A 39-year-old Chinese national arrested Thursday for allegedly defrauding unsuspecting members of the public of over US$1 million through th...
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A 39-year-old Chinese national arrested Thursday for allegedly defrauding unsuspecting members of the public of over US$1 million through the E-creator Ponzi Scheme will spend the weekend in jail after he was remanded to Monday for bail application.
Zhao Jiaotong briefly appeared before Harare magistrate Marewanazvo Gofa charged with fraud. E-Creator was a firm that promised investors quick money by sharing positive reviews on e-commerce sites worldwide.According to court papers, sometime in January, Jiaotong hatched a plan to defraud unsuspecting Zimbabwean nationals through an online investment Ponzi scheme.
On February 7 2021 and in connivance with Trymore Tapfumaneyi, Justin Kuchekenya, Bily Thomas Syedou, Abraham Mutambu and others who are still at large, he allegedly registered a company with the Zimbabwean Registrar of Companies styled E-Creator Electronic Commence Private Limited.
The company had its offices situated at room 15 and 16, 10th Floor Joina City Building, Harare. In other news, the Zimbabwe Republic Police have made a second arrest in connection with the E-Creator Ponzi scheme. Trymore Tapfumaneyi, one of the directors of the company, was taken into custody on 13 July 2023 for fraud involving the scheme.
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| E-Creator: Why is it Really Called a Ponzi Scheme? |
This development follows the closure of E-Creator in July 2023 after it allegedly disappeared with over $1 million of its members’ money. This arrest comes shortly after the arrest of alleged mastermind Zhao Jiaotong.
E-Creator was registered as a legal private company under the Companies and City Council’s acts, accompanied by a Zimra number. The company claimed to be an e-commerce company that partnered with platforms such as Lazada and Zalando.
It offered various packages that required members to pay a registration fee ranging from US$15 to US$300 and then post fake positive reviews on these platforms.
The merchants allegedly paid the company promotion fees, and the employees who completed the work allegedly earned commission income. This business model and the high-interest rates of 4 percent per day attracted many investors and customers to E-Creator.
The merchants allegedly paid the company promotion fees, and the employees who completed the work allegedly earned commission income. This business model and the high-interest rates of 4 percent per day attracted many investors and customers to E-Creator.
E-Creator closed down in July 2023, after just two months of operation, due to the alleged disappearance of its founder, Zhao Jiaotong, who was a Chinese national. The scheme scammed thousands of people in Zimbabwe who had invested their hard-earned money in the hope of making some extra income.
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.
Some of the first recorded incidents to meet the modern definition of the Ponzi scheme were carried out from 1869 to 1872 by Adele Spitzeder in Germany and by Sarah Howe in the United States in the 1880s through the "Ladies' Deposit".
Howe offered a solely female clientele an 8% monthly interest rate and then stole the money that the women had invested. She was eventually discovered and served three years in prison. The Ponzi scheme was also previously described in novels; Charles Dickens's 1844 novel Martin Chuzzlewit and his 1857 novel Little Dorrit both feature such a scheme.
In the 1920s, Charles Ponzi carried out this scheme and became well known throughout the United States because of the huge amount of money that he took in. His original scheme was based on the legitimate arbitrage of international reply coupons for postage stamps, but he soon began diverting new investors' money to make payments to earlier investors and to himself.
Unlike earlier similar schemes, Ponzi's gained considerable press coverage both within the United States and internationally both while it was being perpetrated and after it collapsed – this notoriety eventually led to the type of scheme being named after him. - Online Sources
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.
Some of the first recorded incidents to meet the modern definition of the Ponzi scheme were carried out from 1869 to 1872 by Adele Spitzeder in Germany and by Sarah Howe in the United States in the 1880s through the "Ladies' Deposit".
Howe offered a solely female clientele an 8% monthly interest rate and then stole the money that the women had invested. She was eventually discovered and served three years in prison. The Ponzi scheme was also previously described in novels; Charles Dickens's 1844 novel Martin Chuzzlewit and his 1857 novel Little Dorrit both feature such a scheme.
In the 1920s, Charles Ponzi carried out this scheme and became well known throughout the United States because of the huge amount of money that he took in. His original scheme was based on the legitimate arbitrage of international reply coupons for postage stamps, but he soon began diverting new investors' money to make payments to earlier investors and to himself.
Unlike earlier similar schemes, Ponzi's gained considerable press coverage both within the United States and internationally both while it was being perpetrated and after it collapsed – this notoriety eventually led to the type of scheme being named after him. - Online Sources
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