Gollong Racket Collapsed But Desperate South Africans Falling for New International Scams

• Gollong Investments, a Ponzi scheme GroundUp exposed in November, has collapsed.
• But a new scheme, New Energy International, has emerged and it appears to be very similar.
• According to a report by Surfshark, South Africa ranks sixth in the world for cybercrime density.

In November last year, the Limpopo Mirror and GroundUp exposed the shenanigans of Gollong Investments. It was a Ponzi scheme. It promised lucrative returns to “investors” and claimed to be backed by big business and the government. Investors were told that they were buying products, such as solar equipment, which would then be rented out to consumers and businesses.

Gollong has now collapsed but not before the scammers squeezed whatever money they could out of gullible participants. Even before disappearing in mid-December, the operators of the scheme, who appear to be from outside South Africa, had already launched a new investment scheme which is still actively promoted.

The entry-level investment in Gollong was R230, which had to be invested for 40 days. Investors were to get back R8 a day and at the end of the period were to be paid out R320, the equivalent of an annual yield of 357%.

For investors who had an appetite for risk, the promised returns were even more attractive. A R140,000 investment in the top-of-the-range G-VIP8 products would pay out R588,000 in 60 days.

The Gollong Investment scheme made use of referrals, and new investors had to be introduced by active investors. The scheme encouraged members to recruit investors, and the more people a member recruited, the higher the member’s earnings.

Gollong made use of a dedicated app that could be downloaded from the Google Play Store or by visiting the website. The app provided members with more options to invest, and it displayed information such as daily balances. Communication was via closed WhatsApp groups, with strict rules prohibiting members from posting “negative” comments.

The scheme caught the attention of investigative reporters, who quickly saw the red flags.

Gollong Investments claimed in its marketing videos to have been active in South Africa since 2021, but the company was only registered on 21 September 2022. A visit to its listed address in Edgar Road, Boksburg, showed that there was no such business operating there. The address of the “headquarters” in Piccadilly Street in London also proved to be false.

The names and pictures of the international “directors” of Gollong also turned out to be fake. A reverse image search of photos of Gollong staff revealed that the same “team” were the driving force behind several other dubious companies. None of these companies responded to questions about the legitimacy of their directors.

In Ponzi schemes, the early investors are paid with money coming from new investors. Once the scheme reaches a point where it is about to collapse, the organisers disappear with the money. This happened with Gollong Investments, less than a month after the article in Limpopo Mirror and GroundUp appeared.

“I was part of it”

At the end of December, Limpopo Mirror was contacted by one of Gollong’s former members, David (not his real name). He said he only realised later that he was probably one of the first investors in the scheme.

“Late in August last year, I spotted an advert on a community chat group, where a company was looking for part-time and full-time workers. The income promised was between R500 and R2,500 per day. I desperately needed to supplement my income, so I responded and that’s how I met Christine, one of the scheme’s administrators,” said David.

Interviews and subsequent conversations with Christine were via WhatsApp. David noticed that Gollong’s administrators all used +44 phone numbers, the country code for the United Kingdom. (It is possible that the numbers are fake and that the scammers used virtual or cloud-based UK phone numbers.) The profile of one administrator contained Chinese text, which strengthened suspicions that the scheme was not driven from South Africa.

Initially things worked well for David. He was wary of taking risks, so he opted for the R230 investment. He started canvassing his family members and friends and his Gollong “ranking” quickly moved up.

“I became a team leader and reported directly to Christine. She even allocated some funds to my account to help me market Gollong at events in my neighbourhood,” David said.

He says he remained wary and advised new members not to invest too much of their money in the scheme.

“In some way we saw it as having a bit of fun. We were making money, but back in our minds we were wondering how long it would last,” he said.

At the end of November, shortly after the article questioning Gollong’s activities appeared, Gollong launched its FIFA World Cup competition. Investors could place bets on different “funds”, such as Morocco or England funds. The odds were very attractive, and investors were almost assured of doubling or tripling their money while the World Cup was being played.

“In hindsight I should have realised that this was only a stalling technique to stop investors from withdrawing funds,” said David. “Investors were betting their income on the outcome of the soccer matches, but could not withdraw anything until the final was played.”

Excuses made

At the end of November the first of many excuses for not paying out funds appeared in the WhatsApp groups. One message sent out on 1 December stated: “Due to the hot activities (World Cup) and the rapid growth of members, Gollong’s original financial personnel were limited, resulting in slow withdrawals. We are also working hard to improve, and the financial department is actively recruiting financial personnel to process withdrawals. We are also actively communicating with banks, please rest assured that your funds are absolutely safe!”

Over the following weeks the excuses mounted with numerous “technical problems” cited as reasons for non-payment.

David had about R80,000 “invested” though most of this was the “profits” earned on his investments in Gollong. But when he attempted to withdraw these funds, his request was rejected. His last successful withdrawal was on 4 December, after which all further attempts were blocked. When he queried this, he was told that his team members were not performing and that he could only withdraw small amounts. He subsequently tried to withdraw a lower amount but was still refused.

