home Self-development Financial pyramids on the Internet actually pay. Rating of financial pyramids in Russia Does the pyramid work?

Financial pyramids on the Internet actually pay. Rating of financial pyramids in Russia Does the pyramid work?

What are financial pyramids and how does it work?

Financial pyramids: is it possible to make money on them?

In an effort to earn as much as possible, investors have to work with instruments that significantly exceed the risks in classical investment methods (stocks, etc.). Often such projects have signs of financial pyramids, i.e. there is a possibility of suffering not only losses, but also losing the invested capital completely. I recently met a Balinese who invested more than 400 tr. (in our terms) into the MMM-2011 pyramid, which in just a few months of existence reached the countries of Southeast Asia.

In this article I will not discuss whether it is good or bad to work with financial pyramids. Let everyone make their own decisions. Now let’s talk about what it is and how financial pyramids work, how to distinguish and make money on such projects. After this article, I recommend reading, the articles complement each other.

What are financial pyramids: examples from history;
How to distinguish a financial pyramid from a venture investment project;
How to make money on financial pyramids.

Financial pyramid - what is it?

I've been running this blog for over 6 years. All this time, I regularly publish reports on the results of my investments. Now the public investment portfolio is more than 1,000,000 rubles.

Especially for readers, I developed the Lazy Investor Course, in which I showed step by step how to put your personal finances in order and effectively invest your savings in dozens of assets. I recommend that every reader complete at least the first week of training (it's free).

A financial pyramid is financial. structure (see), providing income to its participants by raising funds for other participants. In other words, the investments of subsequent investors go to pay the income (interest and amount of deposits) of previous investors. The scheme is profitable as long as new investors can be attracted. The purpose of a pyramid scheme is to provide an ever-increasing flow of money, as it must provide a return not only on earlier investments, but also on interest payments.

Interesting fact. Despite the understanding that the financial pyramid can burst at any moment, people continue to trust them. Alas, they are driven not by cold investor calculations, but by a banal desire for a freebie. Here is Sergey Mavrodi’s website from MMM-2016, where, by the way, it is absolutely not hidden that the profit comes from new clients sergeymavrodi-mmm.net/index.html. Only in the spring of 2016, Article 172.2 of the Criminal Code of the Russian Federation (dated March 30, 2016) prohibited the operation of financial pyramids at the legislative level. But this doesn’t stop Mavrodi.

Financial pyramids can be divided into two parts:

simple pyramids;

They work according to the scheme of Charles Ponzi (“the pyramid builder” from Italy, who in 1919 founded one of the largest pyramids in history, which lasted about a year and a half). The idea is simple: the founder collects money from new investors by paying bonuses to old ones. As soon as the flow of clients, and with it the ability to pay interest, dries up, the founder of the pyramid disappears along with the money;

multi-level pyramids.

The idea is to create several levels, that is, people who attract new participants and receive a percentage for this. At the origins of the pyramid is the founder, who attracts, say, 5 investors. 5 investors, in turn, attract another 5 investors, receiving 10% of their deposit, etc. The lower the level, the lower the reward and the more people you need to attract to earn.

Financial pyramids began to appear in the 1800s, but their essence has not fundamentally changed. Here are examples of the most famous of them:

After the collapse of MMM, about 50 people committed suicide. After serving his sentence, Mavrodi continued to create pyramids, and not only in Russia. In the fall of 2015, growth in China was attributed precisely to Mavrodi’s activities.

Interesting fact. The American insurance system, which was introduced by Roosevelt in 1935, is also considered a financial pyramid. Its essence has remained virtually unchanged to this day: social payments to new participants in the system are paid at the expense of old ones. As the population grows, analysts say the country could face a shortage of money for payments as early as 2018. By the way, the Russian pension system has similar problems.

How to recognize a financial pyramid

Signs of a financial pyramid:

a promise of a fixed monthly (weekly) income without explaining its source. Moreover, the larger the promised interest, the faster the pyramid will go to the bottom;
intrusive adware. “Join us!”, “Earn money now!” and other enticing slogans. SMS mailings, solicitation on social networks, phone calls, offers to make money by attracting new clients - all this shows the true goals of the organizers;
lack of information about company registration and information about its management, lack of contacts;
various promotions with inadequate prize sizes, such as “invest money now and get the opportunity to win a car!” etc.;
making a profit by attracting new participants (often hidden behind affiliate programs).

Russian legislation banned financial pyramids in 2016 with one caveat. If the website of the organizer (pyramid) directly states that its activities are a pyramid, then you can work. If the site does not report this and you notice the signs indicated above, you should know that this activity is illegal. However, there are big questions regarding illegality, since regulatory authorities have little real leverage over financial pyramids.

Is it possible to make money on financial pyramids?

The fact that pyramids appear with enviable consistency indicates that interest in the topic does not disappear. And the point is not that people are too trusting - after passbooks and MMM in 1992, people learned not to trust anyone. The fact is that there are still “investors” who invest money in pyramids: some for the purpose of making money, others simply succumbing to excitement. Many pyramids appear again after bankruptcy; a so-called restart occurs. For example, on Sergei Mavrodi’s website it is written like this: the investor risks losing money, but the pyramid will be restarted and the investor who is ready to take the risk again will be one of the first, recouping the previous loss.

And in conclusion, a few rules for investing in financial pyramids:

invest only the amount that you don’t mind losing;
withdraw profits as often as possible;
do not reinvest if you have invested a decent amount of money;
invest whenever possible at the very beginning of the pyramid;
do not freeze money for various promotions and long tariff plans, so that when the first problems appear, you have time to withdraw money.

Conclusion

Financial pyramids will exist as long as people have passion and a thirst for easy money. Despite the fact that many consider a pyramid scheme to be a scam, it is rather a lottery - the probability of losing is very high, but if you win, the income can exceed all expectations. The main thing in investing is understanding that the money may not come back, composure and competent analysis. In the comments, I propose to discuss whether it is worth investing in pyramids at all, write your opinion.

Profit to everyone!

Hello! Today we’ll talk about financial pyramids so that you know what they are, how they work, and so that you don’t fall for such “earning money” schemes in your life.

A market economy is characterized by freedom of enterprise and freedom of choice in the way of doing business. For any businessman, the main goal of his business is to make a profit. The universal measure of performance evaluation is money. The functioning of a legitimate business is based on the production, sale or resale of goods, provision of services and other schemes. There is such a term as financial pyramids. Most often, although not always, these are deliberately created fraudulent models for obtaining money by their creators.

What is a financial pyramid

In economic terms, a financial pyramid is an organized scheme for its participants to generate income by attracting funds from new participants. That is, people entering the pyramid today “provide” for those who came there earlier. Or all the money can be accumulated by one person - the organizer.

The average person will immediately remember the MMM financial pyramid in Russia in the early 90s, which ended in a loud collapse with thousands of people affected. And indeed, in most cases they disguise themselves as investment, charitable funds, companies with goods that have no real value, or simply promise to make money out of thin air.

However, the classic business scheme can lead to a financial pyramid. This happens when the owner miscalculates profitability and the company runs at a loss or has difficulty covering its cost. Money borrowed or raised from investors cannot be returned. To support the business, new loans are taken out and used to pay off previous debtors. It is incorrect to interpret this as fraud; this situation is closer to the concept of illegal entrepreneurship.

