Crowd1: Get-rich-quick scheme that has left dozens in poverty
By Daniel Wesangula and BBC
| November 2nd 2020
It was all about the money. All about the planes. All about the bottles of expensive champagne and sleek suits. All about an unattainable dream sold to a population trying to pry itself out of poverty and into a better life.
For close to two years, Crowd1, an online based investment opportunity promised the key that would open the doors to a magical kingdom. Until it all came down, bringing with it the ambitions and dreams of Africa’s poor who had invested all their hard earned money for a chance at this life.
Instead of greatness, investigations by BBC’s Africa Eye have revealed that investors have been left with nothing but pain and agony with some losing their life savings to a greatly marketed pyramid scheme in one of the world’s most elaborate frauds.
Yet, even with complaint from individuals who have lost more than money, little is done by governments whose financial institutions can curtail the damage down by these online scams. A few countries have put up warnings to their citizens against getting themselves entangled in such schemes. Fewer, like Burundi have banned Crowd 1 from operating within their jurisdictions. But many more governments continue to look on as their citizens get carried away by the faux glitz and glamour that accompanies these schemes.
Impossible is nothing
For Regina’s mother, possibilities of a better life seemed impossible. No matter how hard she worked the big breakthrough for Regina in South Africa looked just out of reach. Just a fingertip away. If she could perhaps just stand lift herself a bit higher and stand on the very tips of her toes she could maybe touch the great life that she aspired to. But she just couldn’t do it. Every tiptoe fell just short of her aspirations.
Until Crowd 1 came her way and suddenly, she grew a foot taller. And all she wanted to achieve was within reach.
“Yes they were recruiting us using short videos of people getting money and driving Ford Rangers and BMWs and Mercedes saying that this could be us in the next 6 months,” xxxxx says. “Those clips are what got me.”
Her daughter, Regina, says many people thought his was true because they could see the money in their phones.
But the virtual money was just part of the ruse.
Like any proper pyramid scheme, an investor had to first part with quite a large sum of money. Of course, the more your put in initially, the better your chances at a better life.
For Regina’s mother, the price for a better life, a life of the Ford Rangers, BMWs and the Mercedes Benz cars she had seen in the short recruitment videos was Sh30000, a huge sum for a struggling mother.
What she was promised for this investment was a certain shareholding that would yield payments to her every three months.
According to Crowd 1, this educational pack was supplied by a third party Grithub. The educational package was meant to give you lessons on how to become a multimillionaire, the first in your family.
The best package, platinum goes for some Sh200,000 shillings.
For this, the BBC Eye team found out, one gets just under 2 hours of educational material. But that was not it. The entire programme sold by Crowd 1 for this premium product was plagiarized from a real estate self-help book by author Phil Pustejovsky, which sells for Sh1000 on Amazon and is also available for free on various book sharing platforms.
But for unsuspecting members of the public who have put their money in this, the plagiarism by Crowd1 represents the fastest way to get from poverty to wealth.
“This is what will help you become a billionaire like some of those rich guys,” one of the promotional videos goes.
These details though, of the educational plan, were not passed on to the investors such as Regina’s mother. Instead, the messaging they received was far much different than what the founders of Crowd1 have been saying in their video clips.
For her, the deal was brought to her by her pastor. A man whom she had entrusted with her spiritual well-being and who would gain nothing by lying to her, so she thought. She was wrong.
“This pastor told us that he has hundreds of thousands in his account from Crowd1,” Regina, told the BBC Africa Eye team.
And when the man of God sold the dream to her mother, there was no mention of educational packages. He was selling something else.
“They called them shares and told us that every three months we would get an amount in our accounts like a salary and they would send us clips every month of winners getting their money. People making around Sh100000 a month.”
The regularity of the payouts and the amounts being bandied about sold Regina’s mother to the idea. She too wanted to be part of the Crowd1 dream.
According to another promotional video by crowd 1, the money sent out to investors is from profit sharing agreements from a litany of third party partners who, allegedly pay Crowd1 to access its huge data base of clients and eventually provide customers to their partners minus the cost of customer acquisition. On paper, this sounds like a good idea.
But what happens when a customer wants to cash out his share of the profits after the three-month investment period? In the course of their investigations, the BBC Eye team which had invested some Sh200,000 in an educational plan that had over the months earned rewards amounting to some Sh700,000.
But, there was a problem.
When payday came, and the BBC team wanted to cash out, they only managed to access some Sh300 of the money initially put in.
It was worse for other investors.
Crowd1 had come up with an incredible plan to get people talking about their products.
“There was this countdown on all their social media handles to the life changing events of them getting interests on their money. People didn’t sleep. Everyone was waiting for their lives to change,” Regina says.
But the eager investors woke up to news of a different kind.
“Then I saw my money was gone and I stopped believing in them,” Regina’s mother says.
Over the years that it has been in operation, Crowd1 has amassed quite a large amount of followers particularly from developing nations in Asia and Africa. However, their journey to get these numbers has been shrouded in uncertainty.
First, from past experiences, many nations across the globe have some form of legislation against pyramid schemes or multilevel marketing schemes without an actual product to sell to the members. This is precisely why Crowd1 says it is in the business of selling educational materials such as the packages that would turn readers into millionaires.
This keeps them, legally, away from the arms of authorities across the countries within which they operate. A closer look at the affiliate companies that they claim to be in business with for revenue sharing casts more doubt onto their story.
