There is this scheme in our townYou buy a certificate containing five names for sh 500. The seller appears last on this list. You are then asked to send another sh 500 to the coordinator of the scheme and sh 1,500 to the person appearing the top of the list. Your total investment comes only shs 2,500. When these monies are paid, you get another five certificates bearing your name at number five on the list. The other people have been moved up one slot each and the person who was at the top removed. Now you sell these papers to five new recruits at sh 500 each. At that point, you recover your sh 2500 , and the numbers begin multiply . When the five certificates with your name at number five are sold, they generate 25 ( 5 x 5) more with you at position four. When these are sold, they produce another 125(25x5) with your name at number three. The next level has 625 (125 x 5) certificates “out there”. Now each of these 3,125 new members will pay you sh 1,500 making at total of sh 4,687,500
2006-10-20 00:32:44 · 7 answers · asked by Omar 1 in Business & Finance ➔ Investing
This type of "investing" has two common names. It is called a Pyramid Scheme -- because it involves selling to more people on each level. It is also called a Ponzi Scheme after Charles ponzi (though his scheme was actually a little different).
The problem is that it depends on unsustainable growth. The second level has five people. The third level has 25 people. But you need almost two million people for the tenth level. It is likely to collapse before it gets there -- so the sixth level people never get paid off.
The other problem with this scheme is that it is highly illegal.
2006-10-20 04:23:56 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
It is called a pyramid scheme. The only ones to profit are the ones at the very top of the list. This scheme has been around longer than I have and I have been around for a long time. Very quickly the list runs out of names as all the gullable have been consumed.
2006-10-20 07:44:25 · answer #2 · answered by Anonymous · 1⤊ 0⤋
This goes on all over the place and is indeed a scam. Those on the list whom you pay are the organizers of this scam. Once they've soaked as much money out of your town as they possibly can, they take the money and run, never to be heard from again. I know it sounds convincing, but they are professional con artists, and this is how they make their living. You'd be better off finding a legitimate investment.
2006-10-20 07:42:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I didn't even read your question - I got as far as ' there is this scheme in our town' and can almost guarantee this is a bad idea.
Why would you put money into a 'scheme'
2006-10-20 09:14:57 · answer #4 · answered by g_tastyfish 4 · 0⤊ 0⤋
it sounds good in theory, but can you really guarantee that somebody will actually buy them from you? And why would you want to pay other people?
2006-10-20 07:42:56 · answer #5 · answered by masterdvrsgirl 3 · 0⤊ 0⤋
It' a pyramid. It's illegal. It's immoral. It screws a lot of people.
2006-10-20 07:43:09 · answer #6 · answered by Common Sense 7 · 1⤊ 0⤋
It is a pyramid scam.
Walk away.
2006-10-20 07:45:21 · answer #7 · answered by Anonymous · 1⤊ 0⤋