Fraudsters often take advantage of this loophole, carefully covering up financial pyramid schemes in order to evade responsibility. A business may bring in a small profit, but if systematically the added value (the result of the company’s work) is less than the income payments, then this project is a financial pyramid. In fact, most of the profit in this case is money from new investors.

To denote a deceptive scheme, this expression began to be used in England from the early 70s. last century, although financial pyramids originated much earlier. The first company operating under a financial pyramid scheme is the joint-stock company (JSC) “Organization of India” by John Law. According to the plan, it was supposed to invest the funds raised in the development of the Mississippi River. In fact, the investments were minimal, and the enterprising Scot used most of the proceeds to purchase government bonds. In fact, he paid off all of France's foreign debts. Law promised that the shares bought today would soon rise in price. Because of the hype, within six months the cost of one paper exceeded the original price several times. France was forced to issue more and more paper money. When the money supply became enormous and the price of shares rose to unprecedented levels, this pyramid collapsed. Prices for goods rose sharply and paper money was not accepted as payment.

Subsequently, financial pyramids began to appear periodically in other countries. He organized a large fraudulent scheme related to coupons in 1919. in the USA Charles Ponzi. This was the first analogue of the modern single-level pyramid. It collapsed because coupons could not be sold for cash, but could only be exchanged. Payments to the first participants came from the following newcomers. In Russia, the pyramid boom occurred during the transition period to the market in the early 1990s, when the famous MMM JSC was created by Sergei Mavrodi.

Financial pyramids are prohibited in many countries (Canada, Mexico, Germany, Italy, Kazakhstan, Poland, etc.), including Russia (Article 172.2 of the Criminal Code of the Russian Federation). In the UAE and China, there is even a death penalty for building such a structure. If the country does not have a separate article for financial pyramids, then such fraud may be classified as illegal entrepreneurship.

Reasons for the emergence of financial pyramids

The emergence of financial pyramids is due to a number of changes in the economy and government policy. Basic prerequisites:

free securities market;
the activities of such structures are not regulated by law;
improving the standard of living of the population;
moderate inflation and stable economic growth;
the country's transition to a market economy;
the emergence of various financial institutions offering both to preserve their savings and increase them;
lack of reliable information and illiteracy of the population in financial matters.

The essence of a financial pyramid

The main goal of such a scheme is to enrich the organizers of the pyramid due to the influx of new people. Perhaps those who immediately joined the front ranks and then withdrew their money on time will also benefit. Contributions from participants are not invested anywhere and go to reward the upper levels, that is, those people who invited them and others above them along the entire chain of the pyramid. Accordingly, if the current investor also invites people, he will receive his income from them, etc. In some models, it is possible that some product may be present to cover the “business,” but the essence does not change: profit in the pyramid is obtained through investments new members.

The distribution of funds of joining members occurs according to different schemes. The principle of a financial pyramid is as many newcomers as possible. But when the flow of investors decreases and there is no money to pay out the promised money, the pyramid collapses. The fact is that the number of people on our planet is finite. Not everyone has a chance to get their money back, not to mention the promised interest. The last ones who entered are unlikely to see their money. The organizers may withhold payments for some time, and then collect all available savings and disappear.

How does a financial pyramid work?

There are many variations of fraudulent pyramid schemes. The essence remains the same, but the ways to “show off” the average citizen are becoming more and more sophisticated. Let's look at 2 illustrative examples:

	Example 1	Example 2
Stage 1	The organizers are conducting an advertising campaign for growing flowers, mushrooms, exotic plants, etc. at home. People are invited to buy seeds and make a certain “entry fee.” The total amount is 4 thousand rubles. After 3–4 months, the company promises to buy the seedlings for 8 thousand rubles.	The organization presents itself as an investment fund. You need to invest at least 5 thousand rubles. You need to invite 4 more people to the project and then you can get your profit in the amount of 10 thousand rubles. When the first 6 people join, the company’s profit at this stage is 25 thousand rubles.
Stage 2	Rumors about this quickly spread among the population, and there is no end to those interested. Seeds are actively being bought, and the first participants are already receiving their profits. In fact, this is money from new buyers.	Each of the 6 applicants invites 4 people, who also contribute 5 thousand rubles. The company already has: 25+645=145 thousand rubles. Of these, she pays the first participants: 10 * 6 = 60 thousand rubles. The company's profit will be 145-60=85 thousand rubles.
Stage 3	At some point, the “boom” for this idea passes and there are fewer and fewer new members of the pyramid. The organizers disappear without a trace with all the money. It turns out that the plants are ordinary and are not worth the money claimed. Therefore, many people do not receive the promised profit or investment.	Participants of the second level also invite 4 people who invest 5 thousand rubles each. The company already has 85+2445=565 thousand rubles on hand. Of these, she pays off the second investors: 10*24=240 thousand rubles. The company's profit will be 565-240 = 325 thousand rubles. The growth of the pyramid will be exponential (geometric progression, when the growth rate is proportional to the number of participants). The time will come when new entrants will no longer be able to find new members. The pyramid is collapsing, and the organizers are skimming off the cream.

These descriptions are presented in a simplified version. There are complex, intricate schemes with the presence of a real product and are very similar to network marketing, which is a legal business. Financial pyramids survive only due to the influx of new people: there are no other sources of income payment. The collapse of any such organization is inevitable.

Perhaps, just a few months after the start of work, the company begins to feel a “shortage” of new members. At the same time, liabilities grow, and panic often begins among investors. They begin to sell “securities” en masse, if any. Or they impulsively decide to withdraw their investments. And if someone says that they were able to make money on the pyramid, it means that they were among the first, or at least in the middle. The top (organizers) will earn more in any case. Sooner or later, a huge number of participants will be scammed, leaving them without money.

In order not to fall for the bait of scammers, you need to know the main signs of financial pyramids. It happens that a person knows about such schemes, but skillful psychological influence and misinformation leads him to the decision to invest his hard-earned money. Signs by which it is highly likely that a business proposal is a financial pyramid:

Types of financial pyramids

All fraudulent pyramid schemes are divided into 3 types according to their structure. Sometimes there are assurances from the organizers that they have created a completely new project. However, upon closer examination, the scheme will belong to one of three types known today.

Single-level (Ponzi scheme) pyramids

Ponzi scheme (Ponzi) is one of the most common and simple types of financial pyramids. It got its name from the name of a famous Italian who was the first to organize a massive deception of the population.

The creator attracts the first participants with high interest rates and guaranteed income for a short period of time. Everyone who joins is not required to attract other people. He can pay the first profit to investors from his own funds. When this project becomes more popular and the number of participants increases, money is transferred - the organizer pays the old participants with the funds of the new ones. The number of people wishing to join is growing steadily and many are re-investing.

Of course, there is no declared activity in this pyramid. It can present itself as an investment project, a charity project, a mutual aid fund, etc. The game of “sack” continues for a certain time. There comes a period when obligations to investors increase, and the influx of new participants decreases. The organizer curtails his activities and disappears along with all the money.

Schematically, such a pyramid looks like this:

In the center is the organizer of the financial pyramid. Contributors are highlighted with small circles:

1st stage;
2 lines;
3 lines;
4 queues .

The lifespan of such a pyramid depends on its popularity. More often, such schemes last from 4 months to 2 years. About 80–90% of investors remain at a loss. Examples of financial pyramids of this type: the first MMM JSC by S. Mavrodi, the investment company of B. Madoff, the iPhone pyramid in 2011. in Moscow, B. Tannenbaum’s project for investment in drugs to combat AIDS, “Vlastilina”, “Hoper-invest”.

