High Yield Investments, Anybody

It is not too hazy today unlike my thoughts.  I have no idea for my tapestry of ink and words. Lacking inspiration from brain freeze or overdrive, I wonder. Where is my favorite mug of piping hot coffee? Oh yes, I have changed my morning fuel with honey tea, my better half’s advice. No wonder. I must be suffering from lack of ideas from caffeine deficient induced cold turkey.

I gaze out my window into my garden, overgrown but very green. Green is good, refreshingly pleasant for the eyes, the color of grace according to theologians. May be that’s why the founding fathers chose that graceful color for the nation’s currency notes, the Greenbacks. Hmmn…the Greenbacks.


As I muse over the Greenbacks, my memory meanders back to an investment proposition recommended by one of my friends during one of our regular Saturday Night tea gatherings a few weeks ago. My mental paralysis begins to thaw, an idea thickens and words begin to weave into sentences.

“The proposition is meant only for the select few who would be pre-screened for eligibility before being invited to participate in the investment opportunity. Apart from benefitting from the phenomenally high rate of returns, those selected will be given opportunity to rub shoulders with the most elite and intelligent of investors. You just need to invest $120,000 seed money to potentially earn a whopping $5.4 million. You can decide how fast you want to achieve that million dollar figure, at your own pace,” he articulated passionately.

“No, you do not need crack your head over the underlying business. It’s complicated. Just trust them with those headaches and you just concentrate on recruiting two more of your close relatives or friends to invest, and you will immediately earn a payout of over 30% ROI. If your new recruits do the same, you will earn another 20% ROI, and if their respective “Downline” recruits continue to recruit, you will earn additional 20% ROI for each level,” he added persuasively. Sounds damn good, right. Some would say too good to be true. To those he would rebut that only sour grapes say so.

“No, you are not allowed to invest more than $120,000 and you must exit the moment you reap $5.4 million in total. They would magnanimously advocate that such a good, more like great, generous investment opportunity should be shared by as many as possible. Let’s together make millionaires, they would selflessly promote. They would also sagaciously add that every investor you bring on board will forever be in your debt,” he uttered confidently. How does that sound? Too good to be true, well then you are really proven beyond reasonable doubt sourer grapes.

“They would stress that they do not just want your passive investment but also your active commitment to share this opportunity with your close family, relatives and friends. They would assist in the promotion and recruitment, if you are tongue tied, just bring them along for the next all expense paid, no expense spared seminars and conferences, in the most luxury hotel somewhere overseas while you attend a briefing some sort of continuing education into the inner workings and secrets of the investment,” he finished sagely. Wow, even I am tempted. Too good to be true again, well you are definitely proven beyond reasonable doubt sourest grapes, hopeless case. No point wasting my breath on you.


What if you are unable to recruit to your “Downline”, you may ponder? Don’t worry, after fulfilling the requisite 2 recruits, your “Upline” can only add new recruits vertically downward and that applies for every level. What if you have more than the required 2 recruits “Downline”, you may ask? Just like before, they will be added to your “Downlines” at which ever level they are needed to keep your pyramid community thriving. My God, my moment of epiphany, I am believe, I am converted. Where do I sign? Shut up! I have already said that I ain’t gonna waste my breath on you!

Come on everybody, let the music begins, let’s party. The celebrations will be revved up when, not if for you will surely achieve the 5th level, then you will be pleasantly surprised with a gift of a luxury Continental car in recognition and as status symbol of your success. To incentivize you, boost your ego or rather inspire your bragging rights, your next surprise might be a Lamborghini. Wow, let’s boogie all night long.

As with all beginning there is an ending, and for this party the ending is a certainty, not a question of if but when, and when it comes, it will surely be most devastating for all and tragic for some. Only the top most “Uplines” or scammers in the likes of Charles Ponzi or Bernard Madoff will be smiling all the way to the bank.

The moment you signed on and invested your money, you are fully vested swallowed the hook, line and sinker all in. Now by hook or crook, you just need snare and reel in more recruits. It is imperative for you to continue recruiting if you wish to keep on earning the promised returns. No new recruit means no new money and in turn means no returns. Approach you family, relatives, friends, all and sundry, share the good news, persuade them, pressure them, do whatever necessary beg, borrow or steal to convert them, to sign on and to invest. “Yes, it may be tough but remember when the goings get tough it is the tough that gets going, losers fall by the wayside. No mountain too high and no hurdle too insurmountable,” the upper crust “Uplines” would propound and encourage at lavish conferences. “We are OVERCOMERS!”

