Investors duped into losing savings
A JOHANNESBURG-BASED company suspected of running a pyramid investment scheme has swindled unsuspecting investors of their hard-earned money.
UNREALISTIC PROMISES: Investors queueing outside one of the offices of Hlala Ethembeni Finances. The company is suspected of running a pyramid scheme, claiming it can double a person's money in a few weeks. It seems most people are still waiting for their cash. Photos: Penwell Dlamini
WAITING IN VAIN: Pyramid schemes typically pay out once and then fail to honour their promises. Sowetan can reveal that among those who invested in Hlala Ethembeni Finances - which promised a 100% return on "invested" cash in a few weeks time - are police officers, nurses and soldiers.
Hlala Ethembeni Finances has been taking money from unsuspecting investors since 2009.
It started out as Living Hope Financial Services and was based in Katlehong on Nova Road. The company has grown and boasts offices in Germiston, Benoni, Johannesburg CBD, Thokoza, Kempton Park, Vereeniging, Polokwane and Burgersfort.
Initially investors were asked to invest a minimum of R500 in cash and pay a 10% administration fee, with the promise of receiving a 100% return after a month.
By last year the basic investment requirement was R1,200 plus a 10% administration fee with the promise of a 100% return after a month.
To test the scheme, Sowetan invested R1,400 in March - of which R200 was taken as an administration fee.
Hlala Ethembeni Finances promised Sowetan would receive R2,400 as a return on its investment after a month.
Up to now Sowetan has not received any money.
Instead, in June, Hlala Ethembeni Finances advised the newspaper to apply for a refund.
- Sibusiso Nkwali (not his real name) of Johannesburg has also fallen victim to Hlala Ethembeni Finances' shady scheme.
As in other pyramid schemes Nkwali was lured by the returns he initially received when he made his first investment.
He invested R2,000 in Hlala Ethembeni Finances' Germiston branch and got a R5,000 return. But he has not been as fortunate since then.
"Between September and December last year I invested R40,000. Unfortunately I got back only R6,000," Nkwali said.
On joining, an investor receives a deposit slip with his or her name, amount and expected return and date of collection.
"I invested because I had hoped to buy a new car," he said.
Nkwali is still waiting for his money and the last promise he received was that he would get it in August.
- Doris Nkosi - not her real name - of Katlehong invested R8,400 in February and when Sowetan met her in April she was still waiting for her R16,800 return.
She accused Hlala Ethembeni Finances of cheating ordinary people while paying out to public servants, including the police and nurses.
During one of Sowetan's visits to the company's offices in Katlehong we noticed how public servants, including police officers, nurses and soldiers, were allowed to jump the long queues of investors.
According to the Companies and Intellectual Property Commission, Hlala Ethembeni Finances was registered on February 17 2012 as a private company. There is no indication of what services the company provides.
Its founder is known only as Thami. His family home is in Katlehong, where the main office is based.
At the beginning of this year the company struggled to pay investors and some of its Joburg staff members pulled out to form Londolozani Financial Services, which operates in the same way.
Sowetan found that none of the three companies mentioned above are registered as financial services firms with the Financial Services Board or the Reserve Bank.
Several attempts to get comment from Hlala Ethembeni Finances have failed.
The bank has launched a campaign, Beware of oMashanyana, to warn people about pyramid schemes.
This article was first published in the Sowetan newspaper on Monday 2 July 2012
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Comments
KeRataBasadi
Greed will get you poorer quicker than you can say pyramid, ppl should learn that if its too good to be true, it probably is. How you can justify doubling your money in 2 months without selling nyaope or cocaine is beyond me, even banks will give you 0.5 % a month on an investment.Report Abuse
Papage
What about those that operate in Sandton, there are a lot of those Pyramid schemes in the surburbs as well, some are run as Churches, mostly White and Nigerial Churches. Beware of Churches that rip you off in the Name of giving God tenth of your earnings, beware, the is No real God who will demand money from you while your children are hungry, God does not need your money, but want to give you some.Report Abuse
KasiKid
People just don't learn.There is no such a thing as a quick buck, they will rob you...
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malemaforpresident
Yaa people could not learn how do you begin to invest your money in a pyramid scheme i mean we work to be rewarded with money there after you buy shares from the jse to getmore money otherwise you will get screwed mara peopleReport Abuse
Dzel
I feel no pity for these people, we've known about pyramid schemes since the early 90s it boggles the mind why people still fall for this.The rule of thumb is simple, if they are not selling a product it is a pyramid scheme and if they offer return of above 30% p.a. be very cautious.
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golly459
Pupil please invest your money through banks. you may rather change from one bank to another unlike investing to sum golly sizanani company, banks will never run away from you and always know that nothing comes out without hardworking, if you want to become millionaire in one day just play lotto not this scam.Report Abuse
Lipgloss
@ Sowetan please check this one for me Yiyo financial health Soweto people are crazy about it , you bring 3 people to join ka R240 and you get paid every month how possible they operate at Entokozweni white city.Report Abuse
Shredder
@Lipgloss@ Sowetan please check this one for me Yiyo financial health Soweto people are crazy about it , you bring 3 people to join ka R240 and you get paid every month how possible they operate at Entokozweni white city.
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Is there another Entokozweni in White City? I know the one in Moletsane or has it moved to White City? It's been a while since I went to that side of Moletsane.
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malemaforpresident
@Lipglossi know of old mutual,sanlam,jsc, banks etc now Yiyo the name tells it all i will never ever put my money there unless otherwise mentally challenged no
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MommaC
If it sounds too good to be true then it probably is.Get rich quick scams are as old as money itself so people should know better.
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