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

GIVE OUR TRAFFIC POLICE A CHANCE

Last week during an investor interaction   Kampala Capital City Authority (KCCA) officials called on police to stop overriding traffic lights while directing traffic. KCCA argues that the traffic lights are large investment and it makes no sense for police to countermand them. In a classic case of “The importance of the river was not known till it dried up” on Friday the traffic police desisted from directing cars at the traffic lights leading to the worst traffic snarl-up in the city’s history. People were stuck in traffic jams around the city for hours and long into the night. Maybe it was the unhappy coincidence of the traditional Friday traffic and pre-Christmas excitement but without the traffic police directing traffic it was a mess. They made their point. It of course points to the bigger issue of a revamping of Kampala’s road network, which has remained   largely the same since independence but with an exponential increase in cars in the last three...
Post a Comment
Read more

DEAL WITH PLASTICS BEFORE ITS TOO LATE

The first rainy season seems to have passed. Not too soon for some of us. It has become standard now that with the rains come the floods and with every season these become not only more and more daunting, but spread all over Kampala. While KCCA has done a lot of work in improving drainage, we are undoing the good work with our bad habits. Everyday we dispose of tons of plastic improperly, these find their way into the existing drainage systems of this city. These cause blockages, which we go about blissfully unaware of until the rainy season begins. The rainwater not only struggles to go past existing blockages but comes along with its own load of plastics to reinforce the existing blockage. The water, which should be finding its way to Lake Victoria, swells out of the drains and finds its way onto the road, into our offices and our homes. That’s the simplified version of events.  This is before we even start examining how we are building in the wetlands ...
Post a Comment
Read more

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

WELL DONE UGANDA REVENUE AUTHORITY BUT …

Over the weekend President Yoweri Museveni commissioned the new head office of the Uganda Revenue Authority, an imposing structure that is set to dominate the Nakawa skyline for some time to come. Congratulations are in order to URA for the construction of such an aesthetically appealing building, which I hope wills set the pace for other developments not only in the area but in Kampala and even Uganda as a whole. I know the pride that comes with having completed such a massive build for the initiators and implementors. The new 22-story structure has allowed the tax man to fold back all his offices from around the city back to the head office, a move they estimate will save them sh7b annually. Using simple math the sh140b will pay for itself in 20 years. The move is seen as precursor to a government move to build a ministerial compound in Bwebajja, where all ministries will be relocated sometime in the future. I have seen comments that such actions are evidence that...
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

THE KEYS TO OUR HEALTH ARE WITHIN OUR REACH

I prefer to speak about business. But it is obvious to me as it should be to everybody, that the fruits of business can’t be enjoyed without good health. As we progress in age we need to take care of our health more than before, focus on prevention because our bodies can no longer bounce back from illness as fast as they used to. The other day I happened upon a Facebook video from Dr Luke Coutinho, an Indian doctor who treats cancer patients. He made a wonderful video that moved me -- “Four things people with cancer have in common.” Look it up. Coutinho, in the video said that when he looked at the data from hundreds of patients, from all over the world, that had been treated at his facility he found four commonalities. The first one he said was chronic constipation. He explained that constipation, infrequent bowel movement, means the body is retaining toxins that should not be there. These toxins then find their way back into our bodies and provide the environment fo...
Post a Comment
Read more