I can only wonder why and why and yet why so many still fell for such scams.  The promised returns just do not add-up or make any sense, clearly nonsensical from the risk-reward viewpoint of known earthly assets. It is just out of this world. Such assets if any will in all likelihood be surreally fictitious, or maybe they are really referring to some interstellar assets, real estate on Mars, anyone. In any case, their interstellar investments are usually packaged and promoted as some cryptic proprietary investment methodology, shrouded behind some secret esoteric formulae. They just want to shock and awe you and fascinate you with some spellbinding jargons so that you will be too embarrassed to ask probing questions. They would then captivate you with hypnotic figures, confuse you further with convoluted calculations to finally convert you with financial wizardry so that you will part with your money quickly and most willingly. The tingling of caveat emptor in your mind is smothered irretrievably.


Actually, it is no longer a secret, quite an open secret rather explicit and well publicized that there is no underlying investment or asset. There is also no convoluted and complex methodology or formula.  They are simply using new money or cash infusion from “Downline” investments to pay out “Uplines” or earlier investors. In order for this to continue new cash infusion must be increased exponentially through equally exponential recruitments. Any recruitment failure, if unplugged, will result in the calamitous collapse of the whole pyramidal scheme.

You do not need to be financially savvy or a genius to understand the workings of such scams. Payouts are only made after the receipts of investment money from ‘Downlines” to ensure cash inflow is always larger than outflow. Upon achieving the predetermined level depending on the greed of the founding scammer, he would drop all tool, roll down the shutters and close his bucket shop and probably disappear for an indefinitely vacation on the sunny and sandy Bermuda Island with all the money accumulated (last column on the right). It is so simple and yet funnily many fell for it, almost amazing.

Based on my simple financial modeling, let’s assume a conservative exponential growth rate of 2 or each just need to recruit another two, 1st payout upon successful recruitment of first two let’s say 33% and 18% thereafter. You can potentially earn the promised $6.135 million from your initial investment of $120,000 at the successful recruitment at the 10th level. By then there should be a total of 1,203 investors in your pyramidal community, investing a total of $122.76 million while paying out only a total of $47.01 million (including your $6.135 million) and leaving the founding scammer with a whopping $75.75 million or if he is less greedy, he might just be satisfied and run away with $11.66 million at the 7th level. As it is oft said, “Everyone has his price.” Come to think about it, they are rather ingenious pulling off such a simple back of the envelope scam probably using a rudimentary and archaic abacus to prey on sucker’s greed, rich and poor alike.

Spread 1a

By just tweaking only the growth rate from 2 to 4 and you will find all the figures blown beyond the stratosphere, at the 10th level the community will have 262,144 investors who have invested a mind boggling total of $41.94 billion while paying out only $4.36 billion, leaving the founder with an astronomical $37.58 billion. “Houston, we have a problem.”

Spread 2a

Understand. Sounds easy, right? I must admit it is a damn bloody attractive investment proposition, once in a life time opportunity not to be missed, right? The scammers understand human psyche and are just preying on our fear of losing out or missing the boat by ensnaring our most primal desire of greed or avarice. As for the rest, just pray that you are not too low in the pyramid and the founding scammer is playing for a huge payout so that you will not be amongst the many out of money when the music stops.

I guess that is main reason why such scams and their derivatives keep popping up over the years despite deafening anguish outcry of financial losses and sobbing sorrowful recounts of suicides. Tragically, I did lose a childhood friend when one of such scams collapsed not too long ago. He just could not face his family and friends for losing their hard earned savings. Too ashamed to face another day and overwhelmed with grief, he took the leap that fateful morning to end it all. However, on a brighter note, I did manage to convince another friend to haggle and hound her “Upline” to get back her money quickly prior to scam inevitable collapse and a few before they took the plunge.


Always remember, there is no such thing as a free lunch. If the proposition is too good to be true, it is most likely not true. Be wary of investment opportunity invites. Don’t be tempted by extraordinary returns. Don’t be swayed by success evangelists especially those who proclaim from a luxurious stage or drive around in show off continental cars. Beware also of those with are already invested for they have vested interest to recruit more especially family members, relatives and friends just to keep the party going. Remember success has many mothers failure is an orphan. Learn to simply say NO!

Such scams and their derivatives come in various shades and sizes, to name a few that keep cropping up over the years, schemes like offshore loans, high yield investment funds, SBLC, Nigerian Notes and so on.  They just refuse to go away because human greed is a recalcitrant vice and new suckers are born every day. I leave you with a quote from the Holy Bible, 1 Timothy 6:9, “But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.”


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