By Anton van Zyl and Maanda Bele on GroundUp
“Do you think it will last until December?” This is Edward’s* main concern. Two months ago he invested R500 in a new get-rich-quick scheme, Gollong Investment.
It was all the money he had, but he was desperate to try something to make some extra cash.
After just 40 days, Edward, from Thohoyandou in Limpopo, received a notification that his balance with Gollong was now R800, showing a welcome R300 profit. The investment generated a 60% return, not bad going for just over a month.
Edward was so impressed with how his “investment” had performed, that instead of cashing in he decided to re-invest the full amount, along with a further R1 500 he borrowed from a family member. Now he must wait 50 days for what he expects will be a payout of R5 250, a staggering R3 250 profit on the R2 000 invested.
“Some say it’s a Ponzi scheme, but I don’t know,” Edward says. A Ponzi scheme, according to Investopedia, is a “fraudulent scheme that involves paying early investors in a non-existent enterprise with the funds invested from new investors”.
But Edward wants to believe that Gollong is legitimate.
“Gollong says it’s a legit company and that it is registered with SARS. I am just hoping that nothing happens before December, because I really need the money.”
Edward heard about the investment scheme from his sister, who lives in Johannesburg. She was one of the early investors. A week ago she received another pay-out, says Edward, showing a WhatsApp screenshot indicating that R15 393 was paid into his sister’s Capitec account.
“She invested R82 300 last week, but she now earns more than R3 000 a day.”
He admits that Gollong’s claimed returns on investment are extravagant, but he wants to believe that it is possible. “I just hope I don’t lose my money,” he says.
One big red flag is that Gollong, in one of its promotional videos, shows a picture of an “Authorization Certificate” claiming that the company has full authority to promote its “photovoltaic series products” to South African citizens for a ten-year-period, from February 2020 to February 2030.
The certificate was awarded by the non-existent “Cape Town People’s Government of South Africa”.
It’s a Ponzi
People around the world have been fleeced of billions of dollars after falling for Ponzi schemes, which rely on the greed or desperation of investors. Characteristics of all schemes are unrealistically high or consistent returns, and vague or unclear business models underpinning them. The lucrative returns on offer often persuade investors to turn a blind eye to the way the returns are generated.
South Africans have seen many such schemes take off and then collapse after the people behind them disappeared with their cash. The most famous was probably Adrian Nieuwoudt and his kubus Ponzi scheme that took the country by storm in the 1980s. This involved the cultivation of milk yeast cultures and a wonder beauty cream. The pyramid collapsed and Nieuwoudt was sequestrated.
A clever Ponzi scheme will try to link to a fairly credible product, but preferably not one where the return on investment is easy to calculate. Until recently, crypto currencies were popular choices for Ponzi scheme operators, because few people understood how these currencies worked.
“We are the chosen ones”
With loadshedding predicted for the next few years, South Africa is fertile ground for Ponzis offering power solutions. Gollong Investments, which claims to originate in the United Kingdom, apparently entered the South African market in 2021, inviting people to invest in its products.
“GOLLONG is a company focusing on new energy research and development. Due to the current electricity shortage in South Africa, our company was invited by the South African government …”, an introduction to a Gollong YouTube marketing video claims. It describes Gollong’s business model as the “promotion of mobile charging equipment and solar generators in South Africa”.
From what we could gather from the company’s various websites, its presentation video on Youtube, and other sources we discovered, the scheme invites investors to “rent” different types of solar equipment including battery packs, solar panels and charging stations that can be used during load-shedding. Once the investor “rents” the equipment, the equipment is then on-rented to end users who pay to use them. Does that make sense? Not really! You are probably asking the same question we are: well then, why doesn’t the company just rent the equipment to consumers itself?
What’s also unclear is whether Gollong actually makes the equipment or buys it from another manufacturer. And also very mysterious is who exactly are the end users? Who are the people or businesses prepared to pay such huge sums to use the equipment that generates such incredible returns for investors?
In short, it’s a very mysterious business model for one that generates such incredible returns.
Numbers don’t add up
Gollong offers investments in a variety of “products”. The bottom-of-the-line product is a six-slot power bank, which can be “rented” by the investor for R230 over a 40-day cycle. This, they claim, pays out R320 at the end of the cycle.
The top-of-the-range investment is for the G-VIP8, described only as “solar power”, at R140 000. After 60 days the investor is promised R588 000, a R448 000 profit.
“Of course, you won’t get the actual device. You’ll get the earnings hold on it,” Gollong says in its video marketing pitch. “The device is still in a mall. In other words, the device works for you every day. Everyday people use your device, they need to pay and those profits are yours.”
Calculating the return on investment on an annual basis, it’s clear that percentage profits claimed are unrealistic. The supposed return on investment on the lowest investment of R230 would yield an annual return of 357%, which is about 350 percentage points more than you’ll get at a commercial bank!
The top-of-the-range investment seems to generate returns that are truly dazzling – and simply too good to be true. If you invested R140 000 in the scheme, a year later you would be a millionaire after having received a staggering R2.72-million, representing a return of some 1 946% in a year.
