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Well Bless My Soul

On Thursday, Moneyweb published an article titled: Process to repay 170,000 Defencex investors underway. This is an update on a story they have been covering for some time now. The introduction reads:

Investors in Defencex, the Ponzi scheme masterminded by Chris Walker, can now register claims to money they invested and subsequently lost in the scheme via a website. Walker, meanwhile, continues to promise high investment returns from a business selling holy water.
Investors – who purchased ‘points’ paying 2%-a-day returns via a Defencex-linked website trading as Net Income Solutions – are now able to register their claims on the Repayment Administration Web Application (RAWA),

The article states that approximately 171 000 investors paid about R800 million into the scheme, of which only some R352 million could be accounted for when the Reserve Bank froze its assets at the end of February 2013. Investors can expect to get around 65% of their deposits back.

I recall with great clarity how disgruntled “investors” spouted fire and brimstone at the Reserve Bank for denying them the opportunity of getting a far above average return on their investments. Those very same people may now be called upon to repay these returns as it appears to have been an illegal deposit-taking scheme.

Please also read this article in by Jackie Cameron.

Batman Returns

The thing that really burns my nether regions is the news that this very same person is now offering investors a new product. According to Moneyweb, he is now selling an elixir called “Mighty Soul”. According to the website, it is “…a sacred anointing liquid that has been consciously and carefully created to serve as a vehicle for the reception of universal conscious energy and Divine Blessing.”

Some previous investors, who are required to supply contact details when applying for a return of their “deposits”, may be tempted to invest in the new venture.
The website, sets out how the scheme works. I am no expert when it comes to pyramid schemes, but the following extract from the website sounds very familiar to me:

The essence of Fractal Marketing is that instead of us spending a portion of our revenues on traditional advertising (TV, radio, magazines and newspapers) to promote our product, we rather take all that money (45% of our total gross earnings) and give this back to our Independent Distributors who are helping to spread the word about Mighty Soul. And this way we keep our money in our communities, where it should be.

Because of the structure of this Fractal Sales Network, not only do you receive a commission from the sales of people you introduce, but you also receive a commission from the sales of people they introduce – and so on, to 5 levels.

My colleague Billy Seyffert’s favourite quote comes to mind here: “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.”

How on earth is this possible?

How many more people have to be burnt before the authorities take action?

It appears that Twin Peaks will provide greater clarity in terms of who is responsible to act proactively in such matters.

In the interim, it appears that a known transgressor can simply change his product and repeat the procedure, and everyone waits for the inevitable implosion before action is taken.

Some schemes even state on their websites that they do not fall under the jurisdiction of any regulators.

Urgent clarity is required on the jurisdiction of those authorities whose reason for existence is to protect consumers.

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