Ponzi schemes gaining popularity in Ghana despite the overwhelming number of victims. The greatest Ponzi scheme ever executed in history is the Bernard Madoff scheme in 1960. Which he run for 48 years until his arrest in 2008.
Ponzi schemes is a form of fraud in which investors invest in a non-existent company which promised then a ridiculous percentage on investment returns. In order to build the scheme to a substantial clientele, they pay earlier investors using funds from new investors. Thus word spreads and they entrap more victims. Simply put, it’s all one big lie!
In efforts to win over the people, these fraudulent companies start off with goodwill activities and donations to the less privileged in the communities they operate. Also they target areas that are far away from the main regulatory institutions, so they avoid big cities and town. Most of these investment companies operating Ponzi schemes are located in the Western, Upper East, Brong Ahafo and Upper West regions.
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All these Ponzi schemes in Ghana promised their investors an investment rate of not less than 50 %. As in the case of DKM Diamond Microfinance, they promised investors a 60% investment return within a period of two months.
Aside loss of money, lives are also ruined. It was reported that about 50 people in the Brong Ahafo region committed suicide after they realized they had been scammed.
Ponzi scheme network
Characteristics of a Ponzi scheme
- Promises of high investment returns. Usually from 80% - 100%.
- Difficulty to find information about the organization. Sketchy or no information available.
- Investment returns are consistent. This should raise a red flag because investments fluctuate especially those of high risk.
- Delays in payment should be taken seriously. Unfortunately this usually happens at the later stage when the scheme is about to fold up.
- Auditors are very important in every organization. If your investment company cannot provide you with details of their auditors, thread with caution.
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Some Ponzi Schemes in Ghana
- DKM and Care for Humanity
CEO and logo of DKM Diamond Microfinance Limited
- God Is Love Microfinance
- Little Drops Financial Services
- Jaster Motors and Investment Limited
- Savana Brokerage
Measures which could be put in place
- Regulatory bodies with strict policies. The arms of the central bank and other regulatory bodies should be stretched far and wide across the country, especially in the rural areas. These areas seemly neglected becomes the perfect target for all kinds of schemes. With all kinds of microfinance and investment companies sprouting all over.
- Culprits should be made to face the full rigors of law. Compensation or refunding monies is not enough punishment for such acts. Most of these fraudsters are free men/women in our societies. And as to whether or not they are still defrauding people, we do not know.
- Financial literacy is also very important for every Ghana. Especially those not in the financial sector.