When high returns raise suspicions

With the slogan ‘Receive double the money you invest’, the moneymakesmoney.co.za website offers investors returns of 20% per month – actually much more than double the original investment. The website promises that investors will receive a total of R12 000 for every R5 000 they invest.

This immediately raises the question as to whether it is a pyramid scheme that will operate until it runs out of gullible ‘investors’, or shut down even sooner when authorities come knocking on the door.

The website is run by a private company, House of Monopoly (Pty) Ltd, with an address in Benoni. A query to the Companies and Intellectual Property Commission (CIPC) shows that the company was registered in August 2018. It lists Toka Tibor as the sole director and presumably the only shareholder. The company has not filed any financial returns with the CIPC as yet, but not much reporting is due if it registered only a year ago.

Suspicious

The promised high return of 20% per month seems suspicious. Everybody knows the best the commercial banks in SA can offer on small amounts is around 5% per annum for a fixed deposit of 12 months.

Maybe an investor can buy a few preference shares on the JSE that offer returns of around 10%, but commissions and fees would not make that viable for an investment lower than R20 000. And it is still a long way from 20% per month.

The moneymakesmoney website doesn’t exactly inspire confidence either. It provides no information on how the company generates its high returns. Every page of the site only repeats the message that investors will receive 20% return per month, together with pictures of smiling people, an expensive car, a graduation gown and an elderly couple happily holding hands.

Guaranteed ‘commission’

The website says other investment options produce unreliable capital growth, but “with us you will get a guaranteed 20% commission” every month on the amount invested for a period of 12 months.

It equates investment with a membership fee that ranges from R2 500 to R500 000.

Under ‘How it works’, it simply states “Join/sign up today and receive 20% commission of your membership fee every month for the next 12 months”. Once their membership has expired, members can choose to take out a new membership if they want to.

The membership form has little extra detail, merely repeating most of the information on the website and asking for basic information such as name, address and bank details. The terms and conditions repeat the promise of 20% commission per month.

The only condition of membership is that members must put out marketing material, such as attaching a bumper sticker to their car.

Membership fees paid on or before the 15th of every month will receive their commission on the 1st of the next month, while members who sign up after the 15th of the month will receive their 20% the following month, it states.

Tibor answered questions from Moneyweb promptly, but declined to say how he generates returns. He gave the impression that House of Monopoly invests and trades in cryptocurrencies.

Keeping mum

“Because of intellectual property I may not tell you the nitty gritty,” he says. “Many people are trying to copy me and my ideas.”

He adds: “The 20% commission I give every month is well calculated. You’ll know in business there are many ups and downs and there are certainly no guarantees whatsoever. You win some. You lose some.

“I know a number of people who made huge profits from crypto. Then again, I know many who have not done that well. I am slowly but surely empowering people and giving them a platform to earn and save money.”

He declined to say how many members the scheme has, saying this is confidential. “What I can tell you is that I’m proud to pay everyone on time or before. I make it happen and sustain it.”

He referred to cryptocurrencies when asked if House of Monopoly is registered as a financial services provider with the Financial Services Conduct Authority (FSCA).

‘I don’t need to be registered’

“I have it on record in the form of many e-mails between myself and the attorneys of the FSCA that I don’t fall in the category of needing an FSB [Financial Services Board, forerunner of the FSCA] number.

“Our industry, much like bitcoin, ethereum, libra and other cryptocurrencies, is a very grey area and not yet regulated.

“Facebook, Uber and a number of other bodies are working closely with governments worldwide, including our own, on how to regulate the industry,” says Tibor.

The FSCA confirms that neither House of Monopoly nor Tibor is registered as an authorised financial services provider or licensed by the FSCA. It also says there has been no investigation into the entity by the FSCA and that it has no record of any complaints against House of Monopoly or Tibor.

The FSCA follows a specific procedure when investigating complaints or investment schemes, starting with a preliminary investigation to determine whether it has jurisdiction. For instance, the FSCA regulates the investment industry and investment advisors to see if they comply with regulations.

If an investigation falls outside of the FSCA’s mandate, it will be referred to the relevant authority, such as the SA Reserve Bank in cases where entities are seen as taking deposits, or the police in cases of fraud.

Too good to be true?

“We remind consumers to always be cautious when dealing with any entity or individual promising returns that look too good to be true,” says the FSCA.

Read: Investors in illegal schemes get R368m back

The 20% per month offered by House of Monopoly might fall into this category. It is reminiscent of the proverbial duck test: ‘If it looks like a duck, swims like a duck and quacks like a duck, it probably is a duck.’

The question remains – is this a pyramid scheme, also known as a Ponzi scheme?

The latter was named after Charles Ponzi, who swindled his way into the history books during the 1920s in the US, when he offered investors returns of up to 100% within a few months in non-existing investments.

Ponzi simply paid returns to existing investors with money wagered by new investors. A century later his name continues to be synonymous with such investment schemes.

Read: The anatomy of a Ponzi scheme

In contrast, Tibor says House of Monopoly is a fast-growing company with members aiming to start their own bank in the future. In an advertisement for call centre agents, House of Monopoly is described as an exclusive investment club working for its members.

“I know I am ruffling feathers,” says Tibor. “I’m just doing what all the mainstream organisations should be doing for their clients.”

“My dream is to have at least half of all economically-active people part of House of Monopoly in some way or another.”