INVESTIGATION: Crowd1: How scammers from Europe use phones to defraud people in Africa
A new investigation by BBC Africa Eye has uncovered an audacious global pyramid scam, run from Europe, that is using smartphones to cheat ordinary people across Africa, Asia, and Latin America.
Crowd1 describes itself as “the fastest growing crowd marketing company in the world” and produces social media videos show members buying new cars and enjoying luxury holidays. Using nothing but a smartphone, Crowd1 claims, you can become a millionaire by promoting and selling a series of exciting digital products to your network.
These claims have persuaded thousands—perhaps millions—of people across Africa to hand over the 99 Euros that buys an entry-level membership to Crowd1. But an investigative documentary by BBC Africa Eye reveals that, behind the slick marketing, Crowd1 is peddling a range of bogus products and false promises to cover an old-fashioned pyramid scheme based on recruitment.
The scheme appears to have made a fortune for a handful of European scammers, many of them Swedish, but it has left behind a trail of debt and poverty in countries including South Africa and Nigeria.
The BBC found that the most important of Crowd1’s products—an “educational package” you have to get if you want to become a full member—is effectively worthless. It is described by Crowd1 as an online “education” in real-estate investment, but when the BBC got hold of a copy (a version sold by Crowd1 for 2499 Euros) they discovered that the content has been lifted, almost word for word, from a book that can be downloaded free from the author’s website.
Other Crowd1 “products” include a gambling platform that is making false claims about its partnerships with sports betting companies, a global lottery scheme that has never launched, and a series of off-the-shelf software applications that have been rebranded to look like new businesses.
The evidence indicates that the main purpose of all these products is not to generate profit for Crowd1’s members, but to disguise the real money-spinner, which is simply the recruitment of more and more people into the network. This recruitment drive needs to be disguised because, in most countries, a network marketing business that makes its money from recruitment, rather than from the sale of a genuine product, will be classified as an illegal pyramid scheme and closed down.
It is clear from Crowd1’s PR videos that its leaders understand the rules around pyramid schemes. “We’re not paid for recruiting,” says Renze Deelstra, one of their top salesmen. “People join for free. And then based on the education pack, based on the sale, based on a viable, tangible product, people get paid.”
Despite these claims, the BBC has found that the recruitment of new members is heavily incentivized by Crowd1. In its online webinars and events, members are encouraged to sign up their families, their Facebook friends, and the people they know from church. Successful recruiters earn a commission for bringing in new members, and—as with a classic pyramid scheme—for any additional people brought into Crowd1 by those recruits.
The BBC spoke to a Crowd1 member in South Africa, an older lady named Rosinah, who spent her entire life savings on Crowd1 in the belief that she was buying “shares” in a business that would pay out a regular “salary.” She was recruited by her pastor, who told Rosinah he was making “hundreds of thousands” with Crowd1. “The clips they sent us are still on our phones,” she said, “of people getting money, driving Ford Rangers and driving BMW and Mercedes cars in six months’ time. So those clips are what got me interested and made me believe.”
Rosinah and ReginahRosinah clearly understood that success in Crowd1 depended on recruitment. With that in mind, she signed up all her adult children and used her own life savings—some 1100 Euros—to buy them “educational packages.” She has received nothing in return, and now accepts that her money is gone.
“It’s only now that I see how stupid I was,” she told the BBC, “and my heart is broken because I wasted all my money that I could have used to buy a house. Now I am living in a shack, with no money. I don’t have an income or a business. I’m just in disbelief and I am ashamed.”
The BBC also spoke to Samtos, a young man in Lagos, Nigeria, who says that, when the COVID-19 lockdown hit Nigeria, he was concerned about how to earn an income and was “sweet-talked” into joining Crowd1 by a friend. Samtos told the BBC that although the scammers are in Europe “enjoying everything that [they are] gathering from poor people” he would still like to ask them a question: “Why did you target the Third World? OK, you know, with the economic realities on ground, they are going to give you a hearing ear. Nobody wants to be poor. Nobody wants his family to suffer. But all the hope and everything, and the hype, everything is a total lie.”
The money that has come from people like Rosinah and Samtos appears to have enriched a group of European businessmen, many of them Swedish, who sit at the top of the Crowd1 pyramid or own the company. Several of these leaders have a history of involvement in scams or pyramid schemes.
The founder, Jonas Eric Werner, has been linked to a network marketing company called Sitetalk OPN, which was bought by OneCoin—a pyramid scam that made millions of dollars selling a fake cryptocurrency. Werner denies that he was involved in Sitetalk OPN. Renze Deelstra, one of Crowd1’s top salesmen, was previously involved in a loyalty card company whose leaders were convicted of fraud.
Deelstra did not comment. Another of Crowd1’s leaders is Johan Stael von Holstein, a former tech entrepreneur who describes himself in PR videos as “the CEO of this operation.” Von Holstein denies that he is the CEO of Crowd1 and insists he’s never had any connection to network marketing or pyramid schemes.
Crowd1 told the BBC that it is not a scam or a pyramid scheme and does not break any South African law. They said it is a legitimate network-marketing company that offers products to its members and enables them to earn money by marketing those products. Crowd1 does not make money from recruitment, they insist, but only from these sales. Crowd1 stressed that all its products are genuine.
Despite these claims, financial regulators in multiple countries are concerned about Crowd1. In South Africa, it is now under investigation. Governments in Paraguay, New Zealand, The Philippines, Vietnam, Mauritius, Burundi, Namibia, Gabon, and Ivory Coast have all issued warnings against Crowd1, or banned it outright.
But regulators move slowly, and scammers move fast. Crowd1 is now making headway in two of the most populous countries on earth: Nigeria and India. For much of this year, their site was ranked by Alexa among the top 1000 most visited websites in the world. Until someone stops them, Crowd1 rolls on.
BBC Africa Eye’s documentary, reproduced below, was released on Monday.
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