Who was Charles Ponzi?
Charles Ponzi, an Italian immigrant to the United States. In the early 20th century showed us a scam that would bear his name forever, he also promised a fast return in an impossibly short time. His tactics, though nearly a century old, inspires modern fraudsters. Let’s take the case of Sumi Borah and Tarkik Borahs case, and the ”Taai and Daai”scheme in Meghalaya.
Ponzi Scheme Explained
Ponzi claimed he could buy government return coupons cheaply in other countries and redeem them at a profit in the United States, promising investors returns of 50% in 45 days or 100% in 90 days. In reality, Ponzi was simply using money from new investors to pay returns to earlier ones, creating an illusion of a profitable company.
The Sumi Borah case, for instance, promised investors nearly double returns in 60 days, just like Ponzi’s profit claims similarly, the scheme in Meghalaya promised high returns on investments, particularly targeting the tribal population with cultural marketing.
Impact of this Scams on the Middle and Lower Class
These Schemes mostly affect the middle and lower-class individuals for several reasons:
Promise of Quick Wealth
Escaping financial struggles through a “too good to be true” investment opportunity is a dream come true for those with limited means of income. This was noticed in both the Sumi Borah case and the “Taai” and “Daai” scheme, where victims were mostly from lower middle class backgrounds.
Limited Financial Literacy
Many middle and lower-class individuals may lack the financial education to critically evaluate investment opportunities, making them more susceptible to fraudulent schemes. Unlike wealthier individuals, those in lower economic backgrounds do not have easy access to financial advisors who could warn them about potential scams.
The Local Influence
The “Taai” and “Daai” scheme in Meghalaya is a prime example of how cultural bonds can be manipulated for fraudulent purposes. Hardships of village life may push individuals to take risks with their savings in the hope of improving their financial situation.
Rise of Scams in Assam: Sumi Borah Case
The increase of financial scams in Assam can be broken down into several factors:
The Digital Difference
While digital technology is spreading, many people lack the digital literacy to evaluate legitimate online opportunities from the fraudulent ones, as seen in the online stock trading scam run by Sumi Borah and Tarkik Borah.
Regulatory Challenges & Communal Foxes
The state may face difficulties in effectively regulating and monitoring financial activities, especially in remote areas. The trust-based culture in many North-Eastern communities can be exploited by scammers who build personal relationships with the potential victims.
Lack of Awareness
There may be insufficient public education about financial frauds and how to identify them. But the success stories of the scammers are widely publicized in the media and news outlets but it only encourages newer cases of scam or simply, inspires copycat criminals.
Scam Hub or North East: Recent Cases
The case of Assamese actor Sumi Borah and her husband Tarkik Borah were detained for their alleged involvement in a ₹2,200 crore online stock trading scam. They promised investors nearly double returns in 60 days. Their scam operated for almost three years before being exposed with the arrest of the mastermind, Bishal Phukan.
Similarly, Meghalaya witnessed the Taai and Daai scheme, which translates to “elder sister” and “elder brother” in the Khasi language. This scheme, promised high returns on investments, particularly targeted the tribal population of Meghalaya. The scammers exploited cultural respect for elders and community trust to lure victims.
Ways to Prevent a Ponzi Fraud
Campaigns to educate the public about the signs of financial fraud, using recent cases like the Borah scam is important. Strong protection is needed for individuals who report suspected fraudulent schemes and educating people on how to identify digital financial scams is required to reduce reliance on informal financial schemes. Atlast, enforcing severe penalties for those convicted of financial fraud would create an example for the public of the consequence of a Ponzi scam.
Conclusion
From the streets of Boston in the 1920s to modern day North East India, these scams remain unchanged – exploiting human hope and greed with promises of unrealistic returns. The cases of Sumi and Tarkik, along with the Taai and Daai scheme in Meghalaya, shows us how these frauds adapt and exploit cultural and community trust.
Lastly, Defense against financial fraud is a well-informed, financially literate citizen that understands the value of his/her hard earned wealth. Always know, If it sounds too good to be true, it probably is not.