Multi-level financial pyramids

Each person who joins pays an entrance fee. This money is distributed among the upper levels of the pyramid: the participant who invited him and several higher ones. After this, the new investor must bring several people into the pyramid (usually from 2 to 5). They explain to him in an explicit or hidden form that in order to make money in the project, it is new participants who are needed. He will begin to receive money from them, that is, recoup his investments and make a profit.

In essence, this is a simple transfer of money, just like in a Ponzi scheme. As the depth increases, the number of participants increases very quickly and after 10–15 levels it will comprise the entire population of the entire country. Obviously, investors at lower levels will lose their money, since there will come a time when there will be no one to invite. Such people make up 85–90% of the entire financial pyramid. At this time, the organizer closes the project, taking the maximum amount of money from it.

Schematically, this structure looks like this:

Such organizations do not last long. The collapse (scam) of the pyramid occurs after 2–6 months. To increase this period, the organizers rename the name of the pyramid and move to another city to continue the “work.” Many people go into virtual space for better camouflage. Examples of such companies: MMM-2011, MMM-2012, Binar, Talk Fusion.

Matrix financial pyramids

These schemes are a complicated modification of multi-level pyramids. Usually there is a real product (for example, gold, silver, a set of weight loss products, etc.) although there may be a fictitious “entrepreneur training system” that costs money. These organizations belong to the new financial pyramids and many people sincerely believe that these are investments.

Let us illustrate the operation of such a structure using the example of the Emgoldex company:

Upon entry, a new participant under number 4 invests 540 Euros, enters the matrix and waits for the entire level to be filled. Next, the matrix is divided into 2 of the same, the person rises to a higher level and must bring 2 people to fill part of the lower level. Perhaps the participant number 3 on the left who invited him will promise that he will find people instead of him. Investor No. 1 receives his reward - 7 thousand. Euros (less commission) in the form of a purchased gold bar, which he can sell back to the company. Essentially, 14 people chip in for a “gift” for one.

When dividing matrices (in Emgoldex they are called “tables”), participants gradually move towards their “top”. Participant #1 opens a new table and ends up in the lowest level. Accordingly, new participants are needed to fill out the matrices. The purchase of gold in an online store itself is legal, but the mechanism for collecting money and making a profit is a financial pyramid. As long as there are newcomers, the system will work.

The Emgoldex company itself is registered in Germany; gold purchases are carried out in Dubai. The belief that gold is rapidly growing in price and that this is what brings good interest to the investor is not supported by real facts. By all indications, this is a clever way of laundering money abroad. After all, as the number of people joining increases, there will be more and more tables. And the time will come when there will be no one to fill them.

It is worth noting that in matrix pyramids the conditions for receiving remuneration are vague: you have to wait until the matrix is complete, and the company does not guarantee when this will happen or whether it will happen at all. Therefore, they function longer than other types of pyramids. But the “hour X” will come for them too. Most investors will be left at a loss.

A comparison of the characteristics of all 3 types of financial pyramids is presented in the table:

	Single-level	Multi-level	Matrix
Structure	The center of interaction is the organizer. It accepts deposits and pays interest up to a certain time.	There is no single center. Each participant is in contact with their higher levels. The organizer supervises only the first people and monitors the activities of the pyramid.	The center of interaction in matrices is 1–2 active participants. Subsequently, they can easily “forget” about the newcomer if he does not bring new people.
Source of profitability	A “profitable” business opportunity, investment or charity project.	New member contributions only. It is possible to disguise it with direct sales to confuse the scheme.	New member contributions only. Complicated schemes involving the purchase of real goods serve to “fuss the brains” of new participants.
Life cycle of a pyramid	It can take a long time, it all depends on the ingenuity of the organizer and his ability to persuade	Short as the number of participants is growing rapidly	It can take a long time, since the company does not promise exact deadlines for filling out the matrices

The emergence of the World Wide Web provided new opportunities for the creation and development of pyramids. The geographic reach of potential participants has increased significantly, and material costs for advertising have decreased. It is more difficult to track the movement of money through electronic payment systems. Registration of sites often occurs with fictitious persons or so that the owner’s data is not exposed. This makes it difficult to find a virtual fraudster and bring him to justice.

The largest financial pyramid in the Stock Generation network was organized by S. Mavrodi. Under the guise of gambling, shares of virtual companies were traded in this pyramid. The scenario was somewhat reminiscent of the MMM project, but on the website for many of these companies there was a disclaimer: prices can go both up and down. This “game” worked for 2 years, the number of victims ranged from 300 thousand to several million.

Mavrodi’s projects MMM-2011 and MMM-2012 are also large-scale. The virtual currency “Mavro” was invented, the purchase and sale of which was carried out in the first project through level managers - foremen, centurions, thousanders, etc. In the second project (referred to as the “mutual aid cash desk”), payments were made directly by the participants themselves. When the influx of deposits began to decline, delays in payments began to be noted, cases of theft of money from the system and the pyramid were closed. Mavrodi announced a restart several times, but there was no longer any trust in him and the scale of the following projects was much smaller.

Among active Internet users, the NewPro pyramid is known, offering to buy a key for 99 rubles and attract 3 newcomers. Next, a second level key is purchased. However, reaching the coveted level 28 is unrealistic. This will require more than 20 trillion people. Pyramids with a similar structure: SuperProgik, Power MLM, MoneyTrain.

Among the variety of online pyramids, HYIPs and seven “magic” wallets stand out in separate categories.

HYIPs are also pyramids

Investment projects with high returns according to the financial pyramid scheme are HYIPs (hype projects). They justify their interest by investing in shares, mutual funds, and trust management, but they may simply remain silent about their activities. There is an opinion that investing in HYIPs is one of the most profitable types of earnings if you invest your funds wisely. On the Internet you can even find articles where experienced participants in these projects talk about the correct investment strategy with the goal of “exiting the game in time” before the closure of the hype and at the same time making money.

In essence, all online pyramids go through the same life cycle stages as their offline counterparts. Money is transferred from the pockets of some to the pockets of others and no further activity is carried out. Therefore, there will be people who actually make a profit from such investments. But you need to understand that this happens at the expense of other participants, whose total contributions are always greater.

There are websites of venture capital - investments with a high level of risk - companies that actually invest money in risky and high-yield financial instruments (such as Forex). In contrast, HYIPs have the following characteristics:

colorful design of the resource and excessive advertising about the need for investments and a guarantee of return;
the profitability is promised to be 0.5–10% per day, which is an unreasonably high figure, however, there are projects offering 15% per month and this feature is not applicable to them;
fictitious investment objects or lack thereof;
there is no information about the company (address, phone number, management), licenses, official registration and other documents or they may be fictitious;
a complicated scheme for generating income, the essence of the project is not clearly clear.

To conduct financial transactions, HYIPs offer participants electronic payment systems Perfect Money, Bitcoin, Payeer, Qiwi and a number of others, which do not require personal identification. Most HYIPs do not work with WebMoney. Based on income level, all HYIP projects are divided into 3 categories:

Low-income financial pyramids. They exist from 1.5 to 3 years and offer relatively low rates - up to 15% per annum per month (up to 0.5% per day). They are characterized by a well-thought-out pyramid scheme and large-scale advertising. Very similar to legal investment programs associated with asset trust management.
Mid-income financial pyramids. They exist from 6 months to 1 year and offer returns of 15–60% per annum per month (up to 3% per day). They promote quickly, but reach the peak of popularity very soon.
Highly profitable financial pyramids. They work for 2–5 weeks and offer rates above 60% per month (over 3% daily). They have aggressive, intrusive advertising like “Register quickly and get a lot of money!”, “Hurry, these rates are only for 1 month!” They close unexpectedly and try to attract as many new investors as possible.