The World Cup ended on 18 December, which meant that the “winnings” had to be paid out, but Gollong’s administrators said there was an audit by the SA Reserve Bank delaying payments.

Midway through December the following message went out on the various groups: “In order to reject illegal transactions of illegal money laundering, all Gollong users are requested to screen and review their accounts. Relevant departments will freeze all illegal accounts that have not been reviewed. Review time: December 19th and 20th.”

The method of “review” differed slightly between groups, but it entailed depositing more money into Gollong’s account.

“In order to protect the property of normal members, please cooperate with the government investigation … the measures are as follows: Deposit the same amount as the funds that entered Gollong last time, to prove that this Is a normal and legal account,” one message read.

On some groups members were told to deposit between R500 and R3,000 into their Gollong accounts. For “investments” below R3,000, only R500 needed to be deposited, whereas those with more than R10,000 invested had to pay R3,000 to “unlock” their accounts.

This alarmed the participants. Some started sharing links to articles exposing Gollong as possibly being a Ponzi scheme.

The Gollong administrators changed the WhatsApp group settings, no longer permitting members to comment.

On 23 December, the www.gollong.org site was no longer available and the Gollong App was no longer functioning. Gollong disappeared and its WhatsApp groups were no longer active.

How many people lost money in the scheme is as yet unknown.

David reckons he just about broke even. He was part of a group with 278 participants. There were at least 100 such Gollong groups. David reckons that most group participants were not active and didn’t invest a lot. But even a conservative estimate indicates that thousands of South Africans deposited money in the scheme.

New Ponzi schemes

Even before Gollong vanished, a number of similar schemes were already in operation, targeting gullible and desperate South Africans.

One scheme goes under the name of New Energy International. It is also called L.NE with a website address h5.bcok.club. Its modus operandi follows Gollong’s. The “products” are slightly different. The more expensive the product, the higher the income.

Investors can “buy” products such as a mini wind turbine for R300 or a small wind turbine for R1,000. The promised return on an investment in a small wind turbine is R30 per day. After 30 days, the payout is R1,020 – which means a R1,000 investment would yield an annual return of R12,240.

There is also money to be made by actively recruiting other investors. If the group of members recruited rises to more than 50, there is a R5,000 monthly bonus. Should the group grow to over 100 members, the bonus doubles to R10,000 per month. This “commission” scale rises to huge figures.

There are many similarities between Gollong and New Energy International. The website (which functions like an app on a mobile phone) has a similar look and functionality to the Gollong app.

Some of the administrators appear not to have bothered to change their descriptions in their WhatsApp profiles, and there are references to Gollong. The administrators also use +44 (UK) numbers.

Whereas Gollong mainly used ABSA bank, the new scheme appears to use Nedbank and African Bank.

The organisers of these schemes have put a lot of effort and planning into them. There are even websites that provide legitimacy to the scams. Enter “Is Gollong a Ponzi?” in Google and sites such as www.tunnelgist.com and www.bramreview.com are listed, which recommend the scheme: “For now, Gollong.org is 100% legit. Golling.org is a legit website. I’ve never heard of any scamming going on there. And I will be updating his article with new information everyday. So you don’t have to worry. For now, they offers [sic] a wide range of opportunities to earn extra income at home,” writes Bramreview.

This was posted a few days after Limpopo Mirror and GroundUp had already exposed Gollong as a Ponzi scheme.

Should I tell?

David seriously considered investing in New Energy International. This time he was more wary and pestered the administrators with questions, asking them where the company’s headquarters are and who the directors are.

“Our company works in the national government department,” was one of the responses. The administrators refused to divulge any specific information about the company and their answers remained vague.

David became convinced it was another scam. He considered alerting others. But before he could do that the administrators blocked him, preventing him and other members of the WhatsApp group from posting comments.

The “latest generation” of Ponzi schemes driven from outside the country’s borders are in many ways a type of cyber-attack. The New Energy International scheme should raise many alarm bells because new investors are requested to provide extensive information about themselves, and even have to submit scanned images of the front and back of their ID documents.

Well-known cybersecurity company Surfshark published a report last year on the effects such crimes have on countries. South Africa, according to the report, ranks sixth in the world for cybercrime density, costing the country an estimated R2.2 billion annually.

South Africa had 52 cybercrime victims per million internet users in 2021. The top-ranking country was the UK, with 4,783 victims per million users.

The types of cybercrimes vary from ransomware attacks to online payment fraud. Criminals are also focusing on obtaining data, with the rate of data breaches worldwide steadily climbing. The most common cybercrime, according to Surfshark, is phishing.

“Phishing victims on average lost the least amount of money ($136 per victim), while people that fell victim to investment fraud lost the most ($70,811 on average),” the report says.

We sent questions to the SA Reserve Bank asking whether it was aware of the activities of Gollong and L.NE. We have not received a response.

Questions were also sent to the South African Banking Risk Information Centre (SABRIC), a non-profit company formed by the four major banks to help fight organised crimes. SABRIC did not respond, but on its website it publishes useful guidelines to help consumers spot Ponzi schemes.

© 2023 GroundUp