The pyramid scheme

Last weekend a friend of mine invited me to attend a business presentation which could make me a billionaire. So to St. Paul, near St. Famile in Kigali we walked finding the conference room filled to capacity. The presentation as it turned out was about QUESTNET. The presenter did a good job because many people who at first seemed apprehensive and unresponsive later opened up and asked questions which she answered with pleasure. Simply put, Questnet offers Rwandans and people the world over unparalleled opportunity to get rich by buying a product from the Headquarters in Singapore and then finding other people to buy other products and then get a percentage of each of the purchased products and for every person you recruit or is recruited by the person you recruited the people in Singapore pay you USD 250 for your salesmanship. The Company decided to use the type of marketing where the buyer sales another product to the next person and is rewarded for it. It is the type of business you can do for once and get paid for the rest of your life the presenter told us. Among the products the new person can buy is a wonder piece of glass called bio-disc that was made by a retired British colonel cum researcher in Tibet which as it turns out “balances one’s blood and body removing all impurities; it is not an anti-biotic but it keeps one’s health balanced”. You can put the disc in water and it will “charge it positively, it stops heart problems and many chronic diseases” we were told. The second product is a pendulum won like a necklace which does have similar properties while the third product is telephone handset which helps the owner save on international calls by reducing the cost of calling international numbers. All the products sell above 600US$.The lady presenter told us she has already earned her 1000 US$ and was expecting more soon for she had just STARTED. It is easy she said: find two people to register using your name to recruit two people “one on your left and one on your left who will recruit others who will also each recruit others and for every recruit you get USD 250. The most likely recruits, she advised are your relatives and friends she said which were obvious. As can be seen the only benefit from the “business” a piece of glass called biodisc, pendlum or Nokia handset and a fraction of money of the amount paid by relatives and friends to some invisible people with whom one communicates through the internet. For every USD 600 Plus paid by a Rwandan the one person benefits in form of a piece of glass, pendulum or Nokia phone and another a fraction of the Dollars sent. This reminded me of illegal activities banned in many countries including the United States, France, Germany, Canada, Romania, Colombia, Malaysia, Poland, Norway, Bulgaria, Australia, New Zealand, Japan, Italy, Philippines, Thailand, Iran, the People’s Republic of China, Mexico, Portugal and The Netherlands referred to as Pyramid Schemes.Pyramid Schemes were outlawed in the UK by The Trading Schemes Act 1996. The US Securities and Exchange Commission describes Pyramid Schemes thus; “In the classic ‘pyramid’ scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same. The fraudsters behind a pyramid scheme may go to great lengths to make the program look like a legitimate multi-level marketing program. But despite their claims to have legitimate products or services to sell, these fraudsters simply use money coming in from new recruits to pay off early stage investors. But eventually the pyramid will collapse. At some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors, and many people lose their money. The chart below shows how pyramid schemes can become impossible to sustain”. Another description of a pyramid scheme states that: A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula. The essential idea is that the mark, Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the “business” expands. The Chinese authorities who banned pyramid schemes describe them in the law passed on 23/08/2005 as follows: “Article 2: For the purposes of these Regulations the term “pyramid selling” means acts that interfere economic order and affect social stability by which an organizer or operator recruits personnel and seeks illegal benefits by means of calculating and paying remuneration to the recruited personnel on the basis of the number of personnel directly or indirectly recruited by them or their sales performance or requiring the recruited personnel to pay certain fees as a condition of being qualified for participation”. It is interesting to note that “in early 2008 the MD of Questnet India Ms. Pushpam was taken into police custody where she remained for five months. Based on media reports, it is learnt that various allegations have been made about the company having defrauded people of several hundred crores of rupees. Police in Tamilnadu state are currently investigating the complaints and Ms.Pushpam has been released on bail. No charge sheet has been filed against the company so far. The company has denied all allegations against it and has stated repeatedly through advertisements in newspapers that it runs a legitimate network marketing business”. I promised myself that I will not join the “business” without consulting. Ladies and Gentlemen out there I want to get rich like many of you, kindly advise me how to invest in a company where I won’t lose my money and deals in real products and service. Are there genuine investment groups where I can invest? Please help. Ekaba2002@yahoo.com