Police detain alleged pyramid scammers

A couple was stopped by the Police from boarding their flight out of the country on Tuesday, for allegedly being involved in a pyramid moneymaking scam.

It is understood that the couple – a Greek male and a Samoan woman – had already transferred money they’d made from the scam to an account in Great Britain when they were detained.

The report was confirmed yesterday by Police Commissioner, Egon Keil, who revealed that the Police were now working on the case.

It is alleged that the couple had visited potential victims with a letter signed by a Samoan Cabinet Minister, endorsing their “business and encouraging people to support it.”

The reports said the funds from the couple’s “business” were transferred to Great Britain using a local bank.

The first transaction was made successfully, the reports said. The second transaction which was about to be made within a few days, was more than $100,000.

The reports said the bank teller got suspicious with the large amounts of money sent within a week and the Central Bank was informed. The couple’s bank account has since been frozen by the Central Bank pending the outcome of an investigation.

In response to submitted questions, the Central Bank Governor, Maiava Atalina Ainu’u- Enari, sent a statement yesterday.

It said:

The Central Bank of Samoa (“the Bank”) has identified what appears to be a pyramid scheme and has collected relevant information (domestically and internationally) through our Financial Intelligence Unit and Anti-Money Laundering Department.

The Bank then coordinated with the different enforcement agencies, including the forwarding of the matter to the Police for their further investigations.

It is in this regard that we will no longer comment on this matter as it is with the Police. Please refer all enquiries on scam-related investigations to the Ministry of Police.

2. We would like to take this opportunity to remind the Public to be extra diligent and cautious in investing their money in 'get-richquick' schemes.

Scams take many forms, and it may be an email stating that you have won a lottery jackpot but you have to first deposit a large amount of money into a certain bank account overseas before you receive the full reward.

People who send money in this manner will never receive any jackpot nor will they get their money back. Other scams are made using the social media network such as Facebook in which you receive a dating invite or a female stating that she wishes to marry you but needs money to get away from a Refugee Camp and travel to Samoa.

Some scams involve investing money for a short period of time and you will receive a substantial amount later. For example, you invest $1,000 today, and in six (6) months, you will receive $10,000. Many people have lost their money because of these types of scams. If it is too good to be true, then most likely it is.

Ma le fa’aaloalo tele, GOVERNOR CENTRAL BANK OF SAMOA

So what is a Pyramid Scheme?

Explains www.howstuffworks.

com:

The main characteristic of a pyramid scheme is that participants only make money by recruiting more members. There are many different kinds of pyramid schemes, but the two most basic are productbased and so-called naked pyramid schemes.

In a naked pyramid scheme, no product is sold. Here's how it works:

1. One person recruits 10 other people to participate in a "no-fail investment opportunity."

2. The 10 recruits each pay the recruiter $100.

3. The recruiter now tells them to go out and recruit 10 more people to do the same.

4. If each recruit is successful, they'll all end up with $900 in profit from a $100 investment.

Sounds simple enough, but here's the problem: Let's say the initial 10 recruits each find 10 more people.

Those 100 new recruits will have to find 10 recruits each to make $900. That means they have to find 1,000 people willing to sign up for the program. And if they somehow find 1,000 people, that next level of the pyramid will need to sign up 10,000 to make a profit. Eventually, there won't be enough recruits at the bottom of the pyramid to support the level above it. That's when the pyramid topples and everyone at the bottom loses their investment.

A product-based pyramid scheme is the same concept disguised as a legitimate direct sales opportunity.

Here's how it works:

1. A distributor recruits 10 salespeople who each pay $500 for a starter kit of products to sell. 2. The distributor gets 10 percent of each starter kit that's sold. 3. The distributor also gets 10 percent of each product that any of his recruits sells, including more starter kits.

4. The recruits are told that the fastest way to make money isn't by selling products, but by recruiting more people to buy starter kits.

5. The people at the top of the pyramid get commissions from everyone in their downline, the many levels of recruits below them on the pyramid.

The problem with most productbased pyramid schemes is that the products themselves don't sell very well, or have very slim profit margins.

So the only way to make money is to find more recruits. Eventually (and surprisingly quickly), the market becomes saturated. There are too many people trying to sell the same unattractive product and there's no one left to be recruited.

It's mathematically impossible for everyone to make money in a pyramid scheme. For example, if each recruit needs to find 10 more people to recoup the cost of his or her initial investment, the eighth level of the pyramid would have to recruit a billion people to make back their money. And the next level would need 10 billion, nearly twice the population of the Earth.

In fact, pyramid schemes don't work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top. It's a mathematical fact that no matter how many people join a pyramid scheme, 88 percent of the members will be on the bottom level and will lose their money [source:Pyramid Scheme Alert].

Pyramid schemes are illegal because people don't lose their money due to normalmarket forces, but because the system requires them to lose so that a few at the top will win.

Studies show that in a naked pyramid scheme, 90.4 percent of people lose their money, while in product-based pyramid schemes, that number jumps to a shocking 99.88 percent [source: Taylor].