Ponzi Scheme: A Plan that Surely Makes you Money

money game
About 6-7 years ago I received a call  introducing me to join an investment plan. I’ve heard of this plan not long ago, and I knew that a friend who have been involving benefited a lot. He has replaced his vehicle from an old car to a brand new BMW. I have also heard that he has even bought new residential estate. It sounded like everyone surrounding him graving to have a share.

When I received this invitation, I declined the offer however. Because I suspected that plan sounded like a money game. It required participants to recruit “customers” as down line, only then the return will be “surprising”.

In the last few months, I also received three friends’ invitation to join a similar investment plan. Two of them have elite social status, but I still refused. I said to one of them, I entered the field of investment in order to learn value-added skills, not just to make money. Hearing this, that person might have thought that I was the greatest idiot in the whole world.

Three months ago, after the JJPTR event exposed, newspapers began to report the gradual disintegration of many money gaming groups. There were also commentaries from the community began elaborating about money games. The term “money game” has eventually been demonized. But at the end of the day, how many people were actually still involved in this money game, or, are you sure they will eventually be victimized? The friend whom I mentioned earlier still enjoys good life! He may have already entered the bliss of riches!

Charms of Money Games

No one who are involved in the “money game” will ever admit they are in money game. They will insist they are doing real business. One of the recruiters approached me has even blatantly admitted that their business company has not been even properly registered to the authority. Because people in the community today have lost confidence in the government’s policy and integrity. These people in the community think that legal businesses are only benefiting governmental officials or political cronies themselves and will not flow into the hands of people in large. Just as what the opposition parties describe this country is governed by “Kleptocracy.” There is a great void then for people easily fall into the money game trap in Malaysia.

People tends to be involved with earning money in an indecent way during hard time economically. For example, stealing and robbery in times of economic downturn is rampant. Gambling industry is also particularly prosperous in the economic down times. Because these people think that this is their only hope of survival. That is why money games in Malaysia are now “thriving” to a very scary level. Companies listed as suspicious by the National Bank (Bank Negara) alone has increased up to 288 (as of 9/5/2017 and is still increasing).

This money game was also called the Ponzi Scheme in the US. The term was derived by a man called Charles Ponzi in 1920 initiated a money-laundering activity soliciting public money to enrich himself. His approach was inspired by two novels by 1844 and 1857 (Martin Chuzzlewit and Little Dorrit). These two novels described how to use pyramid human relationship structure to make founder earn big money. Ponzi then applied into real life and turned it into reality. This deceptive scheme was eventually exposed and brought down.

However, after so many decades, why is it that there are still so many people getting involved? This is not just rampant in Malaysia, but in every country, even in the United States, where education and social awareness are supposed to be high enough. Why are there still so many victims? Why can’t people be alert and avoid such scheme?

The reason is basically due to human nature. Sinful nature of man is filled with greed. Normally people would admit greed is evil. We should avoid it by all means.  But they will fall into the state of greed even unconsciously. Not until failure comes, they will reluctantly confess that they shouldn’t be too greedy in the first place.

The Mix of Greed and Confidence

In fact, greed and confidence are twins like two sides of a coin. For example, when a person started a successful business, his confidence will normally be boosted up.  After a period of time, he will consider to expand his business. If his expanded business continues to be successful, people will compliment him and credited the success was due to his great confidence and brave expansion of business! Feature articles and business reporters might publicize him and conclude his success was due to his self-confident, decisive determination to expand his business.

But what if his expansion fails, the owner will reflect on himself. He would come to a conclusion the failure was due to his greed. He expanded his business too fast and too soon. These two scenario are actually our of the same kind of dealing. But conclusions differ from each other because of different endings.  One conclude self confidence, while the other is greed. Why is it having such a difference?  It is the concluding part. No one can easily identify having confidence or greed until you meet its ending.

This feeling is easily understood by those who trade in stock market. Stock markets are normally be called the greatest casinos on earth. At the beginning, every gambler will start with small amount to try his luck on that day. If the first few attempts have garnered him some money, he will believe today is his day, he would increase his stakes. He would probably thought to himself, he will just stop when he reaches a certain amount of winning, he would quit immediately.

In this case, there would possibly be two endings. First, when he wins enough amount according to his “target”, he would linger some more and even increase his bets further. The ending of the story is not difficult to imagine by anyone.  Second scenario would be, he is really discipline enough to quit after he made his “day”.  He will be out to enjoy lives with his friends. A few days later, money ran out. Would you think he will not go back to the same casino again? We all certainly know the answer.

This is the same situation when it comes to money games. Each player would try a little deposit after his friend persuaded him. He will think to himself, if it is scam, it will just loss the small amount and he can forget all about it! But the real problem comes when he earned money which is most of the cases according to what has been offered.  He will then be trapped in the spiral down entanglement. This is the major trick of money game. It will surely make you money but no one will let you know until when the music will stop.
Swirl of money game

The real danger of Money game is not the loss of initiate investment immediately, but the gradual profit brought back by every participant.  If anyone experiences such return consistently, he will surely increase his confidence about his “business” company. Because he sees real money coming in. He would then move on to recruit others to join such wonderful opportunity because there will be double benefits; First, it is good nature to share good thing among good friends. Secondly, his return will double up sequentially if his friends join him.

When he gets involved deeper and longer, he will see his return grow bountifully.  He will begin to dream about what his future would hold. He will move on to loan a house or car with part of his money earned through such scheme. Once the music stops, he will enter shocked, or would possibly face financial predicament.

So every time when I see any of my friend being invited to these money games “business”, I will give a simple advice. But sometimes, it does not receive positive response. If I meet anyone who has already entered this game, I usually do not provide any advice. Because he has tasted the goodness of it. If I do, he will only feel that I am an obstacle to his blissful future. I will only be an enemy or an idiot to him.

So the most harmful issue for money games is this, it will definitely make you money, but it will never tell you when will the bubble burst, and bring in life crisis. We must stay away from this kind of “investment” activities and we must not even try it ourselves.

money game II
Multi-Level Pyramid People Structure is the most common feature of money games

Usually this kind of scheme can be easily identified. First, there will certainly be beautifying its return, such as ensuring a high monthly rate of return. The higher the rate of return, in fact, is the easiest to recognize. Those who have investment experience are sober enough. The so-called high-return, high-risk. Low returns usually come with low risk. We all know there is “no free lunch in the world”, the law of return on investment is absolutely no such thing as “high-return without any risk”.

Secondly, it will surely come with a mechanism for recruiting down lines. They will normally call this mechanism as “passive” or “active” incomes. For passive income, money derived from recruitment of the organization as a whole.  It is fairly distributed among new members.  Its initiate purpose is to instill faith for you to trust the organization. However, the ultimate goal is motivate you to recruit new members to join, so that your return will increase. This is obviously a multi-level pyramid game. No matter how that organization explains where your returns come from whatever complicated, mystical, adventurous business nature, or how they beautify the company’s operation. It is indeed a Ponzi scheme. Their targets are all un-suspicious newcomers who have been unfortunate and dissatisfied with the current social economy.

How can we avoid such Ponzi scheme? We have come to ascertain that there is absolutely no short cut to richness instantly. Only through time, patience and by our own effort that true wealth will be able to sustain.  When we gradually accumulate money through right kind of investment plan, then real happiness will come to our lives.

 

Note: this blog is a transpose from the Chinese blog published on May 12th, 2017

 

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