Spotting Pyramid Schemes

Pyramid schemes are a species of investment scams that bear a close resemblance to Ponzi schemes. As the name implies, Pyramid schemes denote a hierarchical structure of people, where those in the upper layers get to those positions by recruiting others (those in the lower layers) and earning part of their recruitment fee. Pyramid schemes like Ponzi Schemes are considered illegal because such schemes are doomed to fall apart as it is impossible for there to be an unlimited number of participants. As soon as new recruits dwindle, so these schemes die and the majority on the lower levels make a loss.

Types of Pyramid Schemes

Pyramid schemes can be classified into two broad categories, Naked Pyramid Schemes and Product-based Pyramid Schemes. Naked Pyramid schemes are the classic Pyramid schemes we are used to in which participants at the upper levels are paid from the funds of those newly recruited into the scheme. No goods, services or products are sold in Naked Pyramid schemes and the emphasis is clearly on recruiting new participants. Product-based Pyramid schemes are in most respects like Naked Pyramid Schemes but with the crucial difference that the buying and selling of products are attached to payouts and ascendancy to higher levels in the scheme. This added feature of the buying and selling of products makes it notoriously difficult to differentiate such pyramid schemes from multi-level marketing, another business activity which also has participants selling products in hierarchical levels.

Spotting Naked Pyramid Schemes

This type of Pyramid scheme is not hard to spot. If you are asked to join an “investment” scheme which promises huge profits without having to buy and sell products but depends on you getting other people to sign up and you are going to be paid a percentage of their sign-up fee, then you are dealing with a Naked Pyramid scheme.

Spotting Product-based Pyramid Schemes

As already alluded to, spotting these kinds of Pyramid schemes is more difficult, this is because proponents of these schemes set them up to look like multi-level marketing campaigns. Some are complex with matrix, binary and stairstep hierarchical structures with corresponding compensation plans. Nevertheless, here are some signs that can aid you in spotting such schemes.

There is an emphasis on recruiting more than selling products. Some proponents of such schemes are very clever and try to mask the fact that the concentration is on recruiting rather than the selling of products. Here are some pointers to help you spot when the emphasis is on recruiting.

a) Study their compensation system. If distributors far up the hierarchy (pyramid) receive a larger payout than those at the bottom who sell products directly to the customer, then you will have a situation in which the emphasis will be on recruiting. A legitimate MLM program will offer more rewards to those selling the products directly to the end user.

b) Advancement in the scheme is by recruitment. If to get to upper levels in the distributorship hierarchy depends on recruiting people (downlines) instead of selling products or by appointment, obviously the emphasis will be on recruitment.

c) A distributor hierarchy that is excessive. Functionally, there is no reason for multiple levels of distributors except to make people believe they can earn more money the higher up they are placed in the scheme. This in turn leads to an excessive drive to recruit others (downlines) into the scheme.

2. Lack of Financial Transparency. Pyramid schemes will keep their financials hidden or if made known it will be vague. Always request company financial statements audited by a known and reputable auditing firm. If this is made available to you, get someone who can interpret it for you to show if the company’s revenue is from selling products or from monies made by recruiting people into its scheme.

3. Use of High-Pressure tactics. Pyramid schemes use high-pressure sales tactics. Watch out for promises of high returns in a brief period, freedom to live the life you have always wanted, or an insistence to commit and failure to do so would be to miss an opportunity of a lifetime.

In conclusion, we would like to add that when you are approached with an offer to join a scheme you should always ask questions. Seek out present and past distributors and ask for their experience with the scheme. If they tell you that for you to make money in the scheme you must recruit others, know you are dealing with a Pyramid scheme.

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Is Intelligence Prime Capital a Scam?

We recently received requests via our social media handles to investigate Intelligence Prime Capital ( What follows are our findings.

On the “Why IPCAPITAL” page of their website, we have this description of the company:

We consider ourselves a pioneering broker. We were founded in 2006, which is considered a lifetime in the online trading industry. In fact, we were one of the very first Forex trading platforms to be made available to retail traders, just like you. In that time, we have built a solid reputation for ourselves, and we believe it is incumbent upon us to protect that reputation and the strong relationship we have with our clients.

We decided to start the investigation with Intelligence Prime Capital’s claim that it was founded in 2006. A quick trip to open corporates revealed two entries for the same company, one in Canada and another in the US, both opened in June 2021.

Also, the WHOIS information for the domain reveals that the domain was registered in June 2021.

From this we can deduce that Intelligence Prime Capital is less than a Year old. So where did the date of 2006 come from? To unravel this puzzle, we decided to analyze the contents of the website, specifically looking at the source code. There we found code that had been hidden from displaying, pointing to another domain

Visiting the website, we find that it is similar to, with the pages why-IPCAPITAL being identical to why-avatrade except for a few changes.


A search on the internet revealed Avatrade has been in existence since 2006. From this we can deduce that those behind Intelligence Prime Capital copied the content on their website from Avatrade.

The next thing we looked to verify was if Intelligence Prime Capital had a physical office presence. On their website, the address listed is in Canada.

A search revealed five other organizations using the address, this might mean that this is a virtual office address.

The final thing we investigated was the company’s management team. This is important because having competent people at the helm of affairs means the company would do well and meet its obligations. Likewise, fraudulent companies find it hard to recruit top industry professionals who have worked with recognized firms as such individuals would not want to spoil their reputations. Intelligence Prime Capital does not list any of its management team members on its website. The only person we could find was their supposed Chief Marketing Officer via their YouTube channel.

Outside of a sketchy LinkedIn profile, there is nothing else about Dr. VAL NG SH. While researching more about the company we found that the Central Bank of Russia had released a warning about Intelligence Prime Capital. They said it shows “Signs of an illegal professional participant in the securities market.”

Putting it all together, Intelligence Prime Capital is less than a year old, stole content from another forex broker’s website for its own website, is likely operating from a virtual address and is showing Signs of being an illegal professional participant in the securities market. Our advice is that you stay clear of Intelligence Prime Capital, it has all the telltale signs of a fraudulent offering.

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