“Do you think it will last until December?” This is Edward’s* predominant concern. Two months in the past he invested R500 in a brand new get-rich-quick scheme, Gollong Investment.
It was all the cash he had, however he was determined to attempt one thing to make some additional money.
After simply 40 days, Edward, from Thohoyandou in Limpopo, obtained a notification that his steadiness with Gollong was now R800, displaying a welcome R300 revenue. The funding generated a 60% return, not dangerous going for simply over a month.
Edward was so impressed with how his “investment” had carried out, that as a substitute of cashing in he determined to re-invest the complete quantity, together with an additional R1,500 he borrowed from a member of the family. Now he should wait 50 days for what he expects will be a payout of R5,250, a staggering R3,250 revenue on the R2,000 invested.
“Some say it’s a Ponzi scheme, but I don’t know,” Edward says. A Ponzi scheme, in accordance to Investopedia, is a “fraudulent scheme that involves paying early investors in a non-existent enterprise with the funds invested from new investors”.
But Edward desires to imagine that Gollong is authentic.
“Gollong says it’s a legit company and that it is registered with Sars. I am just hoping that nothing happens before December, because I really need the money.”
Edward heard concerning the funding scheme from his sister, who lives in Johannesburg. She was one of many early traders. Per week in the past she obtained one other pay-out, says Edward, displaying a WhatsApp screenshot indicating that R15 393 was paid into his sister’s Capitec account.
“She invested R82 300 last week, but she now earns more than R3 000 a day.”
He admits that Gollong’s claimed returns on funding are extravagant, however he desires to imagine that it’s attainable. “I just hope I don’t lose my money,” he says.
One massive crimson flag is that Gollong, in one in every of its promotional videos, reveals an image of an ‘authorization certificate’ claiming that the corporate has full authority to promote its “photovoltaic series products” to South African residents for a ten-year-period, from February 2020 to February 2030.
The certificates was awarded by the non-existent “Cape Town People’s Government of South Africa”.
It’s a Ponzi
People world wide have been fleeced of billions of {dollars} after falling for Ponzi schemes, which depend on the greed or desperation of traders. Characteristics of all schemes are unrealistically excessive or constant returns, and obscure or unclear enterprise fashions underpinning them. The profitable returns on supply typically persuade traders to flip a blind eye to the way the returns are generated.
South Africans have seen many such schemes take off after which collapse after the individuals behind them disappeared with their money. The most well-known was most likely Adrian Nieuwoudt and his kubus Ponzi scheme that took the nation by storm within the Eighties. This concerned the cultivation of milk yeast cultures and a marvel magnificence cream. The pyramid collapsed and Nieuwoudt was sequestrated.
A intelligent Ponzi scheme will attempt to hyperlink to a reasonably credible product, however ideally not one the place the return on funding is simple to calculate.
Until not too long ago, crypto currencies have been standard decisions for Ponzi scheme operators, as a result of few individuals understood how these currencies labored.
‘We are the chosen ones’
With load shedding predicted for the following few years, South Africa is fertile floor for Ponzis providing energy options. Gollong Investments, which claims to originate within the United Kingdom, apparently entered the South African market in 2021, inviting individuals to spend money on its merchandise.
“Gollong is a company focusing on new energy research and development. Due to the current electricity shortage in South Africa, our company was invited by the South African government …”, an introduction to a Gollong YouTube advertising and marketing video claims. It describes Gollong’s enterprise mannequin because the “promotion of mobile charging equipment and solar generators in South Africa”.
From what we may collect from the corporate’s varied web sites, its presentation video on Youtube, and different sources we found, the scheme invitations traders to “rent” various kinds of solar gear together with battery packs, solar panels and charging stations that may be used throughout load shedding. Once the investor “rents” the gear, the gear is then on-rented to finish customers who pay to use them.
Does that make sense? Not actually.
You are most likely asking the identical query we’re: properly then, why doesn’t the corporate simply lease the gear to shoppers itself?
These are a few of Gollong’s supposed merchandise and the implausible returns the corporate claims you may make by investing in them.
What’s additionally unclear is whether or not Gollong truly makes the gear or buys it from one other producer. And additionally very mysterious is who precisely are the top customers? Who are the individuals or companies ready to pay such big sums to use the gear that generates such unimaginable returns for traders?