In addition to the organizers of such projects themselves, so-called referral guides play an important role in the system. They spread information about the new project and encourage network users to become participants. The success of the project largely depends on their actions. The creators of HYIPs work with these “agents” through affiliate programs, that is, they award the “referral leaders” a certain percentage of investors’ deposits. The distributors themselves try to advertise the hype project more colorfully and in detail on social networks, forums and blogs. Often, investors are asked to promote hype themselves and participate in the referral program. This gives maximum promotion among online investors and a large influx of money.

For a certain period of time, the hype operates successfully, and some investors receive the promised interest due to the growing popularity of the project. But there comes a time when the volume of cash payments begins to exceed the volume of cash receipts. The hype is closed (scammed) and all the money remains with the organizers.

Magic wallets - a regular financial pyramid

A potential participant is invited to send a small amount (within 10–70 rubles) to seven electronic wallets in the WebMoney or Yandex-money system. After that, remove one of the top wallets, enter your own and post a message on 100–200 forums, message boards, and sites where people are looking for work. It is believed that if everything is done correctly, money will “fall out of a bag” because the next participants will send money to your wallet and also begin to promote information. In fact, this is an ordinary financial pyramid, and also uncontrolled.

There is no guarantee that the person who falls for this will not write down their wallet numbers in order to “squeeze out” more for themselves. But even if all participants follow the instructions and only 5 people respond to mass spam, the pyramid will grow to gigantic proportions. These 5 participants will also attract 5 newcomers, and the total earnings of the first person in theory will be 600–900 thousand rubles. By this time, there will be about 98 thousand participants in the pyramid. This figure grows exponentially: after 2 levels you need 2–3 million connected, then several tens of millions, then trillions, etc. It is clear that the entire population of the planet will cover only a few levels of such a pyramid.

Payment systems are actively fighting such messages, even to the point of blocking the wallet. Financial monitoring and security services monitor the distribution of such spam and identify pyramid schemes within a few days.

Financial pyramids in Russia (list)

The first pyramids came to Russia after the collapse of the USSR. JSC MMM became one of the largest and most famous. The company issued large volumes of shares (about 27 million) and tickets (about 72 million). Investors were promised 500–1000% per annum. Powerful propaganda in the media brought 10–15 million people into this financial pyramid. No documents were given to people. These “papers” were not allowed into free circulation; only the company itself could buy them back. The price of shares and tickets was set by the organizer S. Mavrodi himself.

Due to the hype, their cost rapidly increased and reached 125 thousand rubles. per share. In reality, these papers were not worth that much money. Rumors spread among investors about Mavrodi’s problems with paying taxes and illegal entrepreneurship. The ensuing panic led to a sharp drop (by more than 100 times) in the cost of shares and tickets. In fact, they turned into worthless “pieces of paper”. The office of MMM JSC was stormed by law enforcement agencies. Mavrodi was arrested and sentenced to 4.5 years in prison. In total, he managed to earn about 3 billion rubles. Subsequently, this man created other pyramids.

In addition to MMM, large financial pyramids in the 90s and 2000s were:

"Vlastilina";
"Russian House Selenga";
"Tibet";
"Hoper-invest";
"Rubin" ("SAN").

The number of victims amounted to millions, the lost amounts of investors varied from several million to trillions of rubles. As a result, almost all the organizers received real prison sentences, and only a few managed to escape.

Despite this, financial pyramids continued to exist in Russia. This is explained primarily by people’s desire to get “free” money, their gullibility and greed. The development of the Internet also played an important role. Participating in such roulette is comparable to playing in a casino: someone will get a “piece of the pie,” but the owners will earn money in any case, and most players will lose.

New financial pyramids include:

For organizing pyramids in Russia, along with criminal penalties, administrative liability has been introduced (Article 14.62 of the Administrative Code).

Financial pyramids and network marketing

With the development of the industry (MLM business), financial pyramids increasingly began to disguise themselves as it.

The fact is that a multi-level structure occurs both in fraudulent schemes and in legal businesses.

But a closer look reveals significant differences. The network business is absolutely legal (according to the decision of the US court in 1979 against the Amway company) and is based on creating a network of consultants (distributors) to promote goods from the manufacturer to the buyer. A comparison of features is presented in the table:

Sign	Financial Pyramide	Network marketing
What does the entry fee go towards?	Fully or almost entirely for payments to the upper levels of the pyramid, that is, people who joined earlier	To receive a starter kit of products for a consultant, training materials, brochures. In some companies, a certain amount (20-30% of the contribution) goes to reward sponsors (upper levels).
Product Detail	Unclaimed, fake or overpriced	High-quality products that people periodically buy (usually cosmetics, cleaning products, dietary supplements, etc.). The largest players in the MLM business have a fairly large assortment and may include durable goods (filters, dishes, clothing).
What the company offers	Unreasonably high interest rates for a short period of time. They may promise low interest rates, but do not mention the exact time of return on investment. The entry fee is often large. They say that there is practically no need to work.	Part-time work with a flexible schedule and, as a result, a small increase in the basic income. In the future, it is possible to create a passive source of income (with a large and stable turnover), but this will not happen quickly. The amount of profit directly depends on the work of the consultant.
Source of income	Entry fees for new members. The product serves only to cover up a fraudulent scheme.	Trade turnover structure of each consultant. The price of goods includes distributors’ profits (15–25%), which are distributed throughout the network. Simply connecting people without them purchasing goods does nothing. At the same time, the remuneration plan is designed in such a way that you can outstrip higher levels in terms of income.
Company characteristics	Official documents are hidden, forged, or made in the name of a fake person located far away. The information on the websites is vague and illogical.	All activities are conducted openly; many online companies have their own websites with detailed information (product properties, address, company phone number, trainings, etc.)
Behavior of people promoting to join the company	Obsessive beliefs, emphasis on advertising and quick money. They demand to give money immediately and often without presenting supporting documents (checks, receipts).	A calm story about this type of business, emphasis on personal consumption of products, studying the action and purpose of each product, mastering sales skills, making presentations, communicating with people. A beginner may want to think twice before engaging in online business (usually they give 2-3 days).

What to do if you have already invested money in a financial pyramid?

First of all, you should calm down and soberly assess the situation. First you need to contact the office of the company where you gave the money or the person who invited you. The chances of getting your money back increase if you have documents confirming the receipt or transfer of money.

If the return is refused, hint to the scammers that you plan to contact the police and prosecutor's office. And if this does not help, then immediately contact these authorities. It is recommended to provide detailed information about the scammers: external signs of the people, what product they are promising, the name of the organization, office address, etc. There is a possibility that by the time law enforcement agencies begin to act, the “businessmen” may disappear.

Despite the illegality, financial pyramids will continue to be created, trapping gullible citizens. To recognize them, you need cold calculation and an understanding of the essence of how pyramid schemes work.

Is Bitcoin a pyramid scheme? What do cryptocurrency and big money scams have in common? We decided to look into this issue and tell you about the largest financial frauds of the last century.

