PONZI schemes have resurfaced, prompting the Securities and Exchange Commission of Zimbabwe (SecZim) to warn that they threaten an already fragile economy.
Speaking to NewsDay at a workshop in Kariba last Friday, SecZim acting chief executive Gerald Dzangare said: “One of the most painful things that have happened in our country is these ponzi schemes. People have lost money to these unregistered asset managers who collect it claiming that they will invest it to make it multiply within a month. These people then disappear.”
He said the fraudsters, who operate ponzi schemes, were not registered with SecZim.
The New York Attorney General’s Office describes a ponzi scheme as a pyramid scheme, also known as a chain distributor scheme, which is a fraudulent system of making money based on recruiting an ever-increasing number of “investors”.
Last year, police reported that “at least 10 000 complainants lost over US$30 million” to ponzi scheme dealers.
The police in the same year handled 892 cases involving thousands of complainants whereby the scammers had disappeared after swindling unsuspecting investors.
“Millions of dollars were lost; some lost houses while others committed suicide upon discovering they would have been duped. We have handled suicide cases related to ponzi schemes,” Dzangare added
Ponzi scammers involve sale of products or distributorships in an attempt to show legitimacy. This is done to sidestep regulatory agencies.
In Zimbabwe, the history of ponzi schemes dates back to the 1990s, when the Russian MMM Global scheme was reincarnated in Bulawayo and quickly spread throughout the country.
In 2016, the Reserve Bank of Zimbabwe pointed out that MMM Global Zimbabwe was the biggest pyramid scheme that duped many investors in the country. Newsday