Money Stokvel – Get-rich-quick scam

Money Stokvel
Money Stokvel – the “get-rich-quick” scam

For the past few months, locals and residents from Paulpietersburg and Vryheid had been “gambling” with their money as they heard about the “Money Stokvel”.

There is an old saying that goes, when something seems too good to be true, it normally is, and in this case, hundreds of people from Mkhondo, Paulpietersburg and even Vryheid learned the hard way that there is no such thing as an “investment made easy” that will ensure your wealth – rather quickly!

If you, for example, invested R1 650-00, you would receive R3 000 in 15 days, R6 000 in 30 days and a whopping R12 000 in 40 days. People went crazy as they heard about all their friends and family members cashing in at “Money Stokvel”. Participants “invested” their hard earned money on a daily basis and the queues lined up to receive their pay-outs at the premises in Paulpietersburg as well as in Vryheid.

Also Read: Month-end Madness

And a lot of the “investors” got their pay-outs regularly, which spread the word and led to more and more individuals willing to take the chance. People became greedy and started to cash in their pension funds, maxed out their credit cards, taking out mortgages on properties and even borrowing money to play “Money Stokvel”.

False ideas of a quick way to become wealthy were formed and plans of settling debt was set into place, but on Monday, 11 June, all these people’s dreams came crashing down as they arrived at the premises and found the doors locked and the furniture removed.

Residents from Paulpietersburg stated that “investors”, waiting in the queue became violent and started to vandalise the building, breaking the doors open and trying to hold on to a last pinch of hope that the operators might be late and that they will return later the same day, but . . . to no avail.

The news spread like a wildfire and people slowly started to realise that they have been conned – out of millions of rands! The Vryheid Herald recently published an article stating that the “Money Stokvel” was an operation similar to a Ponzi scheme, which is a fraudulent investing scam that promises high rates of returns with little risk to the investor.

A Ponzi scheme is similar to a pyramid scheme which in both cases uses the new investors’ funds to pay the earlier investors. When word got out that “Money Stokvel” seems to be an illegal investing scam, the operators fled – with everyone’s money!

Although a lot of “investors” were well aware of the fact that this lucrative business will come to a quick end, sooner or later, they kept on investing as much as possible in the hope to cash-in before the scam went up in smoke.

“Investors” knew very well that this “business” will come to a bitter end, but no-one knew exactly when. Unfortunately, hundreds of people lost large sums of money whilst others were “lucky” enough to cash-in before the disappearance of those in charge.

The Vryheid Herald stated that officials at the Financial Services Board (FSB) and the South African Reserve Bank (SARB) confirmed that “Money Stokvel” was not registered to provide financial services and that it most certainly proclaimed itself as a Ponzi scheme.

This is an expensive lesson for everyone! Not only to those who took the chance and “invested” with “Money Stokvel”, but to everyone that is looking for a quick way to get rich. There is no easy or quick way – you have to work hard for every sent! Remember . . . if it’s too good to be true, it normally is!