As you already know, just the other day. The main arguments of this analogy can be expressed in quotes from the director of the national payment system department of the Bank of Russia, Timur Batyrev, and his deputy, Andrei Shamraev:

The analogy between Bitcoin and pyramids is quite obvious due to the speculative nature of transactions with it. There will be people who will be ready to part with money in the hope of easy profit or who are ready to influence the Bitcoin rate in order to obtain maximum profit. But there will also be people who will pay for this profit. Bitcoin is only backed by the time spent “mining” it, unlike securities, stocks or bonds.

So what is a financial pyramid?

A financial pyramid is an organization that ensures its income and the income of investors by constantly attracting funds. The first investors of the pyramid receive income from the deposits of new participants, and those from the deposits of subsequent participants, and so on until its complete collapse. As a rule, the true source of income of the organization is hidden or is false. As soon as the pyramid is deprived of new financial contributions, it collapses.

Is Bitcoin a pyramid scheme?

The financial pyramid promises high returns, which cannot be maintained for a long time and repayment of obligations to investors is obviously impossible. Nobody promises high profits to Bitcoin holders; cryptocurrency is essentially a convenient way to store your money and pay with it for various goods and services. Behind bitcoins is a real product with software and special properties (anonymity, low transaction costs, decentralization, lack of inflation), which ensure its value. A typical pyramid is not a product of any kind.

To better understand financial pyramids and understand whether Bitcoin has anything in common with them, we invite you to get acquainted with the largest and most destructive money scams of the last century. So, let's get started.

1. Ponzi scheme

One of the very first and most famous pyramids belongs to the Italian swindler Charles Ponzi, who in 1919 came up with a get-rich-quick business scheme. One day he received a letter with an international exchange coupon enclosed inside, which anyone could exchange for stamps and send a reply letter back. The most interesting thing was that in Europe you could get only one stamp for such a coupon, while in the USA you could get as many as six stamps for it.

After this, Charles created the company “SXC”, invited investors and began offering people to make money on simple arbitrage, i.e. buying and selling goods in different countries. To those who invested in his papers, Ponzi promised 150% of the invested amount in 45 days. Residents of Boston rushed to buy papers, while Charles maintained interest with paid articles in the press.

But in fact, Charles Ponzi did not buy coupons, which were exchanged exclusively for stamps, but paid old investors the money of new participants. By July, Ponzi bills were bringing him up to $250,000 daily. In August of the same year, the company was inspected by federal agents and liquidated as a pyramid scheme. During the trial, part of the money was returned to the investors, more than 2 million were never found, and the Italian himself received 5 years in prison.

2. Portuguese pyramid of Dona Branca

An ordinary Portuguese woman, Maria Branca dos Santos, most often called Dona Branca, decided to enrich herself by opening her own bank in 1970. To attract customers, she promised an interest rate of 10% per month to any depositor. Poor people from their country rushed to invest money in a bank that could provide them with such rapid financial growth. For 14 years, thousands of clients trusted their money to Dona, who by that time was nicknamed “the people’s banker.” In 1984, the pyramid collapsed, Blanca was arrested and sentenced to 10 years in prison. Maria died alone, although in 1993 her machinations inspired the Portuguese National Opera to stage A Banqueira do Povo (The People's Banker).

3. “Double Check” scheme

No, despite the beautiful name, this scheme has nothing to do with chess. The story begins in 2005, when an ordinary high school teacher from Pakistan, Syed Sibtul Hassan Shah, returned from Dubai to Wazirabad (Punjab province) and made a lucrative offer to his neighbors. Having convinced everyone that on a business trip he learned the latest exchange program, he offered everyone to double their savings in just a week!

That is why the scheme was called “Double Check”. Within a year and a half, the pyramid had grown throughout the country, more than three thousand investors gave him savings worth more than $880 million at that year’s exchange rate. Syed Shah was even planning to become the political leader of the region when the police arrested him. Thousands of people took to the streets demanding the release of their financial guru. At the moment, the hero of the story is behind bars, and the investigation is still ongoing.

4. Lou Pearlman's $300,000,000 Scheme

You may not have heard of Lou Pearlman, but the bands he created certainly have. Thanks to him, such groups as Backstreet Boys and ‘N Sync were born. But he also gained his fame thanks to a criminal scheme worth $300 million, which he “raised” by deceiving investors and large banks. In 1981, former tycoon Lou Pearlman founded Trans Continental Airlines Travel Services, Trans Continental Airlines Inc and a dozen other organizations that existed solely on paper. Which, by the way, did not stop him from selling shares in these companies for 20 years!

When the scheme was discovered, Lu tried to flee the country and was sentenced to 25 years in prison and a $1 million fine. And this is after he made a deal with the court, where he admitted fraud against about 250 victims who lost over $200kk, as well as 10 financial institutions that lost about $100 million.

5. European Royal Club

The non-profit association “European Kings Club” was organized by Damara Bertges and Hans Gunter Spachtholz in 1992 and was positioned as a real force opposing large European banks and capable of helping small businesses.

Under this scheme, new members of the European Royal Club had to buy a “letter”, which was essentially a share of the club. The cost of such a share was 1,400 Swiss francs. This “letter” gave the owner the right to receive 200 francs monthly, which guaranteed the investor to double his contribution within a year.

The criminal scheme was uncovered only 2 years later, when about a hundred thousand German and Swiss investors lost a total of about 1 billion US dollars. Even during the sentencing, the victims refused to acknowledge the fraud and booed the judge. The enterprising Damara Bertges received 7 years in prison, and her partner only 5.

6. Bernard Madoff Scam

Barnard Medoff's pyramid scheme is one of the largest financial scams in modern history. Among the victims are more than three million people and hundreds of financial institutions that lost their savings totaling more than 64.8 billion.

Bernard opened the Madoff Investment Securities investment fund, which had a reputation as one of the most reliable and profitable in the United States. Investors who invested in Madoff could receive 12-13% per annum. Most investors were convinced that this company was able to achieve such success thanks to insider information, and a serious list of clients, including numerous hedge funds, banks and celebrities, was a kind of guarantee of the reliability of this fund.

In the fall of 2008, a number of large investors turned to Madoff with a request to give out their invested funds totaling about $7 billion, but the fund simply had nothing to pay. The pyramid collapsed. It turned out that Madoff Securities has not been investing investors' money for at least the last 13 years! At the time of the proceedings, the company's debt amounted to approximately $50 billion. It is also noteworthy that Madoff’s own sons turned him in to the FBI, to whom he told about his biggest lie in the Ponzi scheme.

In contrast to the relatively short sentences of previous pyramid schemers, Bernard Madoff was sentenced to 150 years in prison.

7. Wang Feng's Ant Farms

A rather unusual financial pyramid was built by Chinese businessman Wang Feng. In 1999, he opened the company “Yilishen Tianxi Group of China” and offered anyone who wanted to become an investor for only $1,500. For this money, investors received a box with special ants, which had to be fed and raised according to special instructions for 90 days. After this time, company representatives came and took the insects back, processing them into aphrodosiacs or medicine to treat arthritis. At least that's what the company told poor Chinese farmers.

After every 14 months of such hassle, investors received about $450, which was equal to a 32% annual return. This pyramid was also successful because Wang Feng quickly became rich and managed to get promoted in newspapers and television. He even became a state nominee. "China's 100 Best Businessmen" Award.

When the company's turnover reached about two billion dollars, Wang's ant scheme collapsed, and he himself was arrested and sentenced to death.