“Gollong’s purpose [is to] insist on letting warmth enter thousands of households and serve every member with heart,”the company told investors in a message last week.
To try to establish whether Gollong can deliver such astronomical returns, we contacted a legitimate vendor who is active in this segment of the market in South Africa.
Adoozy Power rents out power banks similar to the ones used in Gollong’s marketing material. “We give the end consumer an opportunity to rent a power bank in one location and return it … at any other Power Tower throughout the Adoozy network which includes Johannesburg, Cape Town, and Durban,” the company says on its website.
The power bank rental concept is available in several countries where power is an issue, and it is growing in popularity. People reliant on their cell phones and other communication devices for their work and livelihoods are drastically affected by the disruptions posed by load-shedding and power outages. Being able to recharge or power portable devices is a fundamental requirement and also presents a huge business opportunity.
Adoozy Power’s power bank units cost R50 each for a three-hour rental, but customers also have the option to rent them for longer periods at reduced rates, including a monthly rate of R199. During the rental period the power bank can be exchanged for a fully charged one at any of Adoozy’s kiosks.
Adoozy Power CEO, Kegan Peffer, says he has not come across any Gollong devices in South Africa.
“We cannot comment extensively on another business as we do not know the exact nature of their offerings,” he said. “But returns would be based on frequency of rentals, which can be high at high usage areas such as events or airports. Because consumers can rent [equipment] more than once-off, this can give good returns, but … 357% with the consideration of capital expenditure, logistics, maintenance etc is difficult to attain.”
Peffer said that capital expenditure included not just the power bank itself, but also the actual kiosk and the tech and development involved. “On the whole, power bank rental can be profitable. However, it is a capital-intensive exercise to get off the ground. A critical component is choosing the right locations to ensure that frequency of rentals is high. That will dictate profit margins,” he said.
Tracking down Gollong in South Africa
Though Gollong Investment claims to have been active in South Africa since 2021, the company was only registered on 21 September this year. Its listed address is Office 26, Benvista Office complex, Edgar Road, Boksburg, on the East Rand. There is only one director, 31-year-old Melikhaya Palafini. Palafini has no social media presence and a Google search does not produce a single result.
When a reporter visited Gollong’s supposed Boksburg offices, there was no sign of the company. This address is of a series of townhouses and some offices. The security guard at the entrance pointed out a board listing all businesses at the address. Gollong Investments is not one of them. “There are one or two loan sharks operating from some of the offices, but I don’t know a Gollong,” the guard said.
London just as dodgy
The “international” address of Gollong also proved to be false. The company’s website says it is based at 47/48 Piccadilly Street, London. This venue, close to the posh financial district of Mayfair, with Buckingham Palace just around the corner, is a popular tourist shopping destination.
But when a reporter visited this address he found that no such company operates from the building. The concierge, who has been working at the premises for eight years, confirmed that no such company had been based there over that time.
Gollong’s “team” in the UK are listed as Dilip Gupta (CEO and founder), David Adams (Engineer) and Bill Caruso (Engineer).
But a reverse image search of photos of Gollong’s supposed staff revealed that the exact same “team” are also the driving force behind another company, Solar E-tribe, with the descriptions and photos of the team members identical to those on the Gollong website (See “Team”). Further searches showed that the same photos and names of the directors are also used on other websites, such as that of a company called Tiger Tooth Technologies.
Solar E-tribe did not respond to an email asking the company to confirm that its directors are also active in Gollong Investments. Bill Caruso did not respond to a similar inquiry sent to his Tiger Tooth Technologies profile about his relationship with Gollong.
The www.gollong.org site is relatively new and first indexed by webarchive.org on 17 July this year. This site, however, can only be accessed by members who have logged in and contains no public information, such as an address or telephone numbers.
The www.gollong.gq site contains some information, but the address of the office is false. The site contains a “contact us” page, but once a message is submitted via this page, it comes up with a “sorry, it seems that our mail server is not responding. Please try again later!” message.
The www.solaretribe.com site has a history dating back to 2013, but initially was a vendor referral site. When it started to focus on solar energy and devices, it had two addresses, one in Texas in the USA and one in Gurugram, India. In about 2018, the Gurugram address was dropped and replaced with a New York address.
Make money the hush-hush way
Anyone wanting to join Gollong as an investor needs a referral from an existing member. Once someone becomes a member, they can interact via an app that can be downloaded from the Google Play Store or by visiting the website. Only members are privy to information and messages from Gollong.
Gollong makes extensive use of WhatsApp groups to communicate with investors. Judging by the phone numbers, these groups appear to have operators based in the United Kingdom, but the address provided in the group details is in Camps Bay in Cape Town.
We sent a message via WhatsApp last week to one of the group administrators, who goes by the name “Leseai”, asking for names and contact numbers of the scheme’s managers or owners. The messages were simply ignored.
We also sent a WhatsApp message to the cell phone number of one of the South African members, “Tsalelani”, who seems to be actively advising other members, and asked her to supply contact details of her manager. “Y asking me?” she responded, and then refused to interact further.
