Skip to main content

BEWARE OF THE CON MAN


I read with a mixture of horror and sympathy for the victims of the latest Ponzi scheme gone bad in town.

Last week a company, Global Cryptocurrencies Ltd, collapsed and along with it went billions of shillings, by police estimates, of their clients’ money.

The company working out of an obscure office on Namirembe road, managed to rope in all manner of clients with the promise of magical returns – 40% a week! I have been in business for most of my life, if I could be guaranteed 40% week I would sell everything I own and jump in with both feet.

Or maybe not. And this is why.

They say if anything is too good to be true, it is. If you can get an annual return of 40% on your investment you will be doing extremely well. So if you put in a million shillings in your business and walk away at the end of the year with sh400,000 after taxes you have found a good thing, and I would like to be your friend.

I have seen my share of scam artists and con men. Below are my fast and ready rules of separating the wheat from the chaff.

The first red flag is often the rate of return the promoters are promising. Normal businesses return half or less in a year what the Global Cryptocurrencies were promising in a week. So if someone offers you a deal of even one percent a week or about 52% a year, which could also add up to 67% year if the return is compounded. That should be you first red flag...

But assuming the promoter has such a smooth tongue and you listen to him past this first hurdle, find out how they hope to make those returns.

So for example he might tell you he is going to get sugar at a very low price, say sh1000 a kilo, sell it to the shops for sh3000 a kilo. The promise being that you will share the sh2000 profit. If you are a good negotiator you could probably split it 70% to you and leave them 30%,  after all you are carrying all the risk. Meaning your share of the profit would be sh1400 on every kilo.

First off you need to determine the source of that cheap sugar. Is it legal? It’s a rule of thumb that high returns come from high risk and what is riskier than engaging in criminal activity?

If by some miracle you are still around, you haven’t run a mile from these snake oil salesmen, try to find out about them – who they are, who knows them, who do you trust who can vouch for them. Look beyond their sharp suits – they are often well turned out, foreign accents and big spending ways.

It is safe to say, there is a scam going on everyday somewhere around us. The promoters of these scams prey on our belief in fairy tales, about how tons of money can be made with little upfront payment, quickly and with no effort....

We are seduced by tales of going underwater or sacrifices to the gods to explain how such, such and the other made it.

“Remember him?” they ask “He used to be with us and then suddenly he was rich... He banged a deal …. Black dollars ….”

Often times when you see a genuinely rich person, you are looking at the finished product. You should be asking about their story, how long it took to get to where they are, what they did, their struggles, sleepless nghts and the days without food they had to endure before they made it.

Money has its rules and these often entail hard work, financial discipline – don’t spend more than you earn and tipper fulls of patience and perseverance.

If you take nothing else from the above know this, there are no shortcuts. Anyone offering you a short cut to wealth and fame, is taking you for a ride and you best turn them a deaf ear. Better still run for the hills and as far from them as possible.

Labels:

Comments

Post a Comment

Popular posts from this blog

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

KEEP UP PRESSURE ON CORRUPTION

There has been a flurry of activity surrounding corruption in recent weeks, with a few public officials caught red handed taking bribes. The public deprived of services because of a few greedy individuals are understandably gleeful.  However they are also those who are a bit sceptical, wondering whether this campaign will last or will peter out along the way. It is heartening to see that President Yoweri Museveni has put his full weight behind the latest attempt and provides a positive signal to all parties concerned. He should be supported by every well-meaning Ugandan so that this drive does not fizzle out in a few weeks. I choose to be optimistic about this anti-corruption drive, because rolling back the endemic that corruption has become, is one of the first steps we need to take towards attaining middle income status as a nation and for any other meaningful development we hope to see in the future. We see it in our daily lives. Beyond the moralit...
Post a Comment
Read more

SPORTS AS AN ANALOGY FOR BUSINESS

Like everybody else I know, my spirit was lifted by the success of our athletes at the World Athletics Championships last week. The diminutive Halima Nakaayi showed the heart of a lion, sprinting over the last 100m of the women’s 800m event to snatch victory from a more favoured American runner. It was so uplifting to watch. Subsequent stories about the challenges she has had to overcome to get where she is now were testament to the determination of the woman. Joshua Cheptegei’s victory, while no less inspiring, had a different quality to it. Cheptegei was the man to watch going into the event. He won previously at the Commonwealth Games last year and the in the just concluded Golden League. He was a silver medalist in the 10,000m at the last World Championships in London, pipped to the tape by the now retired Mo Farah. Cheptgei still had to battle the Kenyans and the Ethiopians all the way. But as a favourite he lived up to expectations, which sometimes is more diffic...
Post a Comment
Read more

THE GOOD THAT CAN COME OF THE NEW UGANDA AIRLINES

I have fond memories of the Old Uganda Airlines. As a secondary school child, I took advantage of ticket concessions (my mother worked for Uganda Airlines) to fly to the UK to buy clothes and other goods for sale to my friends at school. These trips were a great adventure and served as a good foundation for the businessman I am today. It has been reported that the first two planes of the revived Uganda Airlines will be landing in the country within the month. The finance ministry has been presenting to parliament their needs to pay off deposits on the first two of six planes they are to take possession of in coming months. The project has its equal share of supporters and critics. I am a qualified supporter of the project. In business nothing is certain. We deal in probabilities. When getting into a venture we often must weigh the risks versus the returns of a project. If the risk of failure outweighs the potential profit we stay away, otherwise you are gambling...
Post a Comment
Read more

NOT ONLY THE HARDWARE BUT THE SOFTWARE TOO

In the middle of September the United Nations released its annual Human Development Indicator (HDI). This index serves as an indicator of the quality of life of a country’s people by measuring the health, education, inequality, poverty and security standards. Aside from the statistical measures of development like GDP growth, this is obviously a better measure of how people are actually doing. In this year’s HDI report Uganda was ranked 162 out of 189 countries with a HDI score of 0.516. The index goes from zero to one, the nearer you are to one the better. Our score puts us in the low human development category. But as bad as that sounds we have been worse. In 1990, the earliest year that these figures were compiled our score was 0.311 even the UN recognises that we have improved 66 percent in the last three decades. According to the UN figures life expectancy has risen to 60.2 years   from 45.5 in 1990; expected years of schooling has doubled to 11.6 fr...
Post a Comment
Read more

GOOD BUSINESS SENSE WILL HELP OUR AGRICULTURE

The recent drought has at once alerted us to our deficiencies in our agriculture production and reawakened a drive to revitalise the sector. How is it that a country with half the arable land in the region has people suffering starvation? How is that our crops dried up in the fields when a fifth of our land mass is under water? And on a macro level how is it that the 70 percent of our people who rely on the land directly for a living, account for 30 percent of our economic output or GDP? Given our natural endowments in land, weather and manpower it is obvious that we are performing well below our potential. Reversing this trend of affairs should be the concern of everybody in the country. A lot of the debate has revolved around increasing production, value addition and market access locally and internationally. And rightly so. Taking one example the Uganda Coffee Development Authority says that the average yield per hectare is half a ton of coffee. But meanwhile with...
Post a Comment
Read more