8. MMM by Sergei Mavrodi

The largest financial pyramid in the history of Russia, founded by Sergei Mavrodi together with his brother Vyacheslav and his wife Marina. The name of the company “MMM” was nothing more than an abbreviation of the names of the founders. As you and I remember, in the early 90s, this private company offered its investors 1000% dividends, luring millions of residents of the country into the pyramid. Over the five years of his work, Mavrodi received over $1.5 billion.

His activities had such serious publicity that Sergei was even elected to the State Duma and received parliamentary immunity, which did not stop him from being arrested in 2003, when the pyramid finally collapsed. According to Sergei Mavrodi himself, the collapse of MMM is solely the merit of the country’s government.

9. American insurance system

You might be surprised, but social insurance in the United States has a fairly similar structure to the Ponzi laugh that heads our top financial pyramids. In 1935, President Roosevelt introduced this insurance as part of the fight against poverty, which covered older Americans during the Great Depression. These measures allowed the unemployed and pensioners to receive money, which came from taxation of the working part of the US population.

Although Social Security in America has undergone a number of changes over the years, the essence remains the same: old savers get money from new savers. However, analytical firms have calculated that already in 2018 this scheme will face serious, and quite possibly destructive, consequences. During these years, the so-called baby boomers will retire and there may simply not be enough money for everyone.

Republishing is permitted only if a link to the original is maintained.

In the fall of 2018, the Central Bank discovered one of the largest financial pyramids of recent times - Cashbury. Under the guise of investments with a return of up to 600% per annum, she defrauded the population of several billion rubles. Many compare it in the scope of its activities with the famous MMM.

Despite the bitter experience left over from the nineties, people still become victims of financial pyramids - out of ignorance or because of a thirst for easy money. The methods used by scammers are developing - it is becoming easier for them to confuse both people and the state. You will learn further about how to identify a financial pyramid and what to do if you lost your money in it.

What is a financial pyramid

A financial pyramid is a fraudulent scheme that involves raising income through the investments of new participants. Most often, a pyramid offers to invest money for some purpose (almost always fictitious) and promises high returns on these investments. For its existence, the pyramid must attract more and more money.

After reaching a certain amount of investment, the organizer of the pyramid appropriates the money for himself and closes the company. At the same time, the pyramid can both honestly pay investors interest on investments, and avoid payments in various ways. But even in the second case, there will be people who will risk investing in what they think is a “promising project.” Such people are driven by greed, craving for freebies and poor financial literacy.

The principle of operation of a financial pyramid was well described by the Soviet mathematician, physicist and popularizer of science Yakov Perelman in the problem “Avalanche of cheap bicycles” from the book “Living Mathematics”.

From the history of financial pyramids

Schemes similar to financial pyramids have been known to mankind for a long time. But the first sensational case was the pyramid created by Charles Ponzi, an American of Italian descent, in the early 20s of the last century. He built his scam on the resale of international response coupons - documents that could be exchanged for postage stamps. Ponzi attracted investors by promising high profits from coupon speculation, but in reality it only embezzled their money. The scam came to light in 1920, after which Ponzi was arrested and sentenced to imprisonment.

Later, scammers who began to operate according to the invented Ponzi scheme began to appear in other countries. Over time, the legends that covered the pyramids and the ways to attract new clients changed. Different countries reacted to such scammers in their own way, but they always tried to fight them. Now in many countries, pyramids are directly or indirectly prohibited, and their creators face criminal liability.

Financial pyramids came to Russia in the 90s of the last century. The largest of them was the notorious MMM, which was able to attract more than 15 million depositors throughout the country. The population did not yet know anything about such schemes and therefore easily trusted the scammers. The pyramid schemes of the 90s aggravated the already severe economic crisis in the country, and the name “MMM” became popularly used for such fraudulent schemes.

In the 2000s and 2000s, new pyramids continued to appear in Russia, including the revival of MMM several times. They increasingly began to focus their activities on the Internet - this makes it much easier for the organizers to hide both from the government and from defrauded investors. The law that establishes penalties for organizing such fraudulent schemes was adopted only in 2016.

What types of financial pyramids are there?

A financial pyramid almost never tells its investors that it is a pyramid - this way people will immediately understand the purpose of such an organization. Instead, they hide behind various legends and try to confuse people. There are several most common forms of financial pyramids:

Pseudo-investment project. This type of pyramid is the most common. They lure money under the pretext of a variety of purposes - from construction and development of new technologies to trading on the stock exchange and transactions with cryptocurrencies. In reality, the company does not pursue any of its stated objectives, and the income from the “investment” exists only from new investments. This is exactly the principle that Cashbury operates on.

Pseudo-credit organization. Such a pyramid disguises itself as a bank, microfinance company or credit cooperative. It may offer loans or loans on favorable terms - at below-average rates or without credit history requirements. To receive a “loan” you need to pay a certain fee - for example, a certain part of the amount. However, you will never receive the loan amount, and the company itself is often not even registered as a credit organization
Pseudo-fund. The pyramid can masquerade as a non-state pension fund, an insurance company or a charitable organization. It can be determined by the same criteria - suspiciously tempting conditions for participation and the absence of any information about real activities
Hybrid of financial pyramid and network marketing. Such a company offers the participant not only to sell any products, but also to invite new members to its structure in order to receive passive income from them. At the same time, participants are required to pay fees to higher members or buy goods from them. As a result, the company earns more from contributions from new members than from the sale of its products

Pyramids are also distinguished by their duration of existence: they can be long-term (from 2-3 years), medium-term (up to a year), short-term (up to 3-6 months) and fast (1-2 months). The longer the period, the higher the declared profitability and the lower the likelihood that the organizer will immediately pocket the money. In fact, it is almost impossible to immediately determine how long the pyramid will last - even a company that wants to seem reliable can close down just a few days after its launch.

By what criteria can you calculate a pyramid?

The Central Bank assigned Cashbury the status of a financial pyramid after a thorough study of its activities. The company positioned itself as a platform for lending, but did not issue a single loan. Licenses for microfinance activities were revoked long ago. But at the same time, Cashbury actively lured people with aggressive advertising and promised investment returns of up to 600% per annum. This alerted the financial regulator.

In total, from January to September 2018, the Central Bank identified 82 financial pyramids - 10% more than in the same period last year.

Anyone can determine whether a company is a financial pyramid - just know a few simple signs. Here are the most striking of them:

Non-transparent activities

All fraudulent organizations, including financial pyramids, try to hide real information about the founders, registration, activities and reporting. On the one hand, this is how they try to confuse their victims. On the other hand, to avert the suspicions of the state.

Financial pyramids are often registered in offshore zones - countries and territories with special business conditions for foreigners. Enterprises in such zones do not pay taxes or pay them at a minimum, keep simple records and do not disclose information about the real owners. Working through offshore companies helps the fraudster hide his activities and avoid criminal prosecution.

It is also worth asking the company for information about its activities and documents that will confirm it. If a company actually attracts investments to develop a real business, then it will always be able to provide this evidence. If the pyramid does provide such information, it will most likely turn out to be fake or belonging to another company.

In addition to registration information, check other documents - for example, a sample contract, user agreement and privacy policy. If in them the company tries to disclaim any responsibility for depositors’ funds, then such documents should arouse your suspicions.

