Here is another power of ten marketing scheme, which is "click for cash" I believe it is based on the same principle...

[www.pinoyonlinejob.com] as far as I am aware, this is legal.

I don't find it would really be sustainable in the case of Desteni... I will look more into it.

Yes, its a pyramid selling scheme and it is unsustainable.These are illegal in the UK, I don't know about SA and USA.
Its a scam as the only one who will ever see any payout is the guy at the apex of the pyramid and perhaps the first tier.

The maths kills it--you only have to go a few steps into the downline before the numbers required to be recruited to service the apex get so huge that almost every person in the world would have to join to make it work.

I can't see more than a few dozen, already mind-controlled Desteni-ites, taking this seriously. They, poor souls, will be sold courses for 10 years and still won't be able to recruit any others to make an income.

Its not as if the content is even particularly compelling.

Thanks, Stoic. Do you think Poolman could get away with passing off the "Desteni income plan" as something other than a pyramid selling scheme, and somehow make it appear legal?

Pyramid selling schemes are illegal in South Africa.

According to the southafrica.info page ForeverNoMatterWhat provided a link to a few posts ago -- [www.southafrica.info]: "The government is intent on cracking down on these bogus investment or pyramid schemes to which scores of members of the public continue to lose their life savings. According to Reserve Bank governor Tito Mboweni, the Reserve Bank has spent R13-million in recent years closing down these illegal schemes."

Pyramid schemes are also illegal in Europe and the USA. See: [en.wikipedia.org]

Surely Poolman knows this and that it is not a sustainable business model, but is employing it for as long as he can even if he risks prosecution. It suggests that he may not be planning on continuing with Desteni but is rather going to take the money and run. Either that or he is using it as a way of furthering manipulating those involved in Desteni by interfering with their finances and making them feel responsible for losing their money.

I don't know. Anyone any ideas on this? It seems pretty bizarre and a bit of a stupid thing for Poolman to try and pull off, considering it is inevitably bound to fail.

Nobody who sets up such a scheme is unaware either of its unworkability or that it is illegal.

This isn't a case of Poolman being naive--he is deliberately setting out to defraud anyone who buys in.
I should imagine that he is banking on the loyalty of his followers to keep this quiet and to shield him from prosecution.

He will be the only one to benefit and may get some substantial cash coming in before the thing collapses. In most of these schemes the one who sets it up plans from the beginning to cut and run when it all goes pear-shaped and he's milked as much as he can from the punters.

How much control Poolman exerts over his Desteni-ites will determine whether he gets away with this fraud.

I don't think that Poolman is showing much intelligence in any of this although he is certainly damaging anyone who falls under his spell.

Re whether he can pass this off as legal, that depends on how closely anyone looks at the structure.

To his customers I am sure he will describe this as MLM or Network marketing, or the Desteni Income Plan!
However what makes it illegal is not what it is called but how it is structured and this is structured as a pyramid scheme whatever he calls it.
The SA police will not be fooled by a convenient name change although his followers might.

If anyone genuinely believes that a person is engaging in bogus investment or pyramid schemes, they can report it to the authorities, police, or fraud squad in that area.

Perhaps someone could even post the link in this thread, to where concerned citizens can report suspected fraud, bogus investment or pyramid schemes in South Africa.

Once complaints/reports start coming in, the authorities create a file and then look into it.
Since bogus investment or pyramid schemes are a problem in South Africa, one assumes there is a system of complaints and investigations, according to the local laws in these matters.

---------------quote------------------
Crime in South Africa
[en.wikipedia.org]
Advance fee fraud

... In 2002, the South African Minister of Finance, Trevor Manuel, wanted to establish a call centre for businesses to check reputations of businesses due to proliferation of scams such as advance fee fraud, pyramid schemes and fly-by-night operators.[24]
In response the South African Police services has also setup a project to identify 419 scams, closing websites and bank accounts where possible.[25]

-----------------------
The South African Police Service established a Task Team within the Commercial Branch to investigate 419 scams.
[www.saps.gov.za]

419 Scams [www.saps.gov.za]

Reporting Fraud and Scams to the Proper Authorities SOUTH AFRICA (3/4 way down page) [www.crimes-of-persuasion.com]

Stoic, I would like to ask you another quite basic question. Please can you clarify precisely why or how the "Desteni income plan" is a pyramid scheme and not multilevel marketing, and why it is therefore illegal?

It is worth having a closer look into the question of pyramid schemes in SA and posting any more useful links.

It needs to be determined exactly which organisation in SA this matter would concern. Google "pyramid schemes south africa" ...

Information on this website may lead to authorities in SA who register reports of illegal financial schemes:
[www.southafrica.info]

A report could also be submitted to consumer rights groups in SA.

This video: "Desteni Income Plan & Acts of God" -- [www.youtube.com] -- and this document: [www.bernardpoolman.org]

have been copied. If they are deleted, they can be uploaded elsewhere if necessary, along with related documentation.



Edited 1 time(s). Last edit at 09/29/2010 07:42PM by Sandman.

It is quite a grey area, Multi-Level Marketing is the same pyramid model that has been slightly adjusted to attempt to circumnavigate the illegalities of the pyramid selling schemes.

Some MLM models, those that are distributing a product that is in general demand, can work quite well although I doubt that anyone makes much of an income except those at the very top of the downline. Kitchen and household products are often distributed this way and most MLM'ers only earn pin money selling to a local circle.
The thing that differentiates this from a true pyramid is that there is an assumed demand and ready market for the product, although with Amway, for example, the market is soon saturated, or the customer can find the same goods at a lower price in a local store.

A true pyramid scheme relies on recruitment of other punters, not the sale of goods, to make the money. There may be a nominal product but it is sold at a vastly inflated price and is nothing special to begin with. Information products would generally fall into this category. There are few information products (books, courses, articles etc) that contain info that cannot be found for $20 in any bookstore or for free on the net.
The info product is ostensibly being sold but the scheme relies on the recruitment of endless new distributors in order for the salesperson to make any money at all.

If I join the pyramid scheme, usually for an upfront fee or for the purchase of an 'educational course' that teaches me how to operate the scheme, I will learn that I have to recruit another 10 salesmen, all selling the same product--'educational course'--- and that each of my 10 salesman will have to recruit a further 10 salesmen each selling the same product or 'educational course'. We very swiftly have 100 salesmen all trying to flog the same worthless info product.
This sounds workable on paper, but imagine this off-line in a reasonably sized town, 100 salesmen selling a duff product that nobody really has any need to buy. How soon would this reach saturation point and how many of those 100 salesmen could reasonably expect to ever make a sale?
They have been defrauded of whatever they paid upfront to join because there was never a reasonable expectation that any sales could be made.
It is no easier to sell such a dodgy product on the internet, although it might seem easier--it costs money to get traffic and to maintain an internet presence and there is no way that the required number of recruits can be reliably signed up. The compensation for what few sign ups were aquired probably wouldn't cover such costs.
It is because these pyramid schemes are recognised as making fraudulent promises from the start that they are illegal. They are essentially selling an unworkable dream.

The pyramid scheme relies on this endless recruitment and people buy into it because they are sold this idea that they will eventually have untold thousands of salesmen working in their down-line and that they will get a cut of the sales of these untold thousands of salesmen. 50% of nothing is still nothing and that is, in reality, what they can reasonably expect as a return on their investment.

Some pyramid schemes have theoretically hundreds of tiers of exponentially increasing numbers of salesmen--it doesnt take many tiers before every person in a given area would need to be theoretically signed up in order to keep the scheme going. That is will never happen, in practice these things collapse after three or four tiers at most, as people cotton on to the scam (largely because they have been working like dogs to recruit and have seen no return) and desert--at which point the doo-doo hits the fan and the entire structure crumbles.

Working pyramid schemes are only ever an idea, a figment of someones imagination--they do not work in reality and can never work. Selling someone a figment of imagination is only acceptable as a movie, novel or artwork, if it is sold as reality it is fraud.

Info product Internet Marketers have gotten around this by using the MLM or Network Marketing model and selling through a number of affiliates--there is only one tier so it is not so much a recruitment scheme--although in practice all that has happened is that all the tiers have been flattened into a single level and the same saturation problems occur---you still have thousands of affiliates all trying to flog the same dodgy products but they are now all on the same level and very few indeed have any prospect of making any sales at all.
The guys at the top always collect and they rely on the thousands of hopeful affiliates who will make one or two sales each at most. In IM there is no upfront fee to join so the affiliates theoretically risk nothing but their time, energy and running costs (although a few of the dodgier IM'ers are sneakily trying to introduce this upfront joining cost as revenue falls because the punters are catching on)
Eventually there will be enough disgruntled affiliates who realise that they have been sold a pup and some regulation will happen, but at the moment their particular brand of marketing skates just inside what existing laws cover this area. All the savvy big dogs in IM are currently reworking their business models in preparation for the regulation that is bound to happen shortly.



Edited 1 time(s). Last edit at 09/29/2010 09:39PM by Stoic.

Stoic-

Quote

it costs money to get traffic and to maintain an internet presence and there is no way that the required number of recruits can be reliably signed up. The compensation for what few sign ups were aquired probably wouldn't cover such costs.

Actually you can generate relatively large traffic numbers free... Well at the expense of your time rather than money. Which some Desteni members are happy to share.

Google- free traffic exchange or free traffic generating

Some of the sites which will appear, really do work for generating decent amounts of traffic.

Internet marketers use what appear to be marketing rings. Traffic might not merit sales of the "Desteni Plan" but could potentially bring in advertising revenue. Especially in the wake of user specific ads. (ads which change depending on the individuals internet preferences) I cannot remember the specific amount but the Desteni website did appear to be making some money, from traffic: Advertising?