investors are rewarded for recruiting new investors.

−      Scammers often tend to be vague about how funds are used or managed. If you can’t get accurate information about the company or investment, it’s best to stay away.

−      Scammers can create complex structures to hide real sources of income and losses. If the investment seems complicated or difficult to understand, it is best to avoid it.

Conclusion

This fraudulent financial arrangement has existed for over 100 years. Between its evolution and the continuity of its use by a category of malicious individuals, there are numerous clues like those cited above, far from being exhaustive, which serve to avoid the webs woven by these potential crooks.