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Ponzi Scheme Busted

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Mansoor Danish

Channel: Mansoor Danish

Episode Notes

5 Simply ways to identify a ponzi scheme

Episode Transcript

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Bismillah R Rahman r Rahim Assalamu alaykum warahmatullahi wabarakatuh. I welcome all of you to a brand new video a brand new discussion and today we'll be talking about how do we identify a Ponzi scheme in the market.

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Many of our investors, they like to make quick money. And nowadays there is a growing trend that more and more investment schemes are coming to cater to the Muslim market. And therefore you hear a lot about terminologies like halaal investment returns, halaal, returns halaal business model, we keep hearing these terminologies where companies are promoting the business by reaching out to the Muslim client. Now, I don't wish to doubt all of them. But I wish to today discuss about how you can identify a Ponzi scheme, which is trying to reach out to you by offering you halaal returns, how do you identify them in the market, that's what we're going to be discussing in today's session.

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five ways on how we identify a Ponzi scheme. The first thing is any Ponzi scheme which is running in the market, they will tend to offer you extra ordinarily higher returns, extraordinarily high returns. In fact, let me say this, they offer you ridiculous returns, returns that you can't even imagine. See in the stock market in the share market, you don't get these kinds of returns in the mutual fund market, you don't get these kind of returns. If you are a businessman as well, you don't make this kind of money. I give you a simple example. Go through the quarterly reports of all these famous companies. The Ambani is the attorneys, the billers, the Microsoft, the IBM, apple, they keep

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coming up with the quarterly reports go through the report, see the annual report see what kind of returns they are generating big business houses what kind of returns they generate. Compare that to the kind of return these Ponzi schemes are offering. They are offering you ridiculous returns. So the first most important catch, which should warn you is ridiculous returns extraordinarily ridiculous returns, number one. Number two, the business model appears to be extremely vague. If you ask them how the business model is, they really don't have any answer. And this I have personal experience, when I would try and inquire about a business model from a gentleman who was promoting

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Ponzi scheme, he would keep telling me that the business model is a secret, we cannot disclose it.

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I countered it by asking him how is it that you have a business model, which even the biggest industrial houses in the country have not been able to crack? The answer to which he gave was this is in fact, the secret. The fact that the big business houses have not been able to enter into the market, there's a huge amount of returns waiting for the public. And we don't want to disclose the business model. Because if the business model is disclosed, then other people will enter into the market, and therefore the returns will diminish and people wouldn't be able to make huge amount of money. My respected audience, this is the second most important catch for a Ponzi scheme. They don't

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disclose the business model. How is it that you don't disclose a business model? business model? There's nothing secret about it in today's day and age. Everything needs to be transparent. So please, my respected audience, don't get carried away by huge Ponzi scheme returns extraordinarily ridiculous returns, as well as a big wig business model. You don't know what the business model is. In fact, I have so many people who give me a call and they inquire from me, what is the business model behind fallen and fallen scheme being run in India, so many business schemes are running, which is trying to lower the Muslim investors to invest with them. But the business model is not No,

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you go to their website they talk about an investment model, but they don't disclose how they are generating the kind of returns that they are generating, which by the way we said is ridiculous. The third thing is the investment products are usually being sold in the foreign market. So they are not only trying to reach out to the local investors, most of the investors if you are in India, they will be NRI so you will see many of the Ponzi schemes which are running in India. They were reaching out to investors in Dubai, they were reaching out to investors in UK in us in Canada. Reaching out to the NRI is trying to get their money in

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The reason for this is the people who are in our eyes, they are totally cut off from what exactly is happening in the investment market in India. So they tend to go by the promises made by these investment companies. And of course, as I said, we tend to get carried away with the ridiculous returns and the halaal bit, the moment you hear something being dangled with halaal written on it, we jump on it without even verifying. So another thing which is very interesting in these Ponzi schemes is they don't try to reach out much to the local market, most of the investors would be beyond the country outside the country or for that matter outside the state. Of course, some of the

