In recent times, much have been said of Ponzi Scheme due to MMM Nigeria crashing in the face of economy recession. But truth be told, I don’t feel sorry for victims of Ponzi scheme just as I won’t feel sorry for someone who lost money to gamble or “Baba Ijebu.” In my own opinion, those who falls victims of Ponzi scheme are driven by greed or laziness. Before I buttress that point, it is important to note that Ponzi scheme is not new as some people will want you to believe. The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920.
Why Ponzi Scheme Victims Are Driven By Greed
Normally, as an investor, before you put your money into any business, you should do some research. Just head over to Google and type the phrase “Ponzi scheme”. The Wikipedia definition is glaring and give a whole picture of what the scheme is all about. Except: “Ponzi scheme is a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.” It is referred to as “a classic Ponzi scheme built on treachery and lies”.
Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, rather than solely from profits.
Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.
Ponzi schemes rely on new investors to pay existing investors which make them ultimately unreliable since it cannot continue attracting new investors forever in the required numbers and rates (numbers which actually escalate at exponential rates with every new level of recruitment). Even if the whole population gets recruited (impossible as some are unwilling and some will even actively resist it and convince others not to join, just as its impossible for everyone to join a political party and there is always an opposition), this shows there is a limit beyond which no further recruitment is possible or recruitment begins to slow down sharply enough to cripple the scheme’s paying ability. Therefore the scheme is ultimately doomed to fail and it is only a matter of when, not if.
MMM Case Study
МММ was a Russian company that perpetrated one of the world’s largest Ponzi schemes of all time, in the 1990s. By different estimates from 5 to 40 million people lost up to $10 billion. The exact figures are not known even to the founders. In 2011, MMM re-opened as “MMM Global” with up to 110 subsidiaries per country, it became widely popular in various African countries like South Africa, Nigeria, Zimbabwe and Kenya.
The Nigerian Deposit Insurance Corporation, NDIC, has said that an estimated three million Nigerians lost N18 billion in the MavrodiMundial Movement, MMM, ponzi scheme.
Over three million Nigerians were participating in MMM (A.K.A. Mugu, Mowo wa, Ma lo) before December 2016 when organizers suspended payment to investors due to its system “experiencing heavy workload.”
By the time the scheme returned in January, few new investors joined and the millions waiting for their payments were left disappointed with majority never paid.
At the 38th Kaduna International Trade Fair on Thursday, Mr. Ibrahim noted that despite repeated warnings by the Central Bank of Nigeria, CBN, and other agencies like the anti-graft EFCC, Nigerians still patronized the ponzi scheme.
When you are presented with this type of facts and you still go ahead to invest your money, what would have been the drive if not greed?
Why Ponzi Scheme Victims Are Driven By Laziness
Ponzi Scheme like direct sales depends on the ability of members to recruit new investors. While direct sales involves some level of selling, ponzi scheme does not. The idea of just put in your money and ‘no work is involved’ is what attracted many lazy people to the scheme. If you present the direct sales business opportunity to most of these persons, they will not want to be part of it because it involve some level of hard work.
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. … Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales. Direct selling consists of two main business models: single-level marketing, in which a direct seller makes money by buying products from a parent organization and selling them directly to customers, and multi-level marketing (also known as network marketing or person-to-person marketing), in which the direct seller may earn money from both direct sales to customers and by sponsoring new direct sellers and potentially earning a commission from their efforts.
I wrote an article Top 10 Factors to Choose a Great Network Marketing Opportunity in Nigeria before. One of the points I raised there to look out for is Does the network marketing company offer products or services that are unique? Ponzi scheme does not have any product to sell hence the scheme is bound to fail. History has taught us from time to time that any investment business that rely only on new investors to survive without products can not stand the test of time. But because many people are looking for the lazy root, they still fall victims of these schemes. That is why, many of the scheme members target their family and friends for recruitment.
Besides, in recent times, I have been receiving a lot of offers from Nigerians who want to design ponzi scheme sites. When I look at these individuals they don’t have any direction or purpose, they just want to use the system to siphoned money. Of course my agency does not design any site intended for fraud purpose. So, most of the victims are driven by laziness.
I may be tempted to sympathize with those who are caught unaware due to lack of experience or trust in the referee but I don’t feel sorry for the victims because they were driven by greed and laziness. Present them with opportunity they need to work on, they will back off. So, over to you, do you agree with me that Ponzi scheme victims are driven by greed and laziness?
Latest posts by Jetro Olowole (see all)
- Income Tutors Network Marketing Boothcamp in Lagos - August 13, 2017
- Income Tutors Wealth Summit – Pre-Register Now! - August 5, 2017
- 30 Reasons Why Nigeria Network Marketers Fail - July 30, 2017