Central Bank of T&T

With COVID-19 affecting income levels, many ‘get-rich-quick’ pyramid schemes are surfacing on the T&T market.

However, the Central Bank and Trinidad and Tobago Securities, Exchange Commission (TTSEC) and Financial and Intelligence Unit are now warning citizens that such schemes are against the law and can get you investigated for fraud and result in the loss of your hard-earned cash.

In a joint release yesterday, the financial authorities explained the scheme. They said the ‘investment’ is promoted as “new investments, including different securities, foreign currency trades and even traditional sou-sou arrangements.”

Noting that the “schemes” are offered through chat groups or face-to-face contact, the institutions said they have several common characteristics.

“Investors” are asked to join groups, make initial contributions and recruit new members. The early ‘investors” are paid from contributions by the incoming members. The aim is to get to the top and to be paid the “return” on the investment, the authorities said.

However, the three institutions warned that the scheme eventually collapses.

“When fewer or no new members join the scheme, it collapses and disappears along with the payment platform and the money that was ‘invested’,” the financial authorities warned.

The authorities advised that the people ‘investing’ in the scheme may have acquired their funds from “illicit sources,” noting that all persons or companies offering investment opportunities must register with the TTSEC.

The authorities are now asking the public to report all fraudulent activity to the T&T Police Service’s Fraud Squad.

Financial consultant Ved Seereeram is also warning the public about the pyramid. He said if people engage in it, they can be fined or put in jail and made to face the consequences of their actions.

“Yes you can (be jailed) because a condition of you putting in money, is that you are bringing in two other persons,” Seereeram said.

He said when one recruits people to join the scheme, “you are acting as a financial advisor — to be a financial advisor, you have to have a license.”

He also said when you explain the investment, you are advising, encouraging and enticing people on how to spend their money and it means “you are acting as a financial advisor.”

In 2005, the TTSEC issued a similar warning after a similar scheme was started and embarked on a series of articles aimed at educating citizens. It said then that the “marketing strategies of the fraudsters are so sophisticated that the ordinary investor may not be aware of the issues until it is too late.”