Ponzi Schemes – Characteristics, Methods of Reporting, and Case Examples in Indonesia

What is a Ponzi Scheme – Ponzi schemes are scams or fraudulent investment modes that have claimed many victims and are the most common. In fact, this ponzi scheme has been carried out by scammers for a long time. But until now there are still many victims who are trapped in it, because many people do not know what a ponzi scheme is.

This ponzi scheme mode is actually the same as other fraudsters. Scams that have the same pattern, but in short this ponzi scheme is a fraud mode that provides benefits to members who first join. The results of these profits are profits taken from members who later joined.

This often happens because of the lack of information and public awareness of ponzi schemes. Unwittingly, with the tantalizing lure at the beginning, the community did not gain but instead lost. Therefore, now you have to be more careful and understand what a ponzi scheme is, what are its characteristics, how to report a ponzi scheme fraud, and what are some examples of ponzi scheme cases that have occurred in Indonesia in the following explanation.

Also Read: What is Furgal Living? This is the explanation and how to apply it


What is a Ponzi Scheme?

what is a ponzi scheme

Quote from accurate.id, the Ponzi scheme is a scheme that was first introduced by Charles Ponzi from Italy. This ponzi scheme is famous since the 1920s, where Charles Ponzi made a profit of up to 7 million US dollars from his victims. 

In general, a ponzi scheme is a fraudulent mode of investment under the guise of an investment that promises quick profits for investors. Seeing the bait that is very tempting, many people are ultimately trapped and become victims to this day. But unfortunately, these profits are not from the company's profits, but the profits from investors who join later. In other words, investment is not obtained from the management of business funds or the company's legal system in general. 

Like a pyramid, this ponzi scheme is also divided into two levels. Where the first tier will be occupied by investors who first joined. Meanwhile, the next member will occupy the level below it. As a result, this ponzi scheme will collapse and will not be able to pay the profits to its old investors, because the flow of funds will stop. On the other hand, the company will survive strong and long, if many people are willing to invest funds.

There are so many people who are ultimately deceived by the lure of getting big profits in a short time. In fact, you also have to deceive other people first to get these benefits.

Characteristics of a Ponzi Scheme

Then, what are the characteristics of a ponzi scheme that you need to know so as not to get caught up in it? Here are 7 characteristics of a ponzi scheme that at least you need to know for those of you who want to invest.

1. Pyramid-like structure

As previously explained, this ponzi scheme uses a pyramid structure. Where this pyramid pattern is mostly done by MLM entities (Multi-Level Marketing). This scheme requires consistent investment to maintain business continuity. That's why the lower tiers have to invite new investors to make a profit.

2. Promises big profits in a short time

Through this fraudulent investment, you will be lured by profits exceeding legal instruments such as stocks. The promised time also tends to be very short. In reality, there is no investment like this out there, because the real concept of investing is that the higher the risk, the higher the return you get. For that, you must be wary if you meet an investment that promises big profits in a short time.

3. Unclear form of business

In this case, you also need to be careful by checking the legality of the company first before you decide to join.

"Is the company you are investing in has been registered and supervised by the OJK (Financial Services Authority)?". If so, in general, there will be an OJK logo on the website, banner, or company application. If not, then you need to be careful, because legality checks at this early stage are usually quite difficult to track.

4. Earn commissions when inviting others to invest

As previously explained, this ponzi scheme requires consistent investment. For that, every investor must deceive the victim of new investors in order to get more commissions.

5. Foreign-owned investment products

Various platforms that the OJK has found, there are lots of illegal foreign companies operating in Indonesia. Usually these foreign companies admit that they already have big profits. So, you must first check the credibility of the intended platform. Make sure again that the company is already registered and supervised by the OJK.

6. Take advantage of important figures to attract investors

The next feature is to invite important figures, such as religious leaders and community leaders, as an attraction for investors. That way, the transactions of this fraudulent investment company will look trustworthy and convincing to potential investors.

7. Return of investor funds is difficult

The last characteristic is the difficulty of getting investors' refunds. This is because the business is not clear, so the company must turn the deposit money from new investors. Usually, old investors are lured if they can last a long time, they will get return the greater one.

Case Examples of Ponzi Schemes in Indonesia

The case of ponzi schemes in Indonesia has existed since the 1990s. Here are some examples of fraudulent investments with ponzi schemes in Indonesia.

1. Ponzi Scheme in Pandawa Group

At first this Pandawa group came from the "Pandawa" chicken porridge business owned by Dumeri or Salam Nuryanto which made huge profits.

It started with Dumeri who borrowed money from Haji Ridwan with an agreement to return the money along with 10% interest to develop his porridge business. After getting enough profit, Dumeri then gave loans to small traders, but with an interest of 20%. Dumeri still gave 10% of interest to Haji Ridwan and he kept the other 10% for himself.

Finally, Dumeri, Haji Ridwan, and other members founded the Pandawa Group Cooperative which uses this ponzi scheme. As many as 500 more customers who are members of the Pandawa Group, it means that as much as Rp. 2 trillion is also the total fund raised.

Dumeri was jailed for 15 years and fined as much as Rp 200 billion for ignoring the OJK's request to return the bogus investment funds.

2. Ponzi Scheme in First Travel Anugerah Karya Wisata

First Travel is a fraudulent practice that operates in the field of Umrah and Hajj travel agencies. Surprisingly, First Travel dared to invite well-known artists to help promote its program, so that many people believed it.

However, in the end, many pilgrims reported First Travel, because they never got their turn to go to the Holy Land. A total of 63,310 prospective pilgrims were deceived with a total of Rp 905 billion. Finally, the owner of First Travel was sentenced to 20 years in prison and a fine of Rp. 10 billion.

How to Report a Ponzi Scheme Case

So, what if you find the characteristics of the ponzi scheme above? Where to report a ponzi scheme case? Here's an explanation of how to report a ponzi scheme case that you should know.

You can immediately report through the OJK complaint service (contact 157) or via Whatsapp (081-157-157-157) if you find any of the 7 characteristics of companies that carry out fraudulent investment activities. The sooner you inform it, the more you have saved the victims of investors who will be trapped by ponzi schemes.

In addition, stay alert and equip yourself with good financial literacy. So that you will not be tempted by fraudulent investments that will end up harming yourself.

Also Read: 15 Financial Literacy Tips Ala Raditya Dika!


Well, that's an explanation of the ponzi scheme, its characteristics, examples of cases in Indonesia, and how to report them. Learning to invest is a very good thing. However, don't let you fall into fraudulent investments using this ponzi scheme, OK! Always make sure the legality of the company is registered and supervised by the OJK.

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