Cape Town - Thousands of credulous South Africans are at risk of losing hard-earned cash after investing in massive schemes promising lucrative profits and which are now under investigation.
Weekend Argus established the National Consumer Commission (NCC) is probing nine investment opportunities which could be pyramid schemes.
The extensive probes may lead to investigators having to compile lists of thousands, possibly even millions, of South Africans who might have been swindled.
Curators may also have to be appointed to try to recoup money that was lost, but it’s likely they will be able to recover only a fraction of what was invested.
NCC spokesman Trevor Hattingh confirmed they had joined forced with the police to nab the alleged scammers.
These are MMM South Africa, KIPI, World Ventures, Make Believe, NMT Investments, Instant Wealth Club, DIPESA, Sikhese (Pty) Ltd, and Wealth Creation Club.
“The (commission) is joining forces with the Specialised Commercial Crime Unit on this matter. Criminal proceedings (may) be instituted.
If a scheme was found to be a pyramid scheme, the NCC would go to the police and become the main complainant in the case.
Swindled investors could then be added as complainants and would be called as witnesses.
Hattingh said those running pyramid schemes could be convicted of fraud.
One of the biggest schemes under investigation is MMM South Africa, started by Russian fraudster Sergey Mavrodi, who was convicted for running a similar scheme in the 1990s which saw millions of Russians lose their life savings.
The probe into MMM South Africa, which advertises that investors will make a 30 percent profit on investments every month, began last week after Weekend Argus queried its legality.
Despite this the scheme has continued operating and trying to attract investors.
On its Facebook page this week online seminars were advertised for new investors.
Videos of Mavrodi, speaking in Russian with English subtitles, are regularly posted on the page.
In the latest video posted Mavrodi was quoted as saying that “everything is great in South Africa”.
Weekend Argus repeatedly tried to get comment from Mavrodi and MMM South Africa, but there was no response.
MMM South Africa works on the basis that an investor provided “help”, in the form of money, to another registered user who needs this help.
The investor is then given “Mavro”, the system’s internal currency, equalling what was invested.
This was purported to grow by 30 percent in a month and the total amount at the end of each month was then to grow by another 30 percent.
A “calculator of happiness” on MMM South Africa’s website showed if R100 was invested, this would grow to R2.3 million in 12 months.
Another scheme under investigation is KIPI, also known as Mydeposit247.
This week Innocent Maseko, 35, of Gauteng, an investor with KIPI whose number was advertised for those wanting to join the scheme, said it was similar to MMM South Africa.
“It is almost exactly the same. MMM South Africa just came on to the market . KIPI was started in Russia in 1995.”
Maseko did not know who founded KIPI or who was heading it in South Africa, saying only it was “a Russian man.”
He claimed KIPI had seven million investors in South Africa.
“I don’t have to recruit anyone to make money. We invest money. There’s no big central account run by one person.”
Maseko was aware KIPI was under investigation, but said the fact it was still in operation showed it was a legitimate scheme.
“All the others (similar investment schemes) were shut down by government, but we’re still running. Anything can happen, though.”
Three months ago the Financial Services Board warned it had no record of KIPI being a registered service provider.
It also warned against another scheme, The Wealth Hub, created by former University of the North West vice chancellor Ngoato Takalo.
That scheme stopped operating after authorities froze the bank accounts of those running it.
The last post on The Wealth Hub’s Facebook page, at the end of July, said its legal team had met authorities.
“This was the first step of the process… In the meantime let us all keep positive energy and continue to grow,” it said.
Some investors questioned where their money was, while others said they would continue supporting the scheme.
How to tell if it’s above board
When trying to determine if an investment scheme may be a scam National Consumer Commission spokesman Trevor Hattingh said consumers should:
* Ask what product was being sold. If there was no product, the scheme could likely be classified as a pyramid scam.
* Ensure that after investing money, they received a share certificate.
* Check whether the scheme was registered with the Financial Services Board.
Schemes may be reported to the commission on 021 761 3400.
Weekend Argus