The largest financial pyramids
This term refers to a system based on a constant flow of money. Financial resources are received due to the arrival of new depositors. The money received is used to pay off obligations to old participants. The cycle of activity of a pyramid scheme often has strict restrictions. If the inflow of funds has significantly decreased or stopped altogether, then the pyramid breaks up.
Currently, it is quite difficult to distinguish a really profitable project from a money pyramid. The fact is that the creators of the pyramids resort to various tricks and tricks, use the financial illiteracy of local residents to attract them to their project. Many citizens dream of getting rich just by investing money in a business. If we add more” holes ” in the legislation to this phenomenon, then as a result we get a “profitable” company. But after a while, we realize that this is a common scam. Once again, people were deceived, while the creators of the pyramids will get off with only a small prison term.
But you should not judge ordinary citizens, because even the controlling state bodies can not always recognize the existing financial pyramids. This is exactly what financial geniuses use to create a large number of similar projects.
Today we will tell you about the most famous pyramid schemes in the world. How did people manage to make money out of thin air?
The Boston Pyramid Scheme
After moving to the United States, Italian immigrant Ch.Ponzi wanted to get rich in the shortest possible time. However, all his initiatives ended in failure. A few years later, Ponzi, along with his friends, created a company and issued shares that could bring their owner an income of 20 percent. The high profit was explained by the fact that the company has a large income and sells products all over the world. People believed and were ready to buy securities. In fact, it was not a successful firm at all, but an ordinary financial pyramid that did absolutely no activity.
The creators of the American financial pyramid took care of an impressive advertising event, where the media of that time were invited. Journalists wrote enthusiastic articles about this project, and some officials claimed that they had already become clients of this company. This approach led to a new flow of customers. The local population was not only ready to bring the last savings, but also to stand in line for a long time for the cherished papers. In 1 year, this pyramid raised about $ 50 million.
For that time, this amount was simply huge. The average employee received only $ 60-80 a month. The activity of the pyramid scheme stopped after the federal system turned its attention to Ponzi schemes. Charles was sentenced to 5 years in prison for financial fraud.
Dona Branca’s Best Pyramid Scheme
A Portuguese woman decided to open her own bank. In 1970, a large-scale marketing campaign was held, where depositors of this institution were promised an income of 10 percent of the deposit amount on a monthly basis. Most of the local population hastened to take their savings to this bank.
It is worth noting that this pyramid has worked for almost 14 years. At the same time, Branca regularly paid income to its depositor. People called her the ” people’s banker.” However, like any pyramid scheme, sooner or later the bank had to come to an end. In 1984, Branca failed to fulfill her obligations to the institution’s clients. This woman was sentenced to 10 years in prison. In her honor, an opera was staged in Portugal, which was called “The People’s Banker”.
The biggest Pyramid schemes – Double Check
This pyramid was named after an ordinary teacher from Pakistan. After Syed Shah returned from Dubai to his hometown, he began to spread information among his neighbors, friends and acquaintances that he had a secret program that allows him to make huge profits.
At first, there were very few depositors, no more than 10 people. However, after receiving the first payments, the number of participants began to increase. In 1.5 years, the pyramid scheme has raised $ 1 billion. The number of depositors reached 300 thousand people. Syed Shah became popular and respected among the local population, and they even wanted to nominate him for election to the head of the region.
However, Shah was soon arrested for financial fraud, and the organization immediately collapsed. It is worth noting that thousands of residents stood up for this financial genius, they took to the streets in his defense.
The biggest Pyramid schemes-Lou Perlman promotions
This name is known all over the world. Lou Perlman created such well-known bands as the Backstreet Boys and NSync. But few people know that before that, Perlman was behind bars for a long time. He was convicted of financial fraud.
In 1981, this person created several fictitious organizations at once, which were not engaged in absolutely any activity. They were only registered on paper. Lou then issued securities from these companies and began selling them to people. Shares were bought not only by individuals, but also by large financial institutions. To whet the audience’s interest, Lou regularly prepared fake reports on profit growth.
This system has worked for about 20 years. During this period, the share price has risen several times. After Lu’s criminal activities were discovered, he tried to escape from punishment. He was caught and sentenced to a $ 1 million fine and 25 years in prison.
As a result of the pyramid scheme, participants lost $ 300 million.
Famous financial pyramids in Europe
The European Royal Club was founded in 1992. Its creators presented their project as an organization that will help in the development of small and medium-sized businesses. People were offered to purchase income letters that served as shares. The creators promised an income of 200 marks per month. As a result of simple mathematical calculations, it turned out that the depositor can double his capital within a year.
The criminal system was discovered only two years later. Participants in the pyramid scheme lost a total amount of $ 1 billion. The organizers were sentenced to a relatively short term. D. Bertges was sentenced to 7 years in prison, H. Gunter was sentenced to 5 years in prison.
Money pyramid MMM
The largest financial pyramid that was formed in the post-Soviet space is MMM. Its creators were the Mavrodi family. This organization promised huge profits. The income was 1,000 percent per year. Since the people of that time were financially illiterate, such an offer attracted most of the citizens. Well-known celebrities were involved in the mass advertising campaign. MMM representative offices began to open throughout the country. How many years did mmm last? The pyramid’s activity stopped after 5 years. Mavrodi was able to attract an amount of $ 2 billion to their pyramid. It is worth noting that many depositors really managed to earn money.
After the creators of the pyramid were arrested, people took to the streets and demanded the release of the company’s founder. Money was taken out of the head office by several trucks. And it took a month of painstaking work to calculate the financial resources. Now you know how long mmm lasted and how much money it was able to raise.
American Pyramid schemes – an insurance system
During the Great Depression, Roosevelt officially authorized the operation of a pyramid scheme. According to her scheme, the pension was paid at the expense of the active segment of the population. It was believed that there were far fewer pensioners in the country than the working population. Thus, the principles of all the pyramids were observed. Old participants received income at the expense of new contributors.
In the 60s, the baby boom began, so economists immediately assumed that in 2025 the pension system would collapse. The reason was that the number of pensioners will exceed the number of workers, so there will be nothing to pay the pension.
Today you will learn about the largest pyramids in the world. Share your impressions of the article you read in the comments.