
Home Blog Infamous Ponzi And Pyramid Schemes - Education Can Be A Costly Affair But So Is Ignorance


By - Research Team    |    Updated On 19 September 2015 |    Financial Planning


Most of the Ponzi schemes in our country follow the famous saying "Either Write Something Worth Reading Or Do Something Worth Writing". This is a policy strictly followed in the Ponzi schemes in our country. Everyone seems to be wanting to make money in a hurry. Inventive schemes such as Teak Plantation scams, Emu farming, Multi Level Marketing scams and Collective Investment scams abound in our nation which will put nationals of other countries to shame Ever Wondered Why People Get Fooled So Easily In India? .Ours is a nation of paradoxes. At one extreme one can find people in desperate need for cash willing to risk anything, easily taken up by schemes offered by unscrupulous characters and throw away their hard earned money to the wind without even a single thought."Look Before You Leap" is a policy rarely followed.

At the other extreme is a system which encourages everything from Black Money to Money Laundering. Faulty goods and duplicate goods masquerading as the real thing, Fake degrees of reputed colleges, Piracy Of Movie CD’S, Fake documents to get loans from banks, Fake ration cards and the nexus between businessmen and politicians has reached new highs. This indifference and a Care A Damn attitude followed in our country provides the green signal to all these scamsters of our nation to follow their whims and fancies.

So Why Do Ponzi Schemes Abound In Our Nation

So why do people fall for such type of Pyramid schemes?. Colorful Packaging and Marketing Gimmicks Get More For Less. Doubling of Returns .All these are packed into a package which markets itself. The package which markets itself begins with "G" and takes many forms such as Emu farming, Cattle And Ghee , Teak Plantation scam and so on. Yes Greed markets itself. One has surely heard of the infamous Emu Scam in India. Want To Learn More? I know you definitely do.

What Is The Emu Scam?

What Is An Emu And How Was The Emu Marketed

One knows that Emu is a flightless bird resident to Australia. The Emu hen can be productive for about 30 years laying about 50 eggs in a season .Each bird gives 20 Kgs of meat and 6 Litres of oil. The cost of an Emu egg was INR 1200-1500. The profit model as stated by the Ponzi scheme included selling the meat of the emu, skin used for leather, eggs for consumption and edible oil and fat from the Emu used for exports. Emu meat is low in fat and its oil has curative properties. The cost of the meat is around INR 400-500 per Kilo. The cost of oil is INR 300 per 100 ML. This was marketed as a wonder bird for the masses as its oil and meat were unrivalled and had no equal. Demand was certainly no problem, No part of the bird was wasted. Clearly a Hot Cake ready to sell. The bait was cast. All that was left was for the fish to bite.

Business Model

Mr Suresh of Erode 50 Years of age nearing retirement thought that investing in a unique scheme such as Emu farming was a lucrative deal. Reading about the Emu scheme on a website he made further enquiries and expressed his desire to invest in this scheme. About 10-12 pairs of chicks could be got for a down payment of INR 1.5 Lakhs, Cost of fencing was about INR 50000 and the cost of feed was about 1 Lakh per annum. All this contributed to a net initial investment of INR 3 Lakhs per annum .Emu feed, medicines and Emu medical insurance would be provided to him. The projected income was INR 3 Lakhs per annum on an investment of INR 3 Lakhs. This translates to a 100% rate of return within a year. Since the Emu lays eggs for a number of years the profits were guaranteed. Mr Suresh can also run a hatchery rather than sell the eggs. This would be even more lucrative. The adult Emu’s would be bought back if Mr Suresh wanted to exit from this scheme. Mr Suresh was promised a return of around 3 Lakhs with virtually no risks. In addition gold coins and incentives were promised to Mr Suresh if he continued to stay invested in the scheme. Is This The Perfect Business Model?

Mr Raguraman of Kakinada Andhra Pradesh came across a very interesting scheme from one of his acquaintances .If Mr Raguraman pays INR 1.5 Lakhs as a caution deposit he would get 3 pairs of chicks. The fencing and other infrastructure would be provided to him .For maintenance and rearing of chicks Mr Raguraman would get INR 6000 a month .A yearly bonus of INR 20000 would also be provided. After 2 years when the chicks are fully grown Mr Raguraman would get INR 3 Lakhs along with his caution deposit of INR 1.5 Lakhs refunded after returning the fully grown Emu’s .Mr Raguraman can retain the eggs and sell them if he wants for a profit. However a more lucrative deal would be to hatch them and sell the fully grown birds a few years later .Is This Model Better Than The Previous One?

The VIP Model

This model is most suited for literate and qualified people such as doctors, engineers and so on where they do not have to get their hands dirty. They just pay a caution deposit of INR 1.5 Lakhs which is refundable and get INR 7000 per month and a yearly bonus of INR 20000.The rearing and maintenance of the Emu’s is done by the company itself.

Why Did This Model Fail?

According to reputed poultry farmers the Emu meat is not widely consumed in India and the export potential of this meat is very less. This is because meat processing facilities for this kind of product are very rare in India and the demand for eggs has only recently picked up. There is a huge potential for genuine Emu farming in India as its meat is slowly gaining acceptance. So What Really Happened? If The Emu’s Were Not Sold For Meat And Oil Why Was This Scheme Introduced? Where Did The Money Come From To Pay All The Investors? .In this Ponzi Scheme the old investors were paid the maintenance and the yearly bonus from the new investors.

