how to recognize them and how to return the money

The Department of Finance of the city of Moscow recalled that investors who invested money in financial pyramids and failed to receive compensation in court can partially return the money invested. Compensation has been carried out for 25 years, there is more and more information on the topic of financial literacy every year, but people continue to invest in various dubious enterprises. About modern financial pyramids, about security measures for their potential investors and ways to return the invested money, we talked with Timur Hardy, a partner at the Moscow Law Office “Lebedeva-Romanova and Partners”.

– The financial pyramids of modern Russia are more than 30 years old. Millions of people became their victims. Why, in your opinion, investors still fall for this bait?

– Of course, the main motivation of all victims of financial pyramids is the desire to quickly and effortlessly get large sums of money. There is a category of people who do not want to be “cautious” by investing in proven and safe investment instruments, but carry them into dubious structures. The main thing for them is that these structures promise ultra-high profits.

– Timur Markovich, what are they, financial pyramids-2022? How do they lure their victims?

– Unlike their predecessors from the “dashing nineties”, modern financial pyramids mainly operate online and position themselves as structures working in the field of cryptocurrencies, investing in the extraction of precious metals or in the development of technological start-ups. Such a strategy is designed specifically to attract those people who consider themselves financially literate and at the same time are looking for an opportunity to invest in various modern projects, often not thinking about the fact that these are classic financial pyramids, just somewhat modernized.

If we talk about how pyramids lure people today, then the schemes are still the same: the promise of high income, active advertising, plus a modern feature – the “technological effectiveness” of the project, that is, these are IT technologies, biomedicine, cryptocurrencies, and so on. Many, unfortunately, trust such rhetoric of new financial pyramids, especially if complex technical and financial terminology is used.

— How to recognize a financial pyramid today?

– The principles of operation of financial pyramids have changed little over the decades, which means that it is not so difficult to recognize them. First of all, you should be alerted by the promised super-profits: no one will guarantee a return of 150% of the invested funds just like that, and 100% too. Secondly, active and intrusive advertising is another hallmark of a financial pyramid. Thirdly, a dubious enterprise cannot clearly articulate how and on what it earns money. Try to look for this information about him, and you will be surprised – it is not there, except for a few “duty” paragraphs. After all, a financial pyramid is not a company that is engaged in real financial, industrial or scientific and technological activities, but a structure based on the use of other people’s money.

Is it possible to return the invested money in court and how to do it? Which is better – an individual claim or a class action?

– The money invested is not possible, but you need to try to return it in court. To do this, you will need to prepare the necessary evidence, draw up a statement of claim in court. The best option is to draw up and file a class action lawsuit. But this will require finding other people who also suffered from the actions of this pyramid. In our information age, this is easy to do – through social networks. You should also enlist the help of a good lawyer who specializes in such cases. He will help you file a claim properly and bring the case to court.

— Who can receive compensation from the Federal Fund for the Protection of the Rights of Depositors and Shareholders? How much can be returned and how to do it?

– Compensation in the Federal Fund for the Protection of the Rights of Investors and Shareholders can only be received by investors or shareholders of companies entered in the register of the fund. In addition, it must be understood that compensation is paid in the prescribed amount. To receive compensation, you will need a passport, proof of the damage caused (bills, checks, passbooks), a court decision to recover the damage caused, sentences against the perpetrators, as well as your bank account details. If the victim is disabled or veteran, appropriate supporting documentation will be required. You can return a little – up to 35 thousand rubles. And the disabled and veterans of the Great Patriotic War can receive compensation of 250 thousand rubles.

— The Fund does not return funds to contributors of Check Investment Funds. Why?

– Depositors of Check Investment Funds (ChIF) really cannot receive compensation. This is due to the specifics of CIF activities, since they acted as joint-stock companies and, accordingly, their investors acted as shareholders. But if a joint-stock company fails to do business, this is a natural risk for its participants, which they knew about in advance.

– If a person received an inheritance and found shares of the financial pyramid of the 90s in the papers of his testator, is it possible to receive compensation for them?

– The heirs are entitled to receive compensation, but only if the shares of the financial pyramid were included in the inheritance base. If not, then you can, of course, try to litigate their inclusion, but this is unlikely. In any case, I can advise you to consult on this issue with lawyers.

– Let’s say a person contributed 30 thousand to the financial pyramid, received an income of another 30 thousand, and then lost the rest of the money – will he receive compensation?

– Compensation is paid to everyone who was harmed by the actions of the financial pyramid, and who has the appropriate supporting documents. If there is a court decision, compensation will be paid.

“Modern MFIs can legally raise money from private individuals at higher interest rates than can be obtained from a bank deposit. Would you invest in such a venture? How safe is it?

— It all depends on what kind of microfinance organization it is. There are MFIs, which, in fact, can already be called “mini-banks” – they have been operating for ten or more years on the market, have a stable and good reputation, and have large own funds. In this case, you can invest in them without much concern. But recently emerged MFIs, about which little is known yet, may raise doubts. But if there is money that you can risk, if this is not the last money, then this way of investing it can also be considered.

– Let’s say a person saw a profitable and tempting offer from some company. How to understand that this is not a financial pyramid, but a real strategy? What advice would you give to potential investors?

– First of all, it is necessary to carefully study all the information about this company. It is necessary to understand what she does and where she is going to take money in order to ensure the income of her investors. To do this, you should familiarize yourself with information about the activities of the company, its founders and managers, check reviews on the Internet. It is worth paying attention to the indicated yield. Fabulous percentages without a clear explanation of the reasons for their appearance are offered by classic financial pyramids. Remember that it is much easier to study the information about the company to which you are going to transfer your funds in advance than to seek their return for years, and most often with little prospect of a positive outcome. I can also recommend consulting with a lawyer and financial advisor whether to trust a particular company.

It’s important to know

Investors of the still operating financial pyramid can write a claim to her address with a demand to return the money. In the claim, you must indicate that otherwise you will contact the court and the prosecutor’s office.

Besides, to report about the financial pyramid and its illegal actions, you can contact the Bank of Russia. The Central Bank will not pay you compensation, but your information can help you quickly find scammers and bring them to justice.

Find out more about receiving compensation for those affected by the actions of financial pyramids at website Federal Fund for the Protection of the Rights of Investors and Shareholders.

The interview was conducted by Alena Bodrienko.

Moskovskaya Pravda collage