One of the companies they claim to be affiliated with is an online betting and gambling company called Affilgo. The other is Miggster, a mobile gaming platform. Both these two have no worthwhile content on their websites. The information on these sites, which are supposed to generate revenue to be split between Crowd1 and investors is made up of nothing but blurbs picked up from Wikipedia.
Thats not all though. Repeatedly, Crowd1 has claimed to be in partnership with known brands such as PremierBet. Inquiries from the BBC about this partnership were damning.
“We are not in partnership with Crowd1 or Affilgo,” an email from PremierBet reads.
The two platforms, Miggster and Affilgo, although listed as independent entities in partnership with Crowd1 were both set up in 2019. By Crowd1 themselves.
The other business entity supposedly in partnership with Crowd1 for revenue sharing is Crowd Magazine. So far, the magazine is yet to hit newsstands and a look into one of their issues shows that the content is generally made of profiles of Crowd1 founders with a dash of plagiarized work from other known magazine.
A cursory look reveals that very little effort has gone into the magazine to make it newsworthy in any way. Yet, it is one of the most pushed products by Crowd1. The other companies in affiliation with Crowd1 follow the same route. Made up companies, puffed up to appear legitimate. But behind the glamourous videos around them is a shell that forms just another layer under which millions of shillings from their recruits vanishes under. Never to be seen again.
But how has Crowd1 been running what is increasingly looking like a pyramid scheme successfully for all these years even with the evidence of loss by individuals such as Regina’s mother?
The United States Federal Trade Commission (FTS) defines a pyramid scheme or its operators as follows:
“They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.”
The FTS also says that pyramids are quite seductive because they may be able to deliver a high rate of return to a few early investors for a short period of time. And in the case of Crowd1, the primary investors are few and are bound by unique personal histories.
The men in the background.
Renze Deelstra has promoted Crowd1 all across the world. And when the Corona pandemic struck, they took their opportunity to the web. Webinars became the best recruitment tool, with the Renze holding, according to investigations by the BBC Eye team, at least two 90- minute webinars for recruitment every day.
One of the numerous blogs he has out there of self-promotion defines him as a Small Business Owner in Amsterdam, Netherlands.
“Success means you have a game plan that you can work every day or every week. Most people fail because they are trying to innovate" themselves to success. This business is about duplication not innovation. If you're tired of innovating and wasting your money, work with me. I have the game plan. I have a successful track record,” he says on the website.
In 2013, he was promoting a loyalty card company whose leaders were convicted of fraud.
Renze is not alone though. Crowd1 has an African connection, South African Masilo Mokone, who refers to himself as MR Smile.
Before Crowd1, Mr Smile was marketing a company called Bitclub Network that has been described by the US Department of Justice as a ‘worldwide fraudulent scheme that solicited money from investors in exchange for shares of pooled investments in cryptocurrency mining and that rewarded existing investors for recruiting new investors.”
Renz and Mr Smile aren’t the main guys behind the scheme. Above them, in the pyramid of their organization is CEO Johan Stael Von Holstein who describes himself as a Swedish entrepreneur
“We will give you the means to get where you want to go. Do not miss this opportunity,” Johan says in one of his recruitment videos.
In another one, he says at some point in his life, he was worth some 600million dollars.
Above Johan, at the top of the Crowd 1 pyramid is its founder, Jonas Werner who describes himself as a network industry guru as well as a true entrepreneur and visionary with owner two decades of experience in network marketing.
Crowd1 isn’t his first attempt at network marketing. In 2010, Jonas was involved in a company called Spinglo Synkronice, a company founded in England in 2009 operating in ‘network marketing and investment.’
“Synkronice is using networking combined with social media to give the opportunity to build up a global, recurring income. Synkronice is building a member base, that will be used as an investment in ready-to-launch business concepts,” a note on the company’s website reads.
He was also involved in another marketing schemes associated with proven fraudulent pyramid schemes.
That’s not all. Another name exists.
Petteroe Tor Anders is also one of the main brains behind Crowd1. In his home country of Norway, Anders is known by the moniker Pyramid King, for his propensity for the schemes that go back two decades.
Presented with evidence from the BBC investigations, the Crowd1 officials insisted that the company is not a scam or a pyramid scheme and does not break any laws. It is a legitimate network marketing company that offers products to its members and enables the members earn money by marketing those products. Crowd1 does not make money from recruitment, but only from these sales. All our products are genuine.
Crowd 1 rewards and bonus schemes are not marketed as shares or investments.
Johan denies being CEO of Crowd 1.
Jonas says he has tried to avoid pyramid schemes. The other officials also said they have always attempted to stay clear of Ponzi and pyramid schemes.
Mr Smiles said he was only a member and not an official of Crowd1. When reached for comment, Renze did not reply.
The people at the top of the pyramid seem look far away but Kenya has had its fair share of such schemes. Men and women have killed themselves after losing millions of shillings to such schemes. Others have been tied up in court process for years trying to get their money back from ghost companies with connections in high places including government.
Crowd1 might be the fad now, but with its constant rebranding and reintroduction of new products it is hard to see a future without the pain of people like Regina’s mother losing their hard earned money to the glitzy promises of fast talking strangers.
Unless of course, the authorities involved do much more than issue cautionary statements to the citizens, these schemes will continue to prey on the insecurities of the population.
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