Pyramid schemes to be outlawed
Enticing as they may sound with promises of bumper monetary
returns for a small contribution, pyramid gift schemes are
a vicious circle that have conned many a Maltese individual into believing
that they are a short cut to prosperity.
These gifting schemes are not illegal and monetary transactions
are normally processed through conventional bank channels. However,
in at least one country, the UK, confidence tricksters pioneering these
schemes will soon have to face the music as government proposes legislation
making pyramid gifting schemes illegal.
Under the proposed law con men who set up pyramid schemes could be sentenced
to up to six months in jail or be heavily fined.
British trade officials estimate that about GBP3 billion changed hands
through pyramid selling schemes in the past two years and hundreds of
thousands have fallen victim.
These schemes invite individuals to invest a stipulated
minimum sum, with the promise of a hefty pay out if they could persuade
more people to join the scheme.
The original person will then move up the pyramid according to the number
of new people that enter the scheme with the final aim being that of
reaching the top pay out sum. In the overwhelming majority of cases
the money never materialises.
The scheme collapses when, inevitably, the number of new investors
dries up, leaving thousands at the lower rung of the ladder out of pocket.
Pyramid schemes were a destabilising factor in the collapse of the fledgling
post-Communist Albanian government after thousands of impoverished people
were duped into investing in such schemes with the promise of wealth.
When the schemes failed thousands lost their life savings bringing havoc
to Europes poorest country.