Active advertising

In an advertising campaign, the pyramid places the main emphasis on PR and marketing. She regularly holds public events - presentations, meetings, seminars - at which she vividly talks about the benefits of working with her. The company places advertisements on all available platforms (on the streets, on the Internet, less often on TV and radio), sends out advertising letters, and orders positive reviews about itself.

The scope of such a campaign depends on the budget and the size of the pyramid. For example, Cashbury managed to attract famous Russian artists for his performances - Valery Meladze and Nikolai Baskov. Small pyramids are often limited to sending spam and contextual advertising.

At the same time, a fraudulent company will always talk only about high returns, without mentioning the risks of investments. In her advertising, she can confuse the victim with complex terms, put pressure on greed, scare her with economic crises and promise “financial freedom.” The company does not impose any requirements on its participants - anyone can usually invest in the pyramid.

A real investment project does not need such advertising - it will neither make pretentious presentations nor send spam. It attracts investors only on specialized platforms. Such a company will not splurge - instead, it will immediately report all the nuances and risks. In addition, investors and their investments may be subject to certain requirements, including those established by law.

Sometimes, during the advertising process, a pyramid may announce cooperation with large and well-known companies among people - for example, banks or industrial enterprises. You can then contact the “partner” company directly to find out if it is associated with the alleged scammer. The answer will almost always be no.

Fraud with depositors' funds

A financial pyramid tries to confuse the movement of money and hide all internal processes from prying eyes. To accept money and pay interest, pyramid schemes often use little-known acquiring systems that do not impose any requirements on clients, or transfers between individuals. In more rare cases, payments may be made using cryptocurrencies or payments in transit through several countries. Tracing such transfers and proving their purpose can be very difficult.

Sometimes a pyramid may require its participants to pay additional fees - for example, a commission for accessing a personal account or transferring money. The amount of contributions is usually a significant amount, but not large enough for it to be scary to lose. This is another sign by which you can identify a scammer. All expenses associated with transferring money and providing access to reporting are covered by the real business itself.

The pyramid is also interested in keeping depositors’ funds under any pretext. It can block entry to your personal account or limit the withdrawal of funds, explaining this, for example, by technical or financial problems. In some cases, in order to be able to withdraw, the pyramid requires attracting new members. An honest investment company always voices a clear reason for withdrawal restrictions and provides an approximate time frame for eliminating the problems.

What to do if you become a victim of a pyramid scheme

It is very difficult to cope with a financial pyramid on your own. Due to confusing registration and money fraud, it can be difficult to track activities and identify the real organizers of the pyramid. The problem is complicated by documents that are drawn up in such a way that the fraudster can relieve himself of all responsibility. You will also have to deal with people who sincerely believe in the integrity of the organization and will interfere

The main thing in such a situation is to act together. Try to contact other victims of the pyramid to join forces in the fight against it. People who already have experience fighting pyramid schemes and organizations that help victims of scams will be able to help you. Together you can file a class action lawsuit against the pyramid and make the case public.

If the pyramid is still operating, write a written complaint to it, demanding a refund. If you have not received a response or your payment is refused, contact the police, prosecutor's office or the Central Bank. As evidence, take documents that confirm the fact of the transfer of money, and information that may indicate fraudulent activities of the company.

Punishments for organizing a financial pyramid are determined by Articles 14.62 of the Code of Administrative Offenses and 172.2 of the Criminal Code. They threaten both the organizers of the pyramid and those who attracted new participants to it. If during your membership you managed to attract new people to the fraudulent organization, then you may be considered an accomplice. Then you will additionally have to prove your innocence.

Even if a company is recognized as a pyramid scheme, it is not always possible to recover lost money. But you can count on compensation for damage - to do this, contact the Federal Public-State Fund for the Protection of the Rights of Depositors and Shareholders. This fund maintains a register of organizations that deceive shareholders and investors. If the company you suffered is included in the register, then you are entitled to compensation.

The amount of compensation cannot exceed the amount of your investments in the pyramid and does not take into account the interest received. The maximum amount is 25,000 rubles, and for veterans and disabled people of the Second World War - 250,000 rubles. The fund also takes into account other payments that you can receive after the liquidation of the pyramid.

Questions and answers

What responsibility is established for the organizers of a financial pyramid?

What should I do if my relative or friend became a victim of a pyramid scheme?

The main thing here is to prove to the person that the company he contacted is really a pyramid. Many pyramid schemes use various methods of persuasion and psychological influence on participants to convince them of their honesty. Older people and young people are most susceptible to this influence.

Instead of putting pressure on a person, try to support him, communicate with him more often, and show sympathy. Provide him with information that can prove the fraudulent nature of the organization.

I have heard about companies that allegedly help victims of pyramid schemes and pay full compensation amounts. Should you trust them?

We advise you to treat such companies with caution - they can also disguise themselves as financial pyramids. Such organizations promise a full refund of all investments with interest and require the payment of various fees. In this case, you will not receive any compensation - the company will only depict its activities. Try to contact government organizations and funds first - for example, the Central Bank or the Fund for the Protection of the Rights of Shareholders and Depositors.

Is it possible to make money by participating in financial pyramids?

Some people consider investing in pyramid schemes as a source of additional income. They carefully study such organizations, assess their reliability and calculate their approximate lifespan. They then invest small amounts in a few selected organizations. To reduce risk, they try to invest money and withdraw it at the very beginning of the pyramid.

#AllLoansOnline warns: Such investments always involve a very high risk. Even a seemingly reliable pyramid can immediately disappear along with the money after attracting a certain number of investors. If you decide to invest in such organizations, then use free money for this, which you don’t mind losing. Do not apply for loans for this purpose under any circumstances.

Video

Arkady Mamontov’s investigative film “Pyramid” about modern financial pyramids:

Blogger Alexander Dvizhnov explains why Cashbury is a financial pyramid:

Conclusion

During a tense situation in the economy, various fraudulent schemes, including pyramids, are becoming more and more numerous. People are afraid for their money and property, which is why they are ready to trust everyone who promises a way out of the situation. People find out that they have become victims of scammers too late - only after they have lost all their investments.

To avoid becoming a victim of a financial pyramid, it is enough to think soberly, be careful and be attentive to your money. Remember that even the second mouse does not always get free cheese, and the more you are promised easy income, the higher the likelihood that this is a scammer. Be careful yourself and warn your family and friends about pyramids.

So, most of the signs indicate that Cashbury is a financial pyramid:

She hides behind activities she is not really involved in
She obfuscates her activities and does not provide full reporting
It limits the withdrawal of money without serious reasons
She splurges, talking about huge returns and not mentioning the risks

By these same signs you can distinguish a pyramid from a reliable organization. This way you can protect yourself from risky investments and warn relatives and friends about scammers.

What do you think about Cashbury and similar companies? Leave your reviews and share your opinions about this and other similar organizations.

Founder of the #AllLoansOnline project. He worked in the banking industry for a long time, so he knows well how it works inside and out. Understands all banking products and the rules of their operation. In his free time, he studies new banking products and technologies.

maxzaharov@site

(16 ratings, average: 4.7 out of 5)

Quite often they offer to join financial pyramids.

Under financial pyramids refers to any structures in which the income of investors is formed from income from funds contributed by other investors.

Any doomed to collapse. Because the number of new arrivals sooner or later decreases, it becomes impossible for investors to pay profits and the pyramid is covered with a copper basin.

Perhaps you saw the times of MMM, the Russian House of Selenga, Khoper-Invest... - prominent representatives of financial pyramids.

