Police investigating pyramid scheme as victims come forward

Police headquarters on Wednesday are investigating a known pyramid scheme to which a number of people have allegedly fallen prey losing thousands of euros.

Police issued instructions to district criminal investigation departments (CIDs) to compile complaints about the scheme and have urged victims to come forward.

An expert speaking on CyBC’s morning radio offered his opinion that the investigation would prove to be a challenge, due to the potential for hiding online transactions, particularly if they take place though cryptocurrency means.

A pyramid scheme (aka Ponzi or multilevel marketing scheme) can superficially resemble a legitimate company. The premise is to encourage people to invest their money at a certain level, for which they are required to recruit several other “members” to the scheme.

The next recruits have to recruit even more others. The veneer of a real business can be kept going for a while as the first people to invest do recoup some profits, drawn from those who come after them.

Eventually, however, as the pool of “investors” becomes exhausted, the scheme collapses, leaving those who paid up last in the red.

The case recently came to light through various posts on social media from people who noticed they were unable to recoup promised “investments”, as websites serving the scheme vanished from online.

According to the police, a number of complaints have already been submitted which are set to be evaluated in an island wide investigation.

In statements made by online security expert Dinos Pastos to OmegaTV, he said the scheme, about which people have posted on social media, was a “blatantly obvious” pyramid, where participants are enticed to make money by recruiting others to enter the “pyramid” beneath them.

The purported company, he said, was likely linked to a company by the same name in the Philippines.

In that country an investigation is also underway and the state’s authorities have handled the illegality by noting that investment companies ought to register officially which this “company” had not done. The Filipino authorities are therefore “warning” people about the company.

A particularly insidious feature of pyramid schemes is that the original victims tend to be genuinely enthused, as they do make some profits, and so will recruit through word-of-mouth those nearest and dearest to them. Relatives and friends of the initial “bait” are then reluctant to press any charges against this person who inducted them into the scheme.

Police are in the process of assessing how many individuals in Cyprus have fallen prey to this particular pyramid scheme and how much money has been extorted.