Gollong Investment seems very very like a Ponzi operation
“Do you suppose it should final till December?” This is Edward’s* most important 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 further money.
After simply 40 days, Edward, from Thohoyandou in Limpopo, acquired a notification that his steadiness with Gollong was now R800, exhibiting a welcome R300 revenue. The funding generated a 60% return, not unhealthy going for simply over a month.
Edward was so impressed with how his “funding” had carried out, that as a substitute of cashing in he determined to re-invest the total quantity, together with an extra R1,500 he borrowed from a member of the family. Now he should wait 50 days for what he expects might be a payout of R5,250, a staggering R3,250 revenue on the R2,000 invested.
“Some say it is a Ponzi scheme, however I do not know,” Edward says. A Ponzi scheme, in accordance to Investopedia, is a “fraudulent scheme that includes paying early traders in a non-existent enterprise with the funds invested from new traders”.
But Edward needs to consider that Gollong is reputable.
“Gollong says it is a legit firm and that it’s registered with SARS. I’m simply hoping that nothing occurs earlier than December, as a result of I really want the cash.”
Edward heard in regards to the funding scheme from his sister, who lives in Johannesburg. She was one of many early traders. Every week in the past she acquired one other pay-out, says Edward, exhibiting a WhatsApp screenshot indicating that R15,393 was paid into his sister’s Capitec account.
“She invested R82,300 final week, however she now earns greater than R3,000 a day.”
He admits that Gollong’s claimed returns on funding are extravagant, however he needs to consider that it’s potential. “I simply hope I do not lose my cash,” he says.
One large pink flag is that Gollong, in considered one of its promotional movies, reveals an image of an “Authorization Certificate” claiming that the corporate has full authority to promote its “photovoltaic sequence merchandise” 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 imprecise or unclear enterprise fashions underpinning them. The profitable returns on provide usually persuade traders to flip a blind eye to the way in which 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 surprise 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 just lately, crypto currencies have been fashionable decisions for Ponzi scheme operators, as a result of few individuals understood how these currencies labored.
“We are the chosen ones”
With loadshedding 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 an organization specializing in new power analysis and growth. Due to the present electrical energy scarcity in South Africa, our firm was invited by the South African authorities … “, an introduction to a Gollong YouTube advertising and marketing video claims. It describes Gollong’s enterprise mannequin because the “promotion of cell charging gear and photo voltaic mills in South Africa”.
From what we may collect from the corporate’s numerous web sites, its presentation video on Youtube, and different sources we found, the scheme invitations traders to “lease” various kinds of photo voltaic gear together with battery packs, photo voltaic panels and charging stations that can be utilized 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 does not the corporate simply lease the gear to customers itself?
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 large sums to use the gear that generates such unbelievable returns for traders?
In quick, it is a very mysterious enterprise mannequin for one which generates such unbelievable returns.
Numbers do not add up
Gollong gives investments in a wide range of “merchandise”. 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 energy”, at R140,000. After 60 days the investor is promised R588,000, a R448,000 revenue.
“Of course, you will not get the precise machine. You’ll get the earnings maintain on it,” Gollong says in its video advertising and marketing pitch. “The machine remains to be in a mall. In different phrases, the machine works for you day-after-day. Everyday individuals use your machine, they want to pay and people income are yours.”
Calculating the return on funding on an annual foundation, it is 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 will get at a business financial institution!
The top-of-the-range funding appears to generate returns which might be actually dazzling – and just too good to be true. If you invested R140,000 within the scheme, a yr later you’ll be a millionaire after having acquired a staggering R2.72-million, representing a return of some 1,946% in a yr.
“Gollong’s objective [is to] insist on letting heat enter hundreds of households and serve each member with coronary 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 reputable 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 top shopper a possibility to lease an influence financial institution in a single location and return it … at every other Power Tower all through the Adoozy community which incorporates 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 units 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 units is a elementary requirement and in addition presents an enormous enterprise alternative.
Adoozy Power’s energy financial institution items value R50 every for a three-hour rental, however prospects even have the choice to lease them for longer durations at diminished charges, together with a month-to-month fee of R199. During the rental interval the facility financial institution might be exchanged for a completely charged one at any of Adoozy’s kiosks.
Adoozy Power CEO, Kegan Peffer, says he has not come throughout any Gollong units in South Africa.
“We can not remark extensively on one other enterprise as we have no idea the precise nature of their choices,” he mentioned. “But returns can be primarily based on frequency of leases, which might be excessive at excessive utilization areas equivalent to occasions or airports. Because customers can lease [equipment] greater than once-off, this can provide good returns, however … 357% with the consideration of capital expenditure, logistics, upkeep and so forth is tough to attain.”
Peffer mentioned 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 entire, energy financial institution rental might be worthwhile. However, it’s a capital-intensive train to get off the bottom. A important part is selecting the best places to be certain that frequency of leases is excessive. That will dictate revenue margins,” he mentioned.
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 outcome.
When a reporter visited Gollong’s supposed Boksburg workplaces, there was no signal of the corporate. This handle is of a sequence of townhouses and a few workplaces. The safety guard on the entrance identified a board itemizing all companies on the handle. Gollong Investments isn’t considered one of them. “There are one or two mortgage sharks working from a few of the workplaces, however I do not know a Gollong,” the guard mentioned.
London simply as dodgy
The “worldwide” 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 luxurious 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.
Gollong’s “staff” within the UK are listed as Dilip Gupta (CEO and founder), David Adams (Engineer) and Bill Caruso (Engineer).