In brief, it’s a really mysterious enterprise mannequin for one which generates such unimaginable returns.
Numbers don’t add up
Gollong presents investments in quite a lot of “products”. The bottom-of-the-line product is a six-slot energy financial institution, which might be “rented” by the investor for R230 over a 40-day cycle. This, they declare, pays out R320 on the finish of the cycle.
The top-of-the-range funding is for the G-VIP8, described solely as “solar power”, at R140m 000. After 60 days the investor is promised R588 000, a R448 000 revenue.
“Of course, you won’t get the actual device. You’ll get the earnings hold on it,” Gollong says in its video advertising and marketing pitch. “The device is still in a mall. In other words, the device works for you every day. Everyday people use your device, they need to pay and those profits are yours.”
Calculating the return on funding on an annual foundation, it’s clear that proportion income claimed are unrealistic. The supposed return on funding on the bottom funding of R230 would yield an annual return of 357%, which is about 350 proportion factors greater than you’ll get at a business financial institution!
The top-of-the-range funding appears to generate returns which might be really dazzling – and easily too good to be true. If you invested R140 000 within the scheme, a yr later you’d be a millionaire after having obtained a staggering R2.72 million, representing a return of some 1 946% in a yr.
“Gollong’s purpose [is to] insist on letting warmth enter thousands of households and serve every member with heart,” the corporate advised traders in a message final week.
The actuality
To attempt to set up whether or not Gollong can ship such astronomical returns, we contacted a authentic vendor who’s lively on this phase of the market in South Africa.
Adoozy Power rents out energy banks comparable to those utilized in Gollong’s advertising and marketing materials. “We give the end consumer an opportunity to rent a power bank in one location and return it … at any other Power Tower throughout the Adoozy network which includes Johannesburg, Cape Town, and Durban,” the corporate says on its web site.
The energy financial institution rental idea is on the market in a number of nations the place energy is a matter, and it’s rising in reputation. People reliant on their cell telephones and different communication gadgets for his or her work and livelihoods are drastically affected by the disruptions posed by load shedding and energy outages. Being in a position to recharge or energy moveable gadgets is a basic requirement and likewise presents an enormous enterprise alternative.
Adoozy Power’s energy financial institution models price R50 every for a three-hour rental, however clients even have the choice to lease them for longer durations at lowered charges, together with a month-to-month price of R199. During the rental interval the facility financial institution can be exchanged for a totally charged one at any of Adoozy’s kiosks.
Adoozy Power CEO Kegan Peffer, says he has not come throughout any Gollong gadgets in South Africa.
“We cannot comment extensively on another business as we do not know the exact nature of their offerings,” he stated. “But returns would be based on frequency of rentals, which can be high at high usage areas such as events or airports. Because consumers can rent [equipment] more than once-off, this can give good returns, but … 357% with the consideration of capital expenditure, logistics, maintenance etc is difficult to attain.”
Peffer stated that capital expenditure included not simply the facility financial institution itself, but in addition the precise kiosk and the tech and growth concerned. “On the whole, power bank rental can be profitable. However, it is a capital-intensive exercise to get off the ground. A critical component is choosing the right locations to ensure that frequency of rentals is high. That will dictate profit margins,” he stated.
Tracking down Gollong in South Africa
Though Gollong Investment claims to have been lively in South Africa since 2021, the corporate was solely registered on 21 September this yr. Its listed handle is Office 26, Benvista Office advanced, Edgar Road, Boksburg, on the East Rand. There is just one director, 31-year-old Melikhaya Palafini. Palafini has no social media presence and a Google search doesn’t produce a single end result.
When a reporter visited Gollong’s supposed Boksburg places of work, there was no signal of the corporate. This handle is of a sequence of townhouses and a few places of work. The safety guard on the entrance identified a board itemizing all companies on the handle. Gollong Investments shouldn’t be one in every of them. “There are one or two loan sharks operating from some of the offices, but I don’t know a Gollong,” the guard stated.
London simply as dodgy
The “international” handle of Gollong additionally proved to be false. The firm’s web site says it’s primarily based at 47/48 Piccadilly Street, London. This venue, shut to the luxury monetary district of Mayfair, with Buckingham Palace simply across the nook, is a well-liked vacationer buying vacation spot.
But when a reporter visited this handle he discovered that no such firm operates from the constructing. The concierge, who has been working on the premises for eight years, confirmed that no such firm had been primarily based there over that point.
The supposed handle of Gollong in London. There’s no proof that the corporate exists right here.
Gollong’s “team” within the UK are listed as Dilip Gupta (CEO and founder), David Adams (Engineer) and Bill Caruso (Engineer).
These are the individuals supposedly operating Gollong Investment. We put the photograph of Dilip Gupta via a programme which detects whether or not a picture is actual or not. The programme reported that this photograph might be faux. Images: Gollong’s web site
But a reverse image search of images of Gollong’s supposed workers revealed that the very same “team” are additionally the driving pressure behind one other firm, Solar E-tribe, with the descriptions and photos of the staff members equivalent to these on the Gollong web site (See ‘Team’). Further searches confirmed that the identical images and names of the administrators are additionally used on different web sites, akin to that of an organization referred to as Tiger Tooth Technologies.
Solar E-tribe didn’t reply to an e-mail asking the corporate to verify that its administrators are additionally lively in Gollong Investments. Bill Caruso didn’t reply to an identical inquiry despatched to his Tiger Tooth Technologies profile about his relationship with Gollong.
The www.gollong.org website is comparatively new and first listed by webarchive.org on 17 July this yr. This website, nonetheless, can solely be accessed by members who’ve logged in and comprises no public info, akin to an handle or phone numbers.
The www.gollong.gq website comprises some info, however the handle of the workplace is fake. The website comprises a “contact us” web page, however as soon as a message is submitted by way of this web page, it comes up with a “sorry, it seems that our mail server is not responding. Please try again later!” message.
The www.solaretribe.com website has a historical past relationship again to 2013, however initially was a vendor referral website. When it began to concentrate on solar energy and gadgets, it had two addresses, one in Texas within the USA and one in Gurugram, India. In about 2018, the Gurugram handle was dropped and changed with a New York handle.
Make cash the hush-hush way
Anyone wanting to be a part of Gollong as an investor wants a referral from an present member.
Once somebody turns into a member, they will work together by way of an app that may be downloaded from the Google Play Store or by visiting the web site. Only members are privy to info and messages from Gollong.
Gollong makes intensive use of WhatsApp teams to talk with traders. Judging by the telephone numbers, these teams seem to have operators primarily based within the United Kingdom, however the handle supplied within the group particulars is in Camps Bay in Cape Town.
We despatched a message by way of WhatsApp final week to one of many group directors, who goes by the identify “Leseai”, asking for names and make contact with numbers of the scheme’s managers or homeowners. The messages have been merely ignored.
We additionally despatched a WhatsApp message to the cellphone variety of one of many South African members, “Tsalelani”, who appears to be actively advising different members, and requested her to provide contact particulars of her supervisor. “Y asking me?” she responded, after which refused to work together additional.
Judging by WhatsApp display grabs, contributors within the funding scheme are discouraged from speaking about what is occurring. One message despatched to group members warned towards “discussing or slandering the company.” Members are even supplied rewards of R200 in the event that they report such conduct to the administrator.
“Recently, some people doubt the authenticity of Gollong, and there are rumours that Gollong will stop business in the near future,” Alyssa, who has a UK telephone quantity, posted. “Gollong company will investigate its legal responsibility for these false information and rumour makers”.
Efforts to contact the directors by way of these UK telephone numbers have been additionally unsuccessful.
Feeding the beast
The messages to group members are targeted on encouraging them to recruit extra traders. “Reward codes will be sent every day at 19:30. Invite friends or family to join to get R50-R14,000,” reads a message despatched out on Sunday night time.
Any profitable Ponzi scheme depends on a myriad of enticements. You have to persuade the prevailing members to actively recruit extra traders and spend extra money, as a result of if cash doesn’t stream into the pot, the fraudsters received’t be in a position to pay traders.
In the case of Gollong, it has all of the bells and whistles, together with a lottery pool the place individuals can “spin and win”. “Every time you recruit 1 new user (or spend R600), you get one lucky spin for free. 100% winning,” in accordance to Gollong’s “7 Ways to Make Money in Gollong” instruction handbook.
If individuals don’t need to play Gollong’s lottery, they will become profitable by renting the gear. There is, nonetheless, a slight catch. They have to go to the app a minimum of as soon as a day and declare their revenue. If they don’t, they lose it.
Investors may also become profitable by inviting new members to be a part of. Gollong’s “rules” on this regard are barely complicated, as a result of it may both price an extra R2 a day, or R100 per member for the R500 system. Maybe they make it up as they go alongside.
Any intelligent Ponzi scheme depends on a hierarchy, which implies individuals who have been members for longer have new recruits “under” them. And, being on a better stage, additionally they earn a proportion of what these beneath them earn. They will gather 10% of regardless of the recruit beneath them earns, and an additional 6% of the earnings of the particular person on the tier beneath that. And so it continues.
But, there may be one little snag – the gear that the highest tier lease should be extra precious than the gear of these “below” them.
But wait, there’s extra
If you’re simply distracted and confused by the varied ranges, tiers and VIP statuses, fortunately there may be a neater way to quadruple your cash: you may make investments it within the “Energy Pool”. This is way higher than any financial institution, as a result of it presents 5.2% curiosity per day!
“If you put 10 shares (R1,000) in NO.3 energy pool, then it will automatically add 1,000*5.2%=52 interest to your Gollong account every day After 90 days you can get the total interest: 52*90=4,680,” the handbook explains.
This return on funding beats a few of the greatest Ponzi schemes round. In actual phrases it really works out as a price of 1,898%. And, within the actual phrases of the handbook: “At the same time, you can also get your capital back R1000”.
The handbook ends this part with: “If you experience load shedding a lot or don’t have time to manage your Gollong account, energy pool are (sic) the perfect way to make money.”
Is this authorized?
Of course, none of that is authorized, and for quite a lot of causes. The Banks Act prescribes that solely registered banks can take such deposits and it’s unlawful for unregistered establishments to take deposits from members of the general public.
Gollong shouldn’t be listed as an authorised monetary service supplier, which implies that the corporate could not deal with investments or supply monetary recommendation to shoppers.
Gollong could argue that it doesn’t have “investors”, however merely clients “renting” its gear, however it will be exhausting to show as there may be at present no proof that any of its merchandise are in operation within the nation.
Also, the operating of an inside lottery with out permission is illegitimate in South Africa. The National Lotteries Commission (NLC) regulates all lotteries and sport swimming pools within the nation.
NLC spokesperson Ndivhuho Mafela stated that Gollong Investment “appear to be an investment scheme/company and therefore by law not eligible to conduct a lottery in terms of the provisions of the Lotteries Act 57 of 1997”. He added that no utility had been obtained from the corporate to run a lottery.
Where to from right here?
For traders akin to Edward, it’s a nervous interval of ready. If he “cashes in”, he’ll lose all his potential winnings. If the Ponzi scheme crashes earlier than he bails out, he loses his R500 – and he nonetheless owes his good friend R1,500.
Without inside data of the scheme, it’s close to unimaginable to choose how many individuals have invested. One of the Gollong WhatsApp teams, Gol Long trade group 28, had 352 contributors every week in the past. It may imply that there are a minimum of 27 different comparable teams, nevertheless it may merely be a reputation chosen for the group.
Judging by Gollong’s newest information postings, the bait is getting even tastier. The lottery pool has elevated in dimension. “As mentioned earlier, in order to speed up the popularisation in South Africa, Gollong will spend 200 million rand to promote this event,” a current submit claims.
Edward’s sister has massive plans for Christmas for her kids and different relations. She has invested some huge cash in Gollong and would be very upset – and badly out-of-pocket – if the pyramid crumbles. She may even have to reply to a number of mates and kin who she has recruited, and who invested cash primarily based on her suggestion.
“Do you think it will last until Christmas?” Edward asks once more.
* Edward shouldn’t be his actual identify, however his story is predicated on his actual state of affairs. He didn’t need to be recognized for concern of being victimised by different traders.
Disclosure: The reporters spent R500 investing in Gollong so as to get info they wanted for the story.
© 2022 GroundUp.
This article was first printed here.