When there was a shortage of new investors the gaps in this system widened. The maintenance costs for the old investors could no longer be paid. The entire scheme unraveled and lines of investors queued up at the offices of the Emu scheme farms but the owners had absconded leaving behind Lakhs of traumatized investors, staff ,Infrastructure and thousands of Emu’s with no one to look after. Truly Greed Has No Bounds.

What Was The Fallout Of This Scam?

What Does One Learn From All This? Greed preys on both the literate and the illiterate without making any distinctions. Highly educated doctors and engineers fell for this scheme literally like shooting sitting ducks. So Why Did These People Fall For Ridiculously High Returns Of 20% In A Month Or Doubling Returns In A Year? In India financial awareness is a topic taken for granted .Each of us perceives that there is nothing to learn by wasting ones time on financial awareness and the Just Do It attitude prevails. The results are there for all to see. In India an engineer might be good in his work but he fails to acknowledge that when it comes to financial awareness he might be a zero. seeks to educate each and every citizen of this nation on financial awareness. Schemes promising too high returns? Alarm bells should ring in your head? After educates you and provides you that much needed financial advice the much needed questions will automatically ring in your mind. Why Does This Scheme Promise So High A Return? Where Are They Getting The Money From? Is Their Business Model Viable? encourages all the citizens of this nation to have a questioning bent of mind. I would like to remind you that the team of Financial Planners at are always there for you to plan your financial needs in a most effective and efficient manner. You can explore this unique Free Advisory Service just by giving a missed call on 022 6181 6111.

What Should I Look Out For So That I Do Not Get Hooked In A Ponzi Scheme?

What Is Multi-Level Marketing?

Multi Level marketing is a form of direct selling. If a salesperson sells a washing machine directly to a customer he gets a commission. The company and the salesperson tend to profit heavily through this mechanism. Multi Level Marketing companies sell vitamin tablets, dietary supplements, Kitchenware and cleaning products. The products are sold through a network of distributors. They earn income from the sales they make themselves as well as from people they recruit to become distributors known as the down line. If the money made is through the sale of products to customers to make a profit this is multi level marketing.

If the profit is made based on the number of people one recruits and products are sold to these people it is a pyramid scheme. Business and profit is generally made through outward sales. Selling as much as possible to the general public should be the aim of the business. If the business model is based on recruiting people and selling products to them and they in turn have to sell these products to someone else all the participants tend to lose money. This is a Pyramid Scheme.

Know What The Scheme Is All About?

What Does This Company Deal In? What Is The Company’s Track Record? What Products Does It Sell? Are These Products Really As Good As They Claim To Be? Is The Product Competitively Priced? Does It Appeal To A Large Customer Base? How Much Of Your Money Do You Need To Commit Upfront In This Scheme? Do You Need To Recruit New Distributors To Stay Successful In This Scheme? Ask These Set Of Questions.

Note The Warning Signs "A Bird Is Known By Its Song"

  • If one is required to invest large sums of money upfront to become a distributor then one needs to be cautious. Legitimate Multi Level Marketing Companies do not have too high upfront costs.

  • Does one have to pay for the inventory? What happens if the inventory is unsold? Does the Company take back the unsold inventory? Legitimate Multi Level Marketing schemes will buy back most of the unsold inventory.

  • What product does the Company sell? Is there a consumer demand for the product? Is the Company serious about promoting and selling its products? If one finds any reason to show that the Company is not interested in selling its products Then Beware.Think Twice Before Signing Up.

  • What is the main aim of the Company? Is it interested in selling its products or merely recruiting a distribution network? The cause or the aim of the Company betrays its purpose. If recruitment or setting up a distribution network is the main aim of the Company then it is most probably a Pyramid scheme. Is the Company trying to make money by dumping its products on the distribution network rather than focusing on a consumer base? These warning signs need to be heeded.

  • Does this Company provide health benefits, medical insurance or a retirement plan to its staff? If there is no salary and the income is obtained solely by recruiting a distribution network then the Company is indirectly saying “I Don’t Give A Damn About You.

  • Does the Company make statements which cannot be verified? Does it state that a famous celebrity endorses these products and you find that the celebrity never turns up.

  • Does the Company try to persuade one in its training, that one’s family and friends are the worst enemies around and are out to hinder ones progress. If a concerned friend tries to persuade you that this is a Ponzi scheme Do Not Listen To Them? Is This Instruction Passed To You? People with low self esteem are generally recruited in these schemes and as long as they continue to remain useful they are praised. Just hearing these praises is sufficient to persuade these people to blindly follow the Company and they sustain themselves on these praises.

I would like to end this article with the famous saying "All That Glitters Is Not Gold". Always keep your eyes and ears open before signing up for any scheme which promises return Too Good To Be True. One knows that nothing comes easy in life and if very high returns are being promised there is something fishy in this. Any money which is hard earned is not easily squandered. advocates that you study clearly what financial product you want to take up and advices you on the benefits and shortfalls of these products before you jump into them. "Look Before You Leap"



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