Judging by WhatsApp screen grabs, participants in the investment scheme are discouraged from talking about what is happening. One message sent to group members warned against “discussing or slandering the company.” Members are even offered rewards of R200 if they report such conduct to the administrator.
“Recently, some people doubt the authenticity of Gollong, and there are rumours that Gollong will stop business in the near future,” Alyssa, who has a UK phone number, posted. “Gollong company will investigate its legal responsibility for these false information and rumor makers”.
Efforts to contact the administrators via these UK phone numbers were also unsuccessful.
Feeding the beast
The messages to group members are focused on encouraging them to recruit more investors. “Reward codes will be sent every day at 19:30. Invite friends or family to join to get R50-R14 000,” reads a message sent out on Sunday night.
Any successful Ponzi scheme relies on a myriad of enticements. You have to convince the existing members to actively recruit more investors and spend more money, because if money doesn’t flow into the pot, the fraudsters won’t be able to pay investors.
In the case of Gollong, it has all the bells and whistles, including a lottery pool where people can “spin and win”. “Every time you recruit 1 new user (or spend R600), you get one lucky spin for free. 100% winning,” according to Gollong’s “7 Ways to Make Money in Gollong” instruction manual.
If people don’t want to play Gollong’s lottery, they can make money by renting the equipment. There is, however, a slight catch. They have to visit the app at least once a day and claim their income. If they don’t, they lose it.
Investors can also make money by inviting new members to join. Gollong’s “rules” in this regard are slightly confusing, because it can either earn you an additional R2 a day, or R100 per member for the R500 device. Maybe they make it up as they go along.
Any clever Ponzi scheme relies on a hierarchy, which means people who have been members for longer have new recruits “under” them. And, being on a higher level, they also earn a percentage of what those under them earn. They will collect 10% of whatever the recruit below them earns, and a further 6% of the earnings of the person on the tier below that. And so it continues.
But, there is one little snag – the equipment that the top tier rent must be more valuable than the equipment of those “below” them.
But wait, there’s more
If you are easily distracted and confused by the various levels, tiers and VIP statuses, luckily there is an easier way to quadruple your money: you can invest it in the “Energy Pool”. This is way better than any bank, because it offers 5.2% interest per day!
“If you put 10 shares (R1,000) in NO.3 energy pool, then it will automatically add 1,000*5.2%=52 interest to your Gollong account every day After 90 days you can get the total interest: 52*90=4,680,” the manual explains.
This return on investment beats some of the best Ponzi schemes around. In real terms it works out as a rate of 1,898%. And, in the exact words of the manual: “At the same time, you can also get your capital back R1 000”.
The manual ends this section with: “If you experience load-shedding a lot or don’t have time to manage your Gollong account, energy pool are (sic) the perfect way to make money.”
Is this legal?
Of course, none of this is legal, and for a variety of reasons. The Banks Act prescribes that only registered banks can take such deposits and it is illegal for unregistered institutions to take deposits from members of the public.
Gollong is not listed as an authorised financial service provider, which means that the company may not handle investments or offer financial advice to clients. Gollong may argue that it doesn’t have “investors”, but merely customers “renting” its equipment, but this will be hard to prove as there is currently no evidence that any of its products are in operation in the country.
Also, the running of an internal lottery without permission is illegal in South Africa. The National Lotteries Commission (NLC) regulates all lotteries and sport pools in the country.
NLC spokesperson Ndivhuho Mafela said that Gollong Investment “appear to be an investment scheme/company and therefore by law not eligible to conduct a lottery in terms of the provisions of the Lotteries Act 57 of 1997”. He added that no application had been received from the company to run a lottery.
Where to from here?
For investors such as Edward, it’s a nervous period of waiting. If he “cashes in”, he will lose all his potential winnings. If the Ponzi scheme crashes before he bails out, he loses his R500 – and he still owes his friend R1 500.
Without inside knowledge of the scheme, it’s near impossible to judge how many people have invested. One of the Gollong WhatsApp groups, Gol Long exchange group 28, had 352 participants a week ago. It could mean that there are at least 27 other similar groups, but it could simply be a name chosen for the group.
Judging by Gollong’s latest news postings, the bait is getting even tastier. The lottery pool has increased in size. “As mentioned earlier, in order to speed up the popularization in South Africa, Gollong will spend 200 million rand to promote this event,” a recent post claims.
Edward’s sister has big plans for Christmas for her children and other family members. She has invested a lot of money in Gollong and would be very upset – and badly out-of-pocket – if the pyramid crumbles. She will also have to answer to a lot of friends and relatives who she has recruited, and who invested money based on her recommendation.
“Do you think it will last until Christmas?”Edward asks again.
* Edward is not his real name, but his story is based on his real situation. He did not want to be identified for fear of being victimised by other investors.
Disclosure: The reporters spent R500 investing in Gollong in order to get information they needed for the story.
Anton van Zyl and Maanda Bele are from Limpopo Mirror. Assistance was provided by Warren Thompson, a freelance journalist working with the London-based investigative journalism outfit, Finance Uncovered. Zaid Khumalo, editor of Kathorus Mail on the East Rand, assisted with research in Boksburg. This article is co-published with the Limpopo Mirror.
This article was first published on GroundUp