Police suspicious of growing pyramid scheme

Police are concerned over a growing pyramid money scheme, which has attracted hundreds of people into "investing" thousands of dollars with promises of double returns.

Police believe this scheme was designed to target vulnerable people whose sources of income were affected by the covid19 pandemic. A member of the Fraud Squad told Newsday on Thursday that the police are aware of the scheme and a number of meetings had been held to discuss it.

"Fraudsters try to target persons who are vulnerable and are desperate and need money. So they see this as one way they can make some extra money. But if they think of the circumstances they won't take that risk.

"People may be encouraged to come forward because other people are saying they got through,when this may not be the case, and those messengers themselves could be fraudulent."

The police don't know who are the people in charge of the scheme or exactly how it works.

"Nobody knows who these persons are and they don't know how they getting the returns."

Newsday joined one of the pyramid scheme groups, where almost 200 people were arranging to meet the group administrators to deliver their money to drop-off points in the Port of Spain, Central and South areas.

In order to join, people must agree not only to pay in their money but also to find two other people to "invest." Once that is done, a member will send a WhatsApp invitation link to join a "Pyramid investments" group. Newsday understands there are a number of these groups.

New members are sent a video purporting to show how the process works.

In the 90-second video, two pyramids show how each contribution eventually "blesses" members once they make their contribution.

The bigger the investment the larger the returns, but Newsday was told a member can bring as little as $200 and get back $1,600 in two weeks.

The two new members they bring are then each expected to bring in two more with $200 each if they want to receive their payment. If one member cannot find two more people, Newsday was told the organisers will help by finding the two other people. But the first member will not receive the full amount.

According to the welcome video, "once that person is blessed" (receives their promised share) they leave the pyramid and the cycle repeats, "with each member shifting to a new element until the cycle repeats."

Members can pay out up to $9,000 and once they bring in another two people with $9,000 each, they can collect up to $72,000. The cycle continues – until no one else can be found to invest, and the most recent ones to join don't even get back what they put in.

Even though there is no information as to where this scheme originated and who are the people behind it, members of the group were mostly concerned about when and how soon they could drop off their "investment" – and when is "pay day."

The Central Bank of TT the TT Securities and Exchange Commission and the Financial Intelligence Unit pleaded with the public to be cautious about investing into the pyramid schemes as it poses a serious risk and can result in loss of money.

In a joint advisory, sent to the media on Thursday, the entities said the schemes are being heavily marketed to the public through group chats and in person. It warned that the pyramid schemes "may take many forms and are often falsely presented as new investment including different types of securities, foreign currency and even traditional 'sou-sou' arrangements."

The scheme will collapse when fewer or no new members join, the release said. And if it collapses, it disappears along with the money invested. "Schemes outside of regulated financial facilities, such as pyramid schemes, promising exorbitant cash pay-outs pose a serious risk to those participating including loss of their hard-earned money."

It's also impossible to find where the money originated from, which may be from illicit sources, the release said.

The public is asked to be vigilant and report fraudulent activities to the Fraud Squad at 625-2310, 623-2644 or at 652-8594.

The Central Bank, the Securities and Exchange Commission and the Financial Intelligence Unit issued a joint advisory on Thursday warning people to steer clear of the pyramid schemes.