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Investigative Committee (SK) proposes to add to RF Criminal Code financial pyramid scam article

November 14, 2012, 16:33 UTC+3

Creators of pyramid schemes in recent years have developed a new scheme in order to avoid criminal liability, SK Chairman Alexander Bastrykin said

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MOSCOW, November 14 (Itar-Tass) — The Russian Investigative Committee (SK) has proposed to supplement the RF Criminal Code with a separate article dealing with the creators of financial pyramid schemes. Chairman of the Investigative Committee Alexander Bastrykin said in an interview published by the Rossiyskaya Gazeta daily on Wednesday that “various sorts of organisations and informal groups of individuals whose activities are based on the pyramid scheme principles have become widespread in Russia over the last decade.”

“These unions impede the inflow of capital into the real economy sector. Because people who were promised a very high income invest their money not in securities or other financial instruments. They don’t deposit them in banks. They transfer the hard-earned money to a certain group of people who are not engaged in any business or other economic activities,” Bastrykin said.

At the same time, he said, the creators of pyramid schemes in recent years have developed a new scheme in order to avoid criminal liability. The investors in it are honestly warned that payments will be made from the funds received from other investors and at some point may be discontinued.

“In order to encourage citizens to give them money, they attach some ideological basis to the pyramids (religious, financial, economic and moral). In this case, the organisation or association may be called, for example, a Fund of Believers, Benefit Society, they can have any name,” Alexander Bastrykin said. He admitted that “it is practically impossible to bring to justice the organisers and leaders of financial pyramids created on this principle in the absence in the law of an explicit prohibition of their activities.”

He recalled that in many countries even the organisation of financial pyramids is directly prohibited by law. Such activities are banned and outlawed, for example, in the UK, Germany, Spain, Italy, Canada, China, the United States, and bills criminalising the creation of pyramid schemes have been submitted to the parliaments of Ukraine and Kazakhstan.

“We understand that the delay in the introduction of criminal liability for building pyramid schemes in Russia could lead to the transfer of the activities of such organisations to the territory of Russia,” Bastrykin said.

The bill on adding to the RF Criminal Code of Article 172.1, drafted by the Investigative Committee, suggests that the organisers and leaders of pyramid schemes should be punished by a heavy fine of imprisonment for a term of up to 2 years.


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