Investment scheme promised profit, but delivered destruction

The pitch was irresistible. Make money from your phone! Watch your small investment double, triple, and quadruple in no time! Your friends and family will be leapfrogging each other to join your team and invest too! The incredible thing about this story is that it worked — until it didn’t.

Neema Carter, an Atlanta-based Financial Educator by trade and the widowed mother of one young daughter, sighed heavily at the beginning of our conversation. She straightened her shoulders and steadied her voice. “I thought my life was over. My job every day is to protect families from financial insecurity … I couldn't even protect my own family. The shame is unbelievable. Most people won’t speak about it. They want to sweep it under the rug.”

In January, Neema heard about the Lightening Shared Scooter Company when a good friend from Cedar Rapids — someone she traveled with and trusted — brought her in. Early on, the payouts were real; Neema earned both quick income and advancement in her position with the company. Within the space of six months, she had amassed a team of 2,000 investors on her team and over half a million dollars in her account — on paper.

“I was making so much money, and I thought I understood the business model. I see scooters everywhere — so I invest money, they manufacture more scooters, more people rent them. It made sense. Over time, though, the intention was changing. It wasn’t about scooters, it was about how many more people you could get to invest.”

Neema describes a high-pressure environment designed to keep people so busy there wasn’t enough time to think through the red flags. Exciting promotional bonuses if you hit certain recruiting milestones, the promise of compound interest, new projects popping up weekly to invest in. They even had her open an office in her city, and she invited several chambers of commerce to attend the ribbon cutting. The sheer volume and speed of money coming in was blinding, but things weren’t adding up.

Leaders were encouraged to “invest from the front” — meaning, reinvest earnings that had been paid out. At one point, the company provided Neema an $80,000 bonus toward the purchase of a car. She went to a dealership and provided the company with a photo of her next to a brand-new car — but ultimately, she reinvested the entire $80,000 for fear that she would miss out on the opportunity to double that bonus in the next big project.

Deep down, though, Neema was feeling uneasy. People on her team were asking her questions that she was unable to answer about the company. She had been told the organization was based in Hong Kong, but hadn’t been able to locate any address or ownership. There was a company culture of silence between investors — they were discouraged from connecting with or talking to each other. Her only two lines of communication with direct leadership had been through the messaging service Telegram, and privately livestreamed YouTube videos of a manager named “Danny” that didn’t allow for questions or back and forth dialogue.

“The man on the YouTube videos — he didn’t look like I would expect a leader of that status to look,” Neema said. “I didn’t want to be judgmental, I mean all kinds of young people are making lots of money now doing the stupidest things — but he looked like a kid, like a paid actor.”

Neema is the first to admit that because she trusted the person who connected her to LSSC, she didn’t do enough research before investing her own money. Once the money started rolling in, it was hard to focus on legitimacy anymore. Just 6 months into her new venture, it all came crashing down.

First came the constant — and seemingly unprovoked — dispelling of “rumors of closure” on company communications. Payouts were originally handled through a relatively stable cryptocurrency, and suddenly switched to a different and more volatile crypto. When the switch happened, investors were told they now had to request permission to withdraw their funds. Sometimes, permission was granted. Often it was not. Eventually, no one could access anything they had invested — and some people had invested far more than they could stand to lose. Investors had pulled their retirement accounts, lines of equity from the family home, cash advances, whatever they could get their hands on.

“By this time,” explained Neema, “The reputation for quick money had grown so much that I didn’t have to recruit at all. People were desperate to hand over their money and get rich quick. Even people who were told by existing members ‘We can’t get any of our money out’ — their fear of missing the opportunity was so great that they still wanted to invest!”

Discovering that the great new opportunity you have offered to everyone you know is, in fact, a Ponzi scheme and that in addition to being a victim yourself you have now exposed others to enormous loss is incredibly damaging. People Neema knew personally got divorced, experienced health emergencies, and lost their homes. Very little has come out about this particular scheme, likely because it is so fresh — and as Neema suggested, because some of the former members have joined new schemes in an attempt to recoup what they lost.

The company sent a communication to everyone who had invested letting them know that LSSC was under investigation and that accounts had been frozen — but that investors could now invest in a new project called Ace Alliance. A digital flyer she provided to me bears the words, “Let every profit truly go into your pocket.”

Neema was infuriated. She decided she could not hide in her shame, and must go public with her experience to talk about the red flags she missed — and is working to build a guide that others can use to avoid being taken in by similar scams.

I asked her for a few examples, and she provided the following:

As of this writing, no one has been held out as the culprit of this scheme. The agent listed on the Hong Kong business filing was unaware of his status until he was contacted by media. The company continues to reach out to investors to engage in new projects and investment opportunities.

If you believe you have been the victim of financial or investment fraud, please visit this resource to report to the SEC: https://www.sec.gov/submit-tip-or-complaint

Sofia DeMartino is a Gazette editorial fellow. sofia.demartino@thegazette.com