A Ponzi scheme is an illegal investment operation where the operator pays returns to investors from capital derived from new investors, rather than from the profits earned by the operator.
According to Glenda Paul of IRS, the allegedly fraudulent investment scheme set up offices in Braamfontein and marketed the scheme via the internet, newspaper advertisements and by word of mouth.
Paul said, “The scheme offered a 100 percent return on an investment within 22 days. From the information gleaned from victims, it would seem that the scheme began on or about June last year, and the initial investors did either receive money back on their investment or were given the impression that their investment had grown 100 percent within the promised 22 days.”
According to Paul, initial investors were then either convinced to reinvest or were led to believe that they were going to gain larger returns by investing more money.
“The initial investors convinced community members to invest in the scheme and additional investors were recruited by agents that were employed by the investment scheme,” claimed Paul.
In September last year, the scheme allegedly came undone after the fraudsters went on spending sprees and could not sustain repayments to the investors.
Paul said, “Investors became suspicious when calls to cash in on their investments went unanswered, and requests for repayments were [ignored]. Investors as far as Limpopo, Mpumalanga and KwaZulu-Natal were allegedly defrauded of monies invested in this scheme.”
According to Paul, IRS investigators travelled 700 kilometres to obtain evidence against the alleged fraudsters and drafted 44 statements on behalf of the victims represented by IRS, excluding their own supplementary statements.
“IRS submitted 12 lever arch files of evidence to the South African Police Service as well as two cardboard boxes of supplementary documentation,” added Paul.
Investigations continue and whether or not the scheme is, in fact, fraudulent is still to be decided.
Details: 0861 911 477.
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