Children now getting involved in Cork pyramid scheme

A pyramid scheme which has seen people from Munster invest up to €20 million in it is now apparently spreading throughout the country. It is also attracting schoolchildren with the Irish Examiner reporting that pupils are clubbing together to invest.
The original “Liberty” scheme required at least €5,000 to take part but the new so-called “Speedball Scheme” is a watered-down version, requiring a smaller entry fee of €1,000. Under the scheme members must also introduce two others to the scheme. They are offered an eight-fold return on their investment. Participants hand over money in Germany because of its liberal tax laws.

“People joining are encouraged to buy a ‘ball’ or a ‘bubble’ worth €20,000. By recruiting new people their bubble moves up along the scheme, eventually to the top, taking the place of higher-up investors who have already received their money and dropped off the pyramid.

This specific scheme is said to comprise groups of 15 people, eight on the bottom, four on the next row, two on the next and finally the ‘money ball’. The person who reaches the top row goes to Munich and is handed €80,000. Then the balls are split and four at the bottom on each side have to find two new investors each to create a new system.

There are never more than 15 balls in each scheme and one is continuously moving to the top and getting paid for their investment. This is why those involved argue that the ball/bubble scheme is not a pyramid because in a pyramid scheme the person at the top is rigid.”

Apparently it can take up to six months for investors to get the return. The amount of money invested is thought to be initially €5,000 or €10,000 which promoters say means you can get €40,000 or €80,000 back.

As the scheme depends on an increasing number of investors, which increases the numbers who will lose out when it eventually collapses.

As one Garda said: “We did anticipate there would be difficulties down the line, that it would turn family against family and friend against friend, that the tables would turn.”

Pyramid selling is prohibited under the Pyramid Selling Act 1980 but this only applies to goods and services. Here investors are not really investing in anything.

While this is worrying for those foolish enough to get involved, it pales into insignificance to Albania where pyramid schemes convulsed the entire economy in 1996 and 1997. At their peak, the nominal value of the pyramid schemes’ liabilities amounted to almost half of the country’s GDP. Many Albanians—about two-thirds of the population—invested in them.