CAPE TOWN- A South African pyramid scheme called “Up Money” unlawfully exploited the Covid-19 pandemic and food security concerns to lure around 230 000 consumers into joining and participating in the scam.
The National Prosecuting Authority, Financial Intelligence Centre (FIC) and the National Consumer Commission (NCC) gave details on the pyramid scheme during a press briefing on Tuesday.
The Asset Forfeiture Unit (AFU) was granted a preservation order by the Johannesburg High Court to freeze bank accounts worth more than R18 million in assets as well as three luxury vehicles linked to the company Up Money.
Deputy National Director of Public Prosecutions, Advocate Ouma Rabaji-Rasethaba, said that criminal prosecutions are underway, and the charges may include fraud, money laundering, or assisting another to benefit from proceeds of unlawful activities.
The scam mainly used social media to recruit members and was neither registered with the Reserve Bank, a registered stokvel, nor a financial services provider.
“New participants were required to pay a once-off joining fee of R180. This qualified them for a meat pack. The new members were then required to recruit five other new participants. This process was termed level one,” she said.
The original investor would then help the five he or she recruited to sign up their five new members each. This would then ensure that the original recruiter moved to level two, whose benefits were a meat pack, groceries and R500.
The new participants made up the base of the pyramid and provided funding for participants who were recruited earlier.
Pyramid Schemes are prohibited under Section 43 (2) of the Consumer Protection Act (CPA).
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