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most successful Ponzi schemes will be able to fool even the local market, the local investors. And recently we heard about another scheme, which got bursted in the Middle East where a lot of Middle East investors that invested the money, it was a Ponzi scheme, which was being run from Canada by a Canadian, he was running a Ponzi scheme, he would travel to UAE, to UK, get the investors to invest with them, so you can understand how Ponzi schemes work. Number one, I said ridiculous returns number two, vague or unclear business model. Number three, most of their investors are outside the country of origin, they will be probably in if you are in India, their target audience would be

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those who are in UAE or UK and so on and so forth. The fourth thing, which you need to keep in mind in all of these Ponzi schemes is that the people who are out in the market selling their products, they are offered a huge amount of commission. And I can tell you how you can check that very simple way, extremely highly motivated sales engine individual. Now, I have been a salesperson in my life as well with a financial institution. And I can tell you that self motivation is perhaps one of the most difficult thing with any sales personnel faces in his life. And it happens all over the globe. However, there is something in this business, which makes the service personnel die hard fans of the

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business, you will find them supporting the business, you will find them defending them left right center, even if you come up with logical arguments, even if you try and show them legal paperwork, they will still vouch for the company, they will be ready to lay the life for those companies. This is how the salesperson

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and I can tell you the best thing to do is go on social media and see how when one of these companies in India was recently busted, and the owner was arrested, how the sales personnel were going Gaga about this lady. So Pamela, we have to be very, very careful about these teams, highly motivated sales personnel being offered 15 to 20%. commission, in some cases, let's take an example. A company comes and offers you 36% return per annum 3% per month. So if you put $100 with them, they give $36 back to you.

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But not only that, they're giving around 15 to 20% of the sales commission as to the salesperson. So if you're putting in $100, immediately $20 is going to the salesperson, so what's getting invested is approximately 70 to $80. From that 70 to $80, they're actually going to give you 3% return per month on your investment. So if you invest $100 in a year, you're gonna get $136 36% plus the principal $136. So to get that kind of money to generate that kind of money, you should be giving them more than 50% you should be generating more than 50% return. Otherwise, how will you pay the commission? How will you pay the returns. So more than 50% returns are being generated? And by the

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way, I forgot to mention, what about the business itself retaining some profits for their own sustainability for their own growth. So you can imagine it's bizarre, the kind of returns being given is bizarre. You're seeing only 3% per month in your account, but you're not seeing that the underlying forces are clearly pointing towards a Ponzi scheme. Please be warned my respective audience This is the fourth most important critical thing which you need to keep in mind. The last thing which I want you to keep in mind and this is something where most of us got fooled is halaal returns halaal islamically halaal returns and so you will find either

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Some scholars within inverted commas, who Muslim masses look up to as scholars, they might come out and start, you know marketing those products or you will find a bowl halaal returns written every way. And people tend to get carried away especially in India where you don't have a proper halaal investment market. People tend to get carried away my respected audience, there are still certain schemes which are there where you can make returns to halaal means and they are totally regulated by government agencies, they are in the commodity sector, they are in the share market, they are in the mutual fund market, you can try and use those themes to make money. But as far as all of these

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schemes are concerned, please be warned. I would like to just wrap up quickly and tell you what are the five things which I mentioned number one, I told you about extraordinarily high returns or ridiculous returns. The second thing which I mentioned to you was a vague business model, you don't know what the business model is. The third thing which I told you is, the investment market is spread across the country of its origin, which means they are trying to reach out to foreign markets to garner deposits. The fourth thing which I mentioned to you is a highly motivated, in fact, overzealous salesperson. And they are being offered huge amount of commission. So if you as a sales

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professional are getting huge amount of commission, you must also wonder where is the company making this kind of money from the last thing, which I said is the halaal bit, they come and sell you by dangling the halaal tag, and we tend to get carried away. We don't even try to verify it after that the moment we hear halaal we say Bismillah and we invest in it. And then when we lose the money, we start blaming the movies, we start blaming the halaal sector, we start blaming the Islamic banks, Islamic Finance, anyone else who's trying to do some good work in the halau sector, we start condemning them. There is no point blaming anyone else in Ponzi schemes other than yourself. You are

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to be blamed, especially after this video. When I've made it absolutely clear about some of the signs of Ponzi schemes. No names have been mentioned. All you need to do now is go back and check where you're investing your money and how they are generating the returns. With that we would like to conclude Jazakallah khair for joining me what's Salaam Alaikum warahmatullahi wabarakatuh