As the awareness for the potential of online margin trading increased in recent years, we are seeing more and more fraudsters running ponzi schemes under the guise of forex investing firms to prey on investors. Sadly, it seems the allure of easy money from such scams is irresistible even to self proclaimed men of god.
South African authorities have taken action against a Cape Town pastor, Colin Davis, the sole owner of Platinum Forex for allegedly running a financial pyramid scheme. According to the accusations, Davis has promised clients of his firm with a return on investment as high as 84%. Since 2013, when the firm was established, Davis was able to use his charms to attract more than 100 million rand (about $8 million) from investors.
Guaranteed returns, especially unrealistically high ones, are a common feature of ponzi schemes. Even if they start out by thinking they can actually trade and reach such returns, the operators can’t do that consistently and are forced to cheat in order to keep the scheme going. Usually they give new client’s money to the older investors so that those will attract more new investors and it lasts until the pyramid can’t attract new money and implodes. In some cases however, they never trade to begin with.
Meet BeSquare: the new tech training program for Malaysian graduatesGo to article >>
The National Prosecuting Authority’s Asset Forfeiture Unit has raided pastor Davis’ estates this week and seized about 138 million rand (about $11 million) worth of property, including bank accounts, houses, BMWs, Jaguars and more. He allegedly financed his lifestyle by spending the firm’s clients money on himself.
The pastor is not confessing to any sins or asking for forgiveness just yet as he calls the legal action a vicious attack on a legitimate business. Davis has vowed to fight against the accusations in court and prove his innocence.