Financial pyramids are also a very common phenomenon on the Internet.

I divided all financial pyramids into the following:

1. Blatant financial pyramids .

The most important distinguishing feature of such pyramids is the accrual of interest on the deposit.. As a rule, the interest is large enough (for example, from 1% per day) to attract as many as possible who want to earn money for free.

Such projects are also called HYIP (High Yield Income Programs)...or simply HYIP..or huip

HYIPs usually offer a fairly high interest rate on deposits. As a rule, from 20% per month on invested capital.

Many HYIPs use the same “engine” of the site, where the total number of investors, the total amount of deposits, the total amount of payments, the number of new investors registered today, etc. is written. If you come to a site with such an engine, know this is 100% HYIP .

Pyramids of this type are the most dangerous. Because they are initially created specifically to cheat investors. Trying to make money in them is a very big risk. As a rule, HYIPs pay only for the first time in order to attract as many people as possible, after which payments stop. Most likely, you will find out about the hype when it is already dangerous to invest.

Quite often, just before the scam, pyramids of this type organize additional enticing promotions, promising, for example, an increased percentage. This, for example, happened with MMM-2011, when Mavrodi promised additional bonuses of 50% for new deposits. This was the apogee of the pyramid. MMM-2011 is generally a unique case. Mavrodi openly wrote on the website that the project was a financial pyramid, but this did not stop many people, despite the warning.

How to identify an outright financial pyramid?

Standard hype script.

Income on deposit in the form of increased interest

Lack of confirmation of real activity

Lack of information about the project organizers, or information that cannot be verified

Accepting money only through anonymous methods - Egold, WebMoney, etc.

Is it possible to make money on HYIPs? Can. If you join the hype at the moment of its birth and withdraw your invested funds at the first opportunity, leaving the interest to “spin” in the project. There are special sites that “monitor” HYIPs.

However, personally I don't consider this as income . It is dangerous to invest large sums in such projects; perhaps, after receiving your $1000, the project will immediately close. And investing $100 to earn $20 in a month is not money for me. If you are an adult, then this is NOT income for you either. You can't live on it.

If you really want to take a risk, then you can do it differently, and with a higher probability of success, for example, by investing in PAMM accounts or performing Forex trading operations on your own.

However, sometimes there are pyramid schemes that promise a very modest percentage, for example 5-7% per month. In this case, the pyramid can successfully exist for several years. I even participated in one (though I didn’t think it was a pyramid) and managed to make very good money. But perhaps I was lucky. At that moment, I considered the project serious, and did not expect that it would turn out to be a pyramid.

2. Ordinary financial pyramids

In such pyramids there is no accrual of interest on your deposit just like that, i.e. without doing anything, and in order to earn something, you have to work, namely, attract new people to the pyramid. Money from new participants is distributed up the chain. There are a lot of such pyramids - GoldLine, various "mutual aid funds". When you join a project, you pay a certain amount, which is distributed to higher-level participants. The danger of such pyramids is that you may not find anyone willing to join the project “under you”, and thus burn out. If the pyramid is new and you know how to convince people and they start joining, then you can make money on it. But sooner or later such a pyramid will also bend, because... There will be fewer and fewer people willing to join it.

An important difference from pyramids of the first type is that participants are awarded money based on the number of people they bring. Didn't bring anyone? You won't earn anything. And in the first type of pyramids, the main thing is to invest money, and it is not necessary to bring someone.

But financial pyramids of the first two types are usually prohibited in many countries, so financial pyramids of the third type appear quite often.

3. Disguised financial pyramids

- pyramids that want to be like an MLM company.

Such pyramids usually have some supposedly valuable product, and if you find someone willing to join the company and purchase this product/service, then you are awarded a commission. An example of such a hidden financial pyramid can be InMarket. They offer computer training courses on banal topics (for example, about using Windows) that are of no value, but at exorbitant prices. Or the Intway company (by the way, it has already closed. This will be the fate of all similar projects). Everything would be fine, but the price clearly does not correspond to the product and is several times higher than its analogues, and the services themselves are not needed by 95% of the ordinary population. And everyone else I know (who needs it) knows perfectly well where to get these services cheaper.
Thus we can conclude that the goods in such companies are purely for cover, so as not to be a pure financial pyramid. In most countries, financial pyramids are prohibited by law, so scammers come up with some kind of product or service. As in MLM companies, on the websites of such companies words appear - matrix, marketing compensation plan, bonus, sponsor, etc., which is typical for MLM companies.

Among the popular financial pyramids in disguise, we can note the company World GMN, with supposedly very necessary communication services and a card phone, and the company Emgoldex, which sells gold. In all these structures, “earnings” are based on receiving commissions from attracted people.

4. Matrix-type financial pyramids.

The previously discussed pyramids of the 2nd and 3rd types can be matrix. The difference is that in ordinary financial pyramids, the participant receives income immediately as soon as he invites a person to join him. In the “matrices” you need to fill in several lines below you, and only then can you receive income. For example, in the Emgoldex company you need to invite 2 people who want to, but you don’t get any money from these people, then those two have to invite two more, and they, in turn, have to invite two more. And only when the entire 3rd line is filled/paid will you receive income. In the case of Emgoldex, you will receive money from people in the 3rd line.

Sometimes there are hybrids. For example, the scammer Telexfree has a product in the form of unlimited VOIP communications, but it pays money even if you do not invite anyone and do not sell a single communication package. The “promoters” claim that they are paid to place advertisements, but my investigation has proven that work at Telexfree is absolutely ineffective and fictitious. This means that the participants in this project, who do not sell anything and have not invited anyone, receive income as in outright financial pyramids (the first type).

Is it possible to make money with financial pyramids?

Can. And sometimes a lot if you are at the beginning of the project and invite a lot of people to work for you... But as a rule, big earnings are possible if you give false information about the company. Or, to put it more simply, engage in deception. After all, if you tell the truth about the project, many will not join the company. I consider this approach to be unethical business.

Is it possible to make money with the company....?

I receive a lot of letters like this - “Tell me. Is it possible to make money with the company.....”. If this is an MLM company, or a financial pyramid trying to be like an MLM company, then I always answer like this:

Imagine that you have ALREADY joined this company. What's next? What are you going to do? What are your actions? Are you sociable, sociable, have a large circle of acquaintances and know how to convince anyone that they will even buy a trash can from you at a bus stop? By answering these questions you will make a decision. You can also try offering these “products” to your friends and see their reaction. Again, this will be the criterion for whether to join the project or not. And lately, our people are not very trusting... and everyone understands that if you offer something, it means you want to get rich on it, and the person automatically turns on a defensive reaction.

If you are offered to join a financial pyramid, where you do not need to invite anyone, but you still need to invest money, then assess the risks. Would losing the money you invested be a significant blow to your financial situation? It is complete stupidity to take out loans, sell a car/apartment and invest this money in financial pyramids.

If you still decide to make money using financial pyramids, then provide truthful information about the company and be sure to warn about the risks. Especially if you invite friends or acquaintances. Otherwise, if your friends do not have time to earn money and lose money, most likely your relationship will end.

If you are interested in investing, pay attention to FCT-Academy or to independently purchase cryptocurrencies according to the recommendations of the Golden Island Investors Club. Cryptocurrencies are the trend of 2017, allowing you to earn hundreds and even thousands of percent!

Other ways to MAKE EARNING ONLINE that don’t require wasting time: