HARLINGEN, Texas — Old schemes in a new situation is essentially what’s on Facebook feeds across the country.
Amid the global pandemic, people have taken a 2017 Ponzi scheme and leveraged it to target COVID-19 cash strapped families.
The scheme, has many names but it’s most commonly known as “blessing loom” and it’s nothing short of a cash grab.
“The obvious thing is that if you see someone guaranteeing a rate of return that is just far better than what anyone else is getting, that should raise red flags,” advised Business Law Lecturer James A. Gleason with the University of Texas Rio Grande Valley’s College of Business and Entrepreneurship.
The sales pitch, according to “Blessing Loom” pages, is based on recruitment.
“And is color-coded, the purple gift receiver is in the center, to get to the center, invitations are sent at a sum of money to level up. Moving up requires more cash by more invitations being accepted via a payment app like Venmo, Facebook or PayPal to name a few. It’s essentially a pyramid scheme only in circular form. What makes it illegal, is that you’re not actually trading Investments,” Gleason said. “You’re not actually creating revenue. In other words, you’re literally borrowing from Peter to pay Paul.” The borrow to pay is a textbook Ponzi scheme according to Gleason.
The scheme has seen a resurgence amid the COVID-19 pandemic where millions of Americans have filed for bankruptcy, unemployment and may have their sights set on turning a $1,200 stimulus check, into a quick cash situation.
Only the money doesn’t materialize.
Gleason believes schemes like this are perpetuated out the necessity to minimize loss, “if someone puts in $100 and they want to try to get their $100 back out, they will actually continue to try and recruit even though at some point they have to realize they have made a poor choice.
The poor choice has hit some of KVEO Derick Garcia’s followers on Facebook, one viewer wrote, “I wish I would of know before I got scammed out of what little I had.”
CBS4/LOCAL 23 News attempted to speak with the administrators of a Facebook page titled “RGV Blessing Loom.” When asked via Facebook messenger to explain how the plan works, the administrator responded:
Sorry. I can’t really do an interview without possible consequences. However, there is a lot of information on them online. The group was only created to help people who have been scammed by this system find the means to make their money back.
Before KVEO Derick Garcia could send a request to join the closed group of 150+ people, the page was no longer available, and our follow up questions have not been responded by the administrators.
To watch the full interview with more details on how to protect your pockets visit :
KVEO Derick Garcia’s, Chats with Experts series here.