But a reverse picture search of pictures of Gollong’s supposed employees revealed that the very same “staff” are additionally the driving pressure behind one other firm, Solar E-tribe, with the descriptions and pictures of the staff members an identical to these on the Gollong web site (See “Team”). Further searches confirmed that the identical pictures and names of the administrators are additionally used on different web sites, equivalent to that of an organization known 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 analogous inquiry despatched to his Tiger Tooth Technologies profile about his relationship with Gollong.
The www.gollong.org web site is comparatively new and first listed by webarchive.org on 17 July this yr. This web site, nonetheless, can solely be accessed by members who’ve logged in and accommodates no public data, equivalent to an handle or phone numbers.
The www.gollong.gq web site accommodates some data, however the handle of the workplace is fake. The web site accommodates 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, evidently our mail server isn’t responding. Please attempt once more later!” message.
The www.solaretribe.com web site has a historical past relationship again to 2013, however initially was a vendor referral web site. When it began to give attention to photo voltaic power and units, 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 approach
Anyone wanting to be a part of Gollong as an investor wants a referral from an current 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 data 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 title “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 mobile phone 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 screen grabs, individuals within the funding scheme are discouraged from speaking about what is going on. One message despatched to group members warned in opposition to “discussing or slandering the corporate.” Members are even supplied rewards of R200 in the event that they report such conduct to the administrator.
“Recently, some individuals doubt the authenticity of Gollong, and there are rumours that Gollong will cease enterprise within the close to future,” Alyssa, who has a UK telephone quantity, posted. “Gollong firm will examine its obligation for these false data and rumor 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 centered on encouraging them to recruit extra traders. “Reward codes might be despatched day-after-day at 19:30. Invite mates or household to be a part of 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 more cash, as a result of if cash does not move into the pot, the fraudsters will not have the opportunity 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 person (or spend R600), you get one fortunate spin at no cost. 100% profitable,” in accordance to Gollong’s “7 Ways to Make Money in Gollong” instruction guide.
If individuals don’t desire to play Gollong’s lottery, they will generate income by renting the gear. There is, nonetheless, a slight catch. They have to go to the app at the very least as soon as a day and declare their revenue. If they do not, they lose it.
Investors can even generate income by inviting new members to be a part of. Gollong’s “guidelines” on this regard are barely complicated, as a result of it may well both value a further R2 a day, or R100 per member for the R500 machine. Maybe they make it up as they go alongside.
Any intelligent Ponzi scheme depends on a hierarchy, which suggests individuals who have been members for longer have new recruits “underneath” them. And, being on the next degree, in addition they earn a proportion of what these underneath them earn. They will accumulate 10% of regardless of the recruit under them earns, and an extra 6% of the earnings of the individual on the tier under that. And so it continues.
But, there’s one little snag – the gear that the highest tier lease have to be extra invaluable than the gear of these “under” them.
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But wait, there’s extra
If you might be simply distracted and confused by the assorted ranges, tiers and VIP statuses, fortunately there’s a better approach to quadruple your cash: you may make investments it within the “Energy Pool”. This is approach higher than any financial institution, as a result of it gives 5.2% curiosity per day!
“If you place 10 shares (R1,000) in NO.3 power pool, then it should robotically add 1,000*5.2%=52 curiosity to your Gollong account day-after-day After 90 days you will get the full curiosity: 52*90=4,680,” the guide explains.
This return on funding beats a few of the greatest Ponzi schemes round. In actual phrases it really works out as a fee of 1,898%. And, within the actual phrases of the guide: “At the identical time, you may also get your capital again R1000”.
The guide ends this part with: “If you expertise load-shedding loads or do not have time to handle your Gollong account, power pool are (sic) the right approach to generate income.”
Is this authorized?
Of course, none of that is authorized, and for a wide range 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 isn’t listed as an authorised monetary service supplier, which implies that the corporate might not deal with investments or provide monetary recommendation to shoppers. Gollong might argue that it does not have “traders”, however merely prospects “renting” its gear, however this might be onerous to show as there’s at present no proof that any of its merchandise are in operation within the nation.
Also, the working of an inner 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 mentioned that Gollong Investment “seem to be an funding scheme/firm and due to this fact by legislation not eligible to conduct a lottery by way of the provisions of the Lotteries Act 57 of 1997”. He added that no utility had been acquired from the corporate to run a lottery.
Where to from right here?
For traders equivalent to Edward, it is 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 pal R1,500.
Without inside data of the scheme, it is close to inconceivable to decide how many individuals have invested. One of the Gollong WhatsApp teams, Gol Long alternate group 28, had 352 individuals every week in the past. It may imply that there are at the very least 27 different comparable teams, however 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 measurement. “As talked about earlier, so as to pace up the popularization in South Africa, Gollong will spend 200 million rand to promote this occasion,” a current put up claims.
Edward’s sister has large plans for Christmas for her kids and different members of the family. She has invested some huge cash in Gollong and can be very upset – and badly out-of-pocket – if the pyramid crumbles. She can even have to reply to plenty of mates and relations who she has recruited, and who invested cash primarily based on her advice.
“Do you suppose it should final till Christmas?” Edward asks once more.
* Edward isn’t his actual title, however his story is predicated on his actual scenario. He didn’t need to be recognized for worry of being victimised by different traders.
Disclosure: The reporters spent R500 investing in Gollong so as to get data they wanted for the story.
Anton van Zyl and Maanda Bele are from Limpopo Mirror. Assistance was supplied by Warren Thompson, a contract journalist working with the London-based investigative journalism outfit, Finance Uncovered. Zaid Khumalo, editor of Kathorus Mail on the East Rand, assisted with analysis in Boksburg. This article is co-published with the Limpopo Mirror.
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