A Billion dollar Industry

How to Protect Yourself from Pyramid Schemes

Let me begin by saying, all business or interactions of real significance begin from a level of trust and credibility. Without which there can be no business conducted. Nobody sits down with a stranger and discuss matters of real importance unless they are completely desperate or have built rapport with said stranger.

Scams are a billion dollar industry, and there is about one hundred thousand new scams that mushroom in a single month, in the United States alone. And the US has about the most sophisticated financial systems in the world but they also struggle to put a stop to these scams. The scams vary in complexities and the industry they operate in.

On Thursday June 1st 2023, Elizabeth Holmes Founding CEO of Theranos reported to a US Federal prison to start serving her sentence. Her scam was just simply making bold claims and she turn her startup into a 9 billion dollar entity. MTI on the other hand is said to have swindled 35 billion dollars from US citizens alone, and their CEO is still fighting US extradition from Brazil.

Last month as I was doing my rounds, I kept hitting a hurdle in my attempts to secure clients for my then employer. Middle Class Income earners kept telling me that if I cannot guarantee them Twenty Thousand Rand weekly withdrawals, then they had nothing to talk to me about. Okay guys, I would first like you to understand that it is not hard to get R20 000 weekly returns on investments. The problem was not the amount, even a bank can give you R20 000 weekly returns. It all depends on the capital you provide them. A bank would give you 20k before tax if you gave them at least R16 Million Rands in capital. Because none of the people I was speaking to had R16 Million in the bank, I could already tell they had been exposed to a scam.

When I poked further, I learned that they were referring to QZ Asset Management firm. At the time I did not know who they were so I indulged my audience to clue me in a to these guys were and how were they able to make such bold claims.

That same evening someone in my close circle tried to recruit me. They were in a better position to give me an in depth overview of what this QZ Asset Management firm is about. They provided me with materials which has the effect of luring someone who is clueless about the workings of the financial industry. I want to be clear, there is a vast difference between being registered as an entity and being regulated as that entity. That is clue number one about seeing through Schemes or scams. The company claimed to be regulated in China, when I dug around I found out that is not true. They claimed to be on the edge of AI advancement, that was not true either.

In fact what they claimed to be proprietary [BDAI] was nothing more than just gullible people being scammed and discarded like baby nappies after they had been sucked dry off their money. They made claims like they could turn your R1 000 into R4 000 in a matter of a week. On that claim alone they would not pass the test of the FSCA for sound investment advice all FSP need to give to the public. So they would not make those claims if they were regulated in China, because if that were the case; they would seek to be regulated in South Africa as well.

What is even worse, Professor Blake Yeung lied about being a holder of a CFA Level 3 degree, no self respecting Charteredholder would make such claims let alone encourage them as an investment. Their security specialist is also fictional, they took the name of a Russian oligarch, Andrei Petrov who runs a Venture Capital firm with heavy ties to pharmaceutical companies. But you are here to know about how not to be scammed. The video below demonstrates this beautifully.

When your emotions are high do not make decisions

All sales is about manipulating the emotional state of the customer, if you can be in control over your own emotions, you cannot be an easy target for sales people as well as scams. Check your emotional state if you are too excited, you run the risk of making a wrong decision because of tmyour emotional state. The same is true with anger.

Always give yourself time to think things through

When you give yourself time, you allow yourself the space to let emotions to get back to normalcy, so that you can better make quality decisions.

Due Diligence

Before making any commitments, be certain that its what you want. Not because you were doing someone a favour. Due diligence in financial matters involve you knowing that no credible advice can come from someone who is not recognised by the Financial Sector Conduct Authority or the FSCA. The same goes for someone who says their model is networking and they are not members of the Direct Selling Association of Southern Africa or DSASA for short. Doing Due diligence can save you and make you money. But neglecting it would cost you a ton of money and time.

By the time you read this, they [QZ Asset Management firm] would have imploded here in South Africa too just like they had in Indonesia. The sad part they would have taken a lot of people for a ride.

Big ups to the Namibian government man, when Crowd1 wanted to set up shop in Namibia, the government did it's due diligence and when they were done the Namibian Reserve Bank told them that the or business model was questionable at best. So they threatened to freeze their assets if they did not provide them with a solid business plan and viable business model. They ran to South Africa. And the ANC-led government accepted them with open arms. And people got scammed.

Thank you for taking your